In the Industrial Age, the gross domestic product (GDP) was largely driven by tangible asset investments that appeared in balance sheets – equipment, buildings and land. This remained true well into the 1980’s. In todays or information age, the driver of GDP growth has shifted from tangible assets to intangible ones. (Report by Bill Wilder, Life Cycle Engineering)
“People are assets”, this truth is echoed in ACCA’s report entitled; Culture and Channelling Corporate Behaviour. The report looks at the role the boardroom plays in defining an organisation’s corporate culture. Through roundtable discussions and surveys of ACCA members the report highlighted crucial findings that can help CFO’s become more efficient.
No matter how much value an organisation can invest in the latest and most sophisticated machinery and technology, these are all useless without people to man them. Organisations are people; the success of any organisation relies on the people and the skills these people pose.
For organisations to get the best from the people that work for them, they need to make sure that the conditions and the systems within the organisation are strategically structured to enable the energy of these people to flow smoothly into the vision of the organisation to produce the organisation’s desired objectives. To meet this end, CFO’s need to focus on the following relationships within their structures:
The relationship between themselves and their team;
the relationship between team members;
the relationship between themselves and top level management.
An age-old adage was careful to note that, “it is questions that change the world and not answers”. The ACCA report took this route, ACCA’s head of corporate governance and risk management Paul Moxey says: “An organisation can have the most sophisticated code of governance and rules, but as recent high profile scandals have shown, poor organisational culture has been a significant cause of corporate wrong doing. To design a system that works, we believe it is important to ask the right questions – especially what kind of culture do you want?”
The board has to focus on questions such as the following:
Is there openness to mistakes, or to zero tolerance?
Does profit rule, or does public value matter more?
How is diversity of thinking and challenge encouraged?
Does the organisation promote innovation?
It is very important that CFO’s ask themselves these questions and seek answers because it is while doing this that they will ensure that they get the best from their human capital. Setting up sound regulations and rules will ensure that a corporate culture that promotes effectiveness is established in the organisation.
According to ACCA’s researcher Pauline Schu, the findings of the report will help boards and staff to avoid pitfalls helps them on their journey towards evaluating and improving the culture within their organisation.