The Tribune

CULTURE is often presented as the foundation of corporate success. Boards monitor it, executives seek to strengthen it, and consultants are frequently engaged to improve it. Yet culture is rarely the starting point. More often, it is the outcome of leadership decisions repeated over time.

Employee engagement surveys, cultural assessments and staff feedback often identify problems only after behaviours have become established. By the time companies detect declining accountability, inconsistent decision-making or weakening trust, those behaviours have frequently been reinforced through months or years of leadership decisions. Culture, therefore, resembles a financial statement. It reports the effects of corporate choice rather than predicting future performance.

Throughout this author's experience and academic research, companies seldom develop ineffective cultures because their values are poorly written. They develop them because incentives, accountability and leadership behaviours gradually shape what employees come to regard as normal. In this sense, culture is not a leading indicator of corporate performance. It is a lagging indicator of the systems that govern behaviour.

This article examines why culture should be viewed as an organisational outcome rather than a driver, what Boards should be asking instead, and how leadership determines the conditions from which culture ultimately emerges.

Culture reflects organisational design

Corporate culture does not emerge in isolation. It develops through repeated decisions. Incentives influence behaviour, repeated behaviour establishes informal norms and, over time, those norms become recognised as culture. By the time culture is measured through employee surveys or engagement scores, the conditions that produced it have often existed for years.

Edgar Schein, widely regarded as one of the leading authorities on corporate culture, argued that culture develops as groups learn which behaviours consistently solve problems and achieve success. Those behaviours gradually become accepted assumptions that guide future decisions. Culture, therefore, reflects what a company repeatedly rewards, tolerates and reinforces rather than what it formally communicates (Schein & Schein, 2021).

This distinction is important because companies often attempt to improve culture by rewriting values or introducing engagement initiatives. While these efforts may reinforce expectations, they rarely change behaviour unless the underlying corporate systems also change.

Boards need better questions

Boards frequently ask whether the company has the right culture. This author would argue that the more relevant question is whether governance systems consistently produce the behaviours leadership expects. Employees pay close attention to company signals. Promotion decisions, performance measures, incentive structures, policy exceptions and leadership responses to misconduct all communicate organisational priorities. Formal values influence behaviour, but informal governance often influences it more.

Boards often believe they oversee culture. In reality, they oversee governance. Culture simply reports how well governance is working.

Leadership shapes the outcome

The responsibility of leadership is therefore not to manage culture in isolation. It is to create organisational systems that consistently reinforce the desired behaviours.

This requires alignment between incentives and performance, clarity in decision-making, predictable accountability and visible leadership consistency. Every promotion, exception, disciplinary decision and resource allocation communicates what the company genuinely values. Over time, these repeated governance decisions shape corporate culture far more powerfully than communication campaigns alone.

In short, companies rarely develop the culture they aspire to. They develop the culture their governance systems consistently produce. Leaders seeking stronger cultures should therefore spend less time asking how to change employee behaviour and more time examining the conditions that shape it.

• NB: About Derek Smith Jr

Derek Smith Jr has been a governance, risk and compliance professional for more than 20 years with a leadership, innovation and mentorship record. He is the author of ‘The Compliance Blueprint’. Mr Smith is a certified anti-money laundering specialist (CAMS) and holds multiple governance credentials. He can be contacted at hello@pineapplebusinessconsultancy.com