What Is the Relationship Between Team Culture and Governance?

Culture and Performance 

Many companies believe that creating a culture where everything is cutthroat, where highly competitive employees are actively pitted against each other and where profits trump everything is the way to drive success.  

However, as outlined in this article citing several studies that appeared in the Harvard Business Review, the opposite is actually true.  

Employees that work in positive environments tend to take fewer sick days and suffer less from mental health problems.  

While high stress toxic environments that are driven by fear and competition rather than collaboration tend to lead to long term engagement too. Which means that while you might get more from your people in the short term, they will become burned out and demotivated much faster, and in higher numbers.  

Then there is voluntary turnover – in other words, more people resigning. After a while in a pressure cooker environment, most people will put their personal happiness before any material benefits. So even if you pay your people well, if they’re miserable at work, they’re more likely to look for a new job. Many will even take a pay cut to find a better place to work. 

All of these things have only been compounded by the “Great Resignation.” Over the course of the pandemic, people around the world are re-examining their work lives, and when they find that they’re no longer happy, they’re much more likely to take action to correct the problem. That usually means finding a new job.  

The cost to find, hire and retain good people is enormous for most companies. So, this is a serious problem. So, if you’re experiencing high turnover, and you’re not actively trying to build a better company culture, you might be self-sabotaging your efforts. It’s like filling a bucket with a hole in it. You can keep trying, but you’re never going to be able to solve the problem until you plug the hole.  

A Good Culture Is Based on What Factors? 

It’s all very well saying that a good culture is critical to corporate success, but if you don’t know what that means, you might still be lost. Good corporate culture isn’t about casual Fridays and free pizza. It goes a lot deeper than that. Pay attention to the following: 

• Actively seek out toxic people in your company. Whether they’re in management or a colleague, a toxic co-worker is one of the fastest ways to undermine corporate culture. Often, the people who are most likely to “suck up” to upper management are also the ones creating a toxic work environment in their own teams.  
• Encourage collaboration. Team building exercises might be seen as silly by some, but they’re a great way to get people working together. Your people need to get along and like working together for you to get better results.  
• Offer plenty of opportunities for training and professional development. Throwing people in at the deep end and seeing if they swim might work for a few outliers, but most people need help to reach their full potential. If they don’t have the tools to succeed, you’ll always get subpar results.  
• Commit to transparency. Keeping secrets from your team will not build culture. It will only encourage speculation and rumours, and that’s never good!  
• Set clear goals and define your mission and values. People need to know what they are working towards, so that they can gauge their own progress. If no one knows where you’re going, how can they help you get there? 
• Encourage diversity. Teams that are made up of a variety of people from different life experiences are the most likely to be innovative and creative.  
• Focus on positive results. Celebrate your wins more than you focus on failures.  
• Make sure that there are always open channels of communication with leadership. If your leaders are in isolated ivory towers, there’s no way they will be able to find and fix problems in the organisation.  
• Stamp out office politics. Encouraging people to be disloyal to each other might seem like a good idea, but really, if they’re always worried about being stabbed in the back by co-workers hoping to score brownie points, they’ll get a lot less done.  
• Create a physically comfortable workspace. People work better when they’re comfortable and relaxed.  

Many of the new things we are learning about company culture go against traditional beliefs. We used to think that keeping people on their toes and under pressure got more done. But the truth is, even good employees can only take so much of that kind of environment. It’s better to have happier, more relaxed people that can concentrate on their jobs.  

What Does Good Governance Mean? 

Corporate governance is the set of rules and procedures you use to manage the organisation. Usually, it’s based on the needs and wants of management, the executive team, customers, suppliers, shareholders and investors. It might also be subject to government requirements and legislation.  

So corporate governance is all about how a company is run. But what makes corporate governance good or bad? 

• Clarity and communication. It’s very important that everyone involved knows exactly what the company’s policies, procedures and management structure looks like, and how it operates. Everyone should know what will happen, when, and who will take action. This prevents situations where different people are working against each other, or when no one takes action because they’re not sure who should be doing what.  
• Corporate governance also takes into account the company’s impact on the world, in the form of corporate policies related to the environment, social and community issues and so on.  
• A code of ethics is very often included in corporate governance policies. What are acceptable behaviours, and what crosses the line? 

Corporate governance not only ensures that companies operate within the bounds of the law, but also ensures that they are good corporate citizens. This not only has a positive impact on the communities they serve and the world in general, but also ensures that they won’t be the subject of any ethics related scandals.  

For instance, when Volkswagen decided to lie about their diesel emissions and were caught out, that was a clear example of poor corporate governance, and how it can affect the image of a company.  

How Does Corporate Governance Align with Culture? 

In most companies, behaviour is set not only by written policies and procedures, but also what employees observe from leadership.  

When employees can see that their leaders are not concerned with ethics or loyalty, the subconscious message is that it’s okay or even expected to be less than loyal or ethical. This is very much a situation where employees will do as you do, rather than as you say.  

Your employees will almost certainly reflect what your management team does, and what they see your customers and vendors do.  

Whether we like it or not, the tone for any company is set by the people in charge. So, you should think hard about what kind of picture your actions paint for the people who work for you.  

Culture and Governance 

The relationship between corporate culture and governance is symbiotic. Changes to either one will have a profound impact on the other.  

If you build a team that has a strong ethical backbone and is built on loyalty, transparency, and collaboration, you will find that it’s easier to ensure good corporate governance.  

Likewise, if your corporate governance sets that tone, it will automatically attract people who already have those values, that you can nurture within your company.  

The Final Word 

Companies are complex systems with many moving parts. Their success or failure depend on a huge array of diverse factors, and it’s almost impossible to micromanage every part of them. Which means you need to rely on things like corporate governance and company culture to achieve your goals.  

In this case, it’s very much a case that one bad apple can spoil the whole bushel. If you allow rot to occur and spread in your governance policies or in your teams, your whole organisation will suffer.  

Poor management, backed by poor corporate governance will reward poor behaviour, and you’ll lose good people along the way. That will affect the efficacy of your teams and have a direct impact on company performance and productivity.  

Whether we like it or not, very often the problem starts at the top. So, take a long, hard look at your policies and procedures, and make changes that will have a positive effect on culture. It’s the best thing you can do for the long-term success of any company.