We Need to Talk About Your Flair

Boards are increasingly faced with questions about their corporate culture in the context of a wider cultural shift of the employer-employee relationship. Company culture is on the agenda more today as shifts in broader societal culture have given employees confidence to raise issues about work and to set new expectations around behavior. 

A panel hosted by our London office with representatives from TikTok, the London School of Economics and the Financial Times explored the meaning of culture and how to strengthen and measure it. 

Here were their takeaways:

• Make culture tangible. Culture can best be thought of as the behaviors, values and standards demonstrated consistently by employees at every level. These create a shared sense of identity, which improves loyalty and communication. Leadership should focus on actions and behaviors, starting with alignment at the top. Cultures must be modeled by a company’s senior leadership team to demonstrate consistency and authenticity.

• Focus on building trust. It’s the key to openness, creativity, feedback and growth, and it’s both an input and an outcome. Psychological safety is an enabler of trust, and the panelists discussed the importance of being able to make mistakes and speak up.

• Strengthen internal communication. A company can be thought of as an elaborate network of communications. The stronger this network is, the closer employees will feel to each other and the stronger the sense of a shared culture, while weaker connections leave employees feeling detached. Strengthen these “lines of communication” to give employees a voice, disseminate a clearly-defined set of values and encourage a dialogue.

• Encourage conversations about culture internally. If you don’t, they will surface externally. Many companies have whistleblowing lines, but employees often go straight to social media or journalists.

• Include outside voices in your culture assessment. The traditional employee survey can’t be relied on. In healthcare, patient complaint letters more accurately predict mortality rates than internal reporting, and this “outside-in” lens is just as important in other sectors.

With COP28 set to begin Thursday, we’re highlighting the last in our series of key thematic days at the conference with insights on the role cities play from Deb Greenspan. 

What is the main challenge?

Cities are facing strong economic and climate headwinds – dealing with the lingering impacts of a global recession and COVID-19 all while being on the frontlines of climate change (e.g., flooding, wildfires, torrential rainfall and extreme heat). Cities are where the highest concentrations of people live, where energy is used and where goods are consumed. In short: Climate solutions are urgently needed for cities, and cities are a place where action can happen efficiently. 

But cities are hamstrung by a lack of funding, lack of regional coordination and – sometimes – lack of support from national governments. In some cases, cities can’t access development funding, which needs to go through national governments. Other times, they’re operating on small budgets with limited staff and don’t have the experience or capacity to court investors.

What are the key trends in this space and the most prominent solutions on the table?

Like everyone else, cities need resources. Look for mayors demanding more investment from development banks and private institutions to fund climate mitigation and resilience projects. Cities also want to be recognized for their contribution to climate action and their role in helping national governments increase their ambition under the Paris Agreement. This year, cities will get a seat at the table at COP28’s Local Climate Action Summit. 

Who are the key actors to watch? Numerous global organizations serve as forums to coordinate climate action among subnational leaders, like:

• C40 Cities Climate Leadership Group

• Global Covenant of Mayors for Climate & Energy

• ICLEI – Local Governments for Sustainability

• United Cities and Local Governments (UCLG)

• US Conference of Mayors

• Under2 Coalition

Read our previous installments on Health, Food and Energy.

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​Unions have chosen Starbucks to launch a campaign to get more representation on corporate boards in what could become an activism trend at other U.S. public companies. 

The Strategic Organizing Center, a labor union coalition, is advancing three candidates at the coffee giant – two former White House officials and the former head of the National Labor Relations Board. 

What does this mean for companies? Unions’ ESG proposals have traditionally received significant support from Institutional Shareholder Services (ISS), an investor advisory firm that can influence 20%-40% of the vote in a board election. This could mean companies could be facing a tough challenge from unions who aim to capture board seats. 

Not so fast. A specialized team at ISS makes recommendations in contested board elections requiring outside nominees to show board change is needed and company board members to demonstrate it is not.

Our governance team Strategic Governance Advisors (headed by Chris Cernich who led that specialized team at ISS for 6 years and mentored his successor Cristiano Guerra) points out that board preparation and involvement can be the difference maker.  

Board communications with investors will be critical in these unique political style union campaigns. Institutions, including Blackrock,Vanguard and ISS want to hear directly from the board in their meetings and expect materials to clearly show why board change is unnecessary.

This is a new type of fight where the dissident is not making a direct economic argument and won’t settle for anything less than a board seat. Boards need to consider these implications in communicating to investors and developing a strategy for responding to this new activism challenge.