Corporate culture and the role of boards

Financial Reporting Council

The Financial Reporting Council (FRC) is an independent body with the goal of promoting high standards of corporate governance and information transparency in British institutions to foster investment. It has published this document to analyse the role played by the Board of Directors in corporate culture.

The text emphasises the importance of companies building and keeping good relationships with their different stakeholders, based on respect, trust and mutual benefit, to achieve a solid corporate culture and, as a result, a healthy reputation.

Some of the conclusions reached after consulting with Chairs and senior management of British institutions, as well as with investors and other stakeholders, are:

  • A healthy corporate culture represents a competitive advantage and encourages long-term value. Because of this, the role of the Board of Directors is to approve the company’s mission and ensure that its values are aligned with corporate strategy and the business model.
  • Corporate culture should be alive at all levels and in all areas of the institution, as well as in all business matters.
  • Board members must ensure that the culture is open to the market and transparent, one that respects all its stakeholders as a matter of course.
  • Remuneration systems should be consistent with the company’s mission, values, strategy and business model, and the Board bears the final responsibility for keeping shareholders informed on this issue.
  • The Board of Directors must dedicate sufficient resources to assessing corporate culture and analysing whether it is properly informed about it.