UK regulator urges companies to create positive culture

A company can strengthen its business model by aligning culture with purpose, values and strategy, according to a UK Financial Reporting Council report issued Thursday.

By aligning culture with purpose, values, and strategy, a company can strengthen its business model and better manage resources and future challenges, according to a new report issued Thursday by the UK Financial Reporting Council.

The report on creating positive culture finds that the pandemic has challenged the resilience and agility of companies. While organisations have quickly adapted their strategies, business models, and processes, stakeholders and investors often have changed their priorities.

Meanwhile, environmental, social, and governance (ESG) matters have gained prominence, and topics such as wellbeing, flexible work schedules, and working constructively with stakeholders have grown in importance.

The FRC's tips on culture include:

  • Leadership should come from the top, through actions and attitudes, but the workforce must feel engaged to contribute.
  • Everyone has a role to play in developing a positive culture: The board should ensure that the organisation's culture is aligned with purpose, values, and strategy. The CEO is responsible for embedding culture throughout the company. Managers, properly empowered and supported, are critical to achieving culture change.
  • Assessment and monitoring of culture is important. Without clear and timely follow-up actions and feedback to workers and other stakeholders, companies can be perceived as participating in "culture washing", or promoting a culture change as a marketing exercise without driving appropriate behaviours. This leads to loss of trust, which is the biggest barrier to driving positive culture.

"As a regulator, we believe that by putting greater emphasis on creating and maintaining a positive culture, companies will boost their competitiveness, improving their ability to achieve sustainable success," FRC CEO Sir Jonathan Thompson said in a news release. "More open and insightful reporting in this area will also lead to improved access to both capital and talent. The government's proposed reforms set out in the BEIS white paper, Restoring Trust in Audit and Corporate Governance, is a vital next step in ensuring that all stakeholders have trust in the quality of corporate governance, reporting, and audit."

Ken Tysiac ( is FM magazine's editorial director.