More than 90% of directors say that Australian business needs to “make improvements to corporate culture,” according to the Australian Institute of Company Directors’ (AICD) bi-annual Director Sentiment Index.
The AICD’s survey of directors shows that directors are more confident “than at any time in seven years since the Index started,” with 57% of directors expecting their business to expand over the coming year, continuing an upward trend over the past two years.
In addition to the findings on confidence, the AICD included questions on corporate culture in this survey, and 92% of directors said they are putting in either substantial or some effort to change culture within their organisation.
“It’s quite clear from our engagement with members that culture in general and the board’s role in setting the right tone from the top is a key concern for directors at the moment and should be,” said Louise Petschler, general manager, advocacy at AICD. “It’s also clear that the issue of trust in institutions and business and community confidence in business in general are concerns for the director community.”
Directors reported to AICD that they are tacking the issue of corporate culture in a number of ways, specifically, capturing data on key cultural indications, communicating the ethical positions of their organisations to staff as well as ensuring it is a regular item on their board agenda.
“Over 90% is a significant result,” Petschler said. “Interestingly, there was also a greater focus on long term thinking and planning and reporting, and more accountability for misconduct. That’s an interesting finding. We’re not surprised to see accountability and culture so high, but it is interesting to see boards are focusing on governing for the long term and having an explicit focus will support better outcomes and a better engagement with the community, meeting community expectations on social license.”
The survey asked directors about actions that are commonly associated with good practice in maintaining corporate culture, specifically around having issues around corporate culture a regular feature on the board and audit committee agendas.
“Setting the tone from the top is our constant message, and some of that is around communicating cultural expectations,” Petschler said. “It is heartening to see that it is a regular item on agendas, but we’d like to see that rise even further.”
Other findings in the report included the fact that renewable energy sources topped the list of priority areas for infrastructure investment (53%), followed by regional infrastructure (41%) and roads (33%). More than half – 53% – of directors reported their boards were actively seeking to increase gender diversity while 77% reported they were actively looking to increase diversity of skills.