Finance

Five reasons charity boards need culture on their agenda

Organisational culture - why boards need to be paying attention.

Whether you are setting out to achieve your income generation targets in a manner that is consistent with your values or you are hoping to learn from your mistakes, organisational culture will make all the difference. Judith Miller, Partner at Sayer Vincent, explains why ahead of the “Culture – the role of finance” session at the The Charity Accountants’ Conference.

Get it right and you’ll be successful

In whatever way you define it, culture is now accepted to be a key, if not the vital, ingredient to organisational success. Clear values that everyone commits to, cares about, understands and shares provide a strong basis for motivation of the team. It also provides the basis for employees to make decisions and take action in the right way so that what they do is aligned with your organisation’s aims and objectives.

It starts with you

There are repeated references to culture in the Charity Governance Code launched in July 2017. The board is there to set ‘the tone from the top’.
The need to focus on the behavioural characteristics of the board was highlighted back in the Compass Partnership 2012 research work ‘Delivering Effective Governance’ on larger charities and now has a clear place in the refreshed governance code. This identified that work on behaviours, while more challenging, yields greater benefit in terms of improved governance than work on structures and processes.

You need to address whether your board honestly examines its own behaviour. Is constructive challenge genuinely going on around your board table or is ‘the elephant in the room’ avoided, with everyone too polite tackle difficult issues? This may be comfortable in the short term but failure to tackle problems will get you nowhere.

Getting board behaviour right is an enabler of organisational success. It will filter down through the organisation whether good or bad.

What gets measured gets done

Targets need to be positioned in the context of your organisational values. These need to be consistent or you will risk running into trouble. Income generation targets without the context of the organisation’s values can result in fundraising techniques that may be felt to be unethical or inappropriate.

We know from past newspaper headlines how this can impact both an organisation’s reputation as well as that of the sector. So, as you push targets, consider whether the behaviours that these techniques might drive will move you in the right direction. Beware of the law of unintended consequences.

Going the extra mile

Charitable organisations have causes and values that attract people to work for them, beyond that of the corporate sector. To successfully recruit and retain its people, charities need to ensure that the way they do things really does reflect what new recruits expect.

If organisations genuinely live their values from top to toe, they can benefit from what an HR professional might describe as discretionary effort – people going the extra mile because of their strong commitment. If not, staff retention could deteriorate and this could lead to more time and cost spent on recruitment.

Innovate and learn, don’t blame

How does your organisation respond to things that go wrong, mistakes and disappointments? What’s your starting point? Do you look to assign responsibility or look to learn so next time will be different? If it’s the former, and employees feel on balance that the culture is to blame, this can suppress innovation, demotivate and at worst lead people to cover up their mistakes. A positive open culture recognises that progress, learning and development comes through a healthy approach to making mistakes. This leads to a motivated workforce and an overall more successful organisation.

Some essential ingredients for a healthy culture include: clear feedback mechanisms, processes for learning lessons from major projects and initiatives, effective performance management, and well-communicated whistleblowing and complaints procedures.

Find out more about the role of culture at The Charity Accountants’ Conference, Birmingham, 20-21 September