Corporate culture and Covid-19: How leaders respond is crucial

DISCUSSIONS on ways to improve corporate governance usually focus on the training and competence of directors, ensuring independence, disclosure of material announcements and related-party transactions, and most commonly, improving communications between the board and shareholders.

While all these subjects and others are undoubtedly important, rarely featured is the crucial role that corporate culture plays in fostering good governance. With Covid-19, the significant role of culture in a company's success has taken on greater importance. For example, how should companies deal with employees and shareholders who face the common threats and stresses of job losses, reduced pay, or worse, business closures? How are linkages with vendors and customers being managed if supply chains are disrupted and most meetings have to be conducted online?

How companies answer these and many other questions depends heavily on their corporate culture. Often, corporate culture may not be expressly defined but is implied, and develops organically over time from the cumulative traits of its people. If capitalism in its purest form relies on the "invisible hand" of competition to engineer optimal outcomes for the economy, then culture is the invisible unifying force that drives a company to compete ethically and efficiently while generating value - not just for its shareholders, but also its employees and the larger community.