Why today s board has to examine issues of culture.

• Author: Stautberg, Susan
• Position: DIRECTORS TO WATCH

A company's culture exerts undeniable influence on corporate performance across every measure. A positive culture has the power to drive innovation and growth, weather disruption, and attract and engage customers and employees, while a negative culture can stifle constructive dissent, exacerbate problematic issues, and could drive some of your best people out of the company.

Many recent high-profile corporate scandals show that once a culture is compromised, the impact is rarely limited to the executive ranks. However, it's not just reaction to the few head lines that should drive a board's closer look at culture. The very real interplay between culture, leadership strategy and business strategy is the proactive call to action.

Factors like globalization and the pace of technological change, innovation and disruption are fundamentally changing the way companies operate. To be successful, it's imperative that corporate culture aligns with and support the business strategy. It's in this climate that we explored the idea of leadership and the role a board plays in fostering a healthy, productive and strategy-aligned corporate culture. We conducted in-depth interviews with more than two dozen global directors and conducted a survey of board members from U.S. and multinational companies. This information and our experience working with hundreds of boards collectively informed our recent report, The Visionary Board at Work: Developing a Culture of Leadership.

Most boards, in the course of their normal oversight and governance, focus on C-suite succession planning to some degree and spend considerable time working with management to understand the company's business strategy. They are presented with the processes and people that are put In place to support this strategy and are likely presented with tools like talent profiles and skills matrices to use in determining whether the leadership team can ultimately deliver the desired results. Unfortunately, these talent profiles and skills matrices rarely explore whether the management team has the cultural traits that align with the realization of the business strategy.

A challenge for boards is that culture is difficult to define, and how it plays into the success or failure of a team or a business strategy can also be nebulous. One scenario is a company at a crossroads between the old and the new: its traditional "cash...