By Firm Blog Team

May 11, 2021

Corporate culture is defined in many ways; however, it is generally referred to as the shared values and vision of the company that will serve to achieve short and long-term goals of the business enterprise. It is a top-down dynamic that will impact everyone in the company and is one of the most important responsibilities of a board member. Creating a strong culture will be expected by shareholders, customers, suppliers, and employees. If the culture is flawed or confusing, it will have a negative impact on the entire organization and will present obstacles to achieving the company’s strategic goals. Reputation is everything and as we all know, perception is paramount.

The key ingredients to the formation of a positive culture include transparency, high ethical standards, legal compliance, diversity and a long-term approach. If everyone in the organization consistently seeks to do the right thing, that will reflect positively on the board, meaning the board is fulfilling its responsibility to establish a corporate culture that will result in success. Directors are held to a high standard and if their decisions are viewed through the lens of a well-articulated corporate culture that is well-defined and communicated at all levels of the organization, success is inevitable.

An ethical corporate culture needs to be embedded in the strategic plan of the organization and embraced by management at all levels. Maintaining open communication regarding corporate values is essential and it starts at the board level, which should be comprised of individuals who are willing to challenge and ask questions without fear of reprisal. Owners should strive to populate the board with members who are independent thinkers that bring different perspectives and are fully engaged.

A board that shares ideas, develops strong relationships with management and constantly evaluates how they are doing is essential and will send clear messages to employees that culture is valued and essential. Evaluating corporate culture begins with clearly articulated and transparent goals, and must underscore diversity, legal compliance and the company’s overall strategies. Asking employees how they view the corporate culture creates trust and generally leads to positive actions. Surveys and assessments, if done openly, will provide a grading system that can serve as a guide to making improvements.

Corporate culture should also be reflected in who the company hires and how a succession plan will be implemented. What is the company’s code of conduct and what is the process in determining and dealing with violations? The board may consider hiring outside consultants to review the elements of its corporate culture and assist in measuring results. Finally, the board needs to be sensitive to how management is implementing corporate culture, i.e., what are the training methodology and hiring practices? Establishing a strong corporate culture is, and should be, a priority for every board member as it is a key to success. For further information on business planning strategies or other business matters, please contact PLDO Managing Principal Gary R. Pannone at 401-824-5100 or email

Disclaimer: This blog post is for informational purposes only. This blog is not legal advice and you should not use or rely on it as such. By reading this blog or our website, no attorney-client relationship is created. We do not provide legal advice to anyone except clients of the firm who have formally engaged us in writing to do so. This blog post may be considered attorney advertising in certain jurisdictions. The jurisdictions in which we practice license lawyers in the general practice of law, but do not license or certify any lawyer as an expert or specialist in any field of practice

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