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 gpannone@pldolaw.com.
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Gary R. Pannone is the Managing Principal of Pannone Lopes Devereaux & O'Gara LLC and has been representing closely held business owners for over thirty years. He is an experienced business lawyer specializing in the areas of business formations, corporate restructuring, mergers, acquisitions and corporate compliance. His practice includes the representation of nonprofit organizations with respect to consolidations, mergers and acquisitions. In addition to his role as Managing Principal of the firm, Attorney Pannone serves as the team leader for the Health Care Law, Corporate & Business Law and Nonprofit Organizations teams.
Attorney Pannone serves on several boards and governance committees of nonprofit organizations. He is a former Town Solicitor and has served as special counsel to several municipalities. He is also a frequent lecturer and author in the areas of health care law, corporate compliance, board governance and best practices.
Prior to the founding of Pannone Lopes Devereaux & O’Gara LLC, Attorney Pannone served as the managing partner of the Providence office of Holland & Knight LLP. He is a prominent member of the legal community and was honored by his peers and judges with the AV Preeminent rating from Martindale Hubbell, which is the highest rating based on both legal ability and ethics. In addition, he has been recognized by his peers as a leading lawyer in the areas of business law and corporate compliance by Best Lawyers® in America, Chambers USA, Super Lawyers and Corporate Counsel. For the past four years, Attorney Pannone was named Rhode Island’s “Lawyer of the Year” by Best Lawyers in his practice areas and he was selected as a 2020 Excellence in the Law Hall of Fame honoree by Rhode Island Lawyers Weekly. He is also a Fellow of the American Bar Foundation, the nation’s leading research institute for the study of law.
Attorney Pannone received his J.D. from Suffolk Law School after earning his undergraduate degree in Finance and Accounting from the University Of Notre Dame. He is admitted to practice law in Rhode Island and the U.S. District Court for the District of Rhode Island.
To contact Attorney Pannone, call 401-824-5100 or email gpannone@pldolaw.com.