The challenge of promoting good corporate culture

IN A SPEECH last November titled Doing Well, Doing Right, Doing Good, Ravi Menon, then managing director of the Monetary Authority of Singapore, said that the authorities were considering following Hong Kong’s example and introducing a provision in the corporate governance code to promote good company culture. Governance advocates would welcome such a move, given growing awareness that the right culture can make or break a firm. However, while such a goal may be desirable, the problem would be how exactly to approach effective codification.

Often seen as a “soft’’ issue surrounding governance, the promotion of the right organisational culture has nonetheless grown in significance over the past decade.

For instance, in 2017, the Dutch Corporate Governance Code for listed companies in the Netherlands was revised to include a provision on culture. The revised code now requires companies to create a culture that promotes desired behaviour within the corporation. It states that the executive board “should adopt values for the company and is responsible for the incorporation and maintenance of the values within the company”.