Culture represents the norms, behaviours and ideas of a group, or an organisation, and is at the heart of how it operates. Culture influences how we behave, what we think and how we act.

Public sector entities are no different. They too have their own individual cultures that influence the activities and behaviours of their employees. Culture also drives performance, helps focus effort, aligns activities with strategy, and can determine an entity’s ultimate success.

Who sets the culture?

The culture and tone of any entity is driven from the top and filters down. When setting the culture, the board and executive management need to consider the value proposition of their entity. They should firstly consider what the entity is charged to do. From that perspective, they should then work out what values and behaviours they want the entity to demonstrate.

While those at the top are responsible for establishing an entity’s culture, they are also the caretakers of how it is executed. To have an effective culture, they should model the behaviours and lead by example. It is no use drafting values that are intended to drive transparency and accountability, if they aren’t, as leaders, prepared to sign up to the same standard of behaviour. Employees are less likely to embrace a culture and related values and behaviours if their leaders do not:

• demonstrate and uphold the culture themselves
• call out the behaviour of those that don’t adhere to the values
• align the culture and values to the entity’s operations.

Continuously monitoring culture

When the board or executive management decide on the culture they want for their entity, they can’t simply set and forget. Culture needs to be regularly monitored to ensure that proposed values remain relevant, and that the practices and behaviours of the entity match the desired culture.

While items such as monthly management reports, budget forecasts and staff surveys can provide some indication of an entity’s performance, they don’t always go to the heart of an entity’s culture. Those charged with governance need to delve deeper and look for other indicators that can provide greater insight. These could include:

• regularly checking in with the entity and talking to employees
• observing the workplace and its activities
• looking for behaviours that suggest employees are not upholding the culture.

Looking for indicators of poor culture

One effective way an entity can assess its culture is through its internal audit team and audit program. Internal audit can assess various elements that influence culture, such as how an entity manages risk or makes decisions, and can help identify indicators or warning signs of potential weaknesses.

Taking a deeper dive into these elements can reveal how an entity really operates and if it aligns with the desired culture. This can also provide a good gauge for employee attitudes towards the business and potentially flag areas where the culture requires a refresh or revision.

Common indicators that there are issues with culture include:

• poor flow of communication or reluctance to report ‘bad news’
• ineffective partnering or inconsistent practices across divisions/business units
• lack of care or understanding for an organisation’s values
• immature risk management framework
• not documenting or aligning decisions with risk appetite
• poor governance practices and weak internal controls.

We are currently exploring ways that we can assess culture and introduce it into our audit program