European Audit Committee Leadership Network, March 2019
Culture informs and drives individual and collective behavior within an organization. Agility, resilience, and ingenuity are all examples of potentially desirable cultural elements. Excessive risk-taking or a willingness to disregard process are cultural aspects which could lead to serious problems. The culture of a company does not live solely in a particular unit, location, or area of professional expertise within a company; corporate culture is both a reflection of the behaviors and norms throughout an organization and a roadmap for individuals’ future decisions. Because it can be difficult to assess and influence culture at large, global organizations, non-executive directors are eager to understand new and different approaches to culture oversight.
On 5-6 February 2019, members of the European Audit Committee Leadership Network (EACLN) met in London to discuss oversight of corporate culture. They were joined by Novo Nordisk’s Mogens Thorsager Jensen, corporate vice president of facilitation, business assurance, and Kim Bundegaard, senior vice president and chief compliance and data protection officer, for a discussion about the Novo Nordisk Facilitations program, in which a team of skilled experts from the company conducts cultural values audits.
Corporate culture is important to key stakeholders
Major institutional investors and corporate governance policy makers have been focusing on corporate culture in recent years. Input from these stakeholders resonates with EACLN members, who are thinking about how corporate culture affects their role as audit chairs.
Companies use a range of methods to understand and shape culture
EACLN members heard from Mr. Bundegaard and Mr. Thorsager Jensen about Novo Nordisk’s facilitation program, through which the company conducts values audits of its business units on an ongoing basis. With this established and successful cultural audit example in mind, members considered ways in which culture could be assessed and influenced at their own companies. They explored: methods for assessment; reporting lines within cultural oversight functions; and, the role human resources, internal audit, and other traditional functions might play in those efforts.
Board and audit committee oversight of corporate culture
Novo Nordisk facilitators submit consolidated reports on dozens of facilitations to the board annually. The board chair, audit committee, risk committee, and other board members each contribute to corporate culture oversight. This example stimulated EACLN members to consider how they, as audit chairs, might oversee culture at their companies.