The Financial Reporting Council is responsible for the regulation of auditing, accounting, corporate governance and reporting in the UK. Its chair is Sir Win Bischoff, a long time City director, who wrote in City AM this morning that:
What can business do to rebuild public trust? There may be no silver bullet, but there is no doubt that corporate behaviours need to be closely aligned with long-term value creation for all stakeholders.
With the government and others taking a close interest in issues that portray business as out of touch, firms face a wake-up call to look at their own cultures before winning back broad support from society. Companies must establish a culture that encourages good behaviour, which operates through all levels of the organisation and which becomes embedded in the minds of all staff. This subject will be explored in depth today at the Financial Reporting Council's (FRC) annual conference, where experienced business leaders will explore the relationship between culture, value creation, stakeholders, the economy and society.
I added the emphasis, and for good reason. If the FRC is serious - and it should be - it would be inviting its critics in, as well as civil society and others who have had much to say about its massive failings, not least on entirely avoiding the entire issue of country-by-country reporting, which is probably the lightning rod of current concern on accounting right now. But it isn't. It's just continuing as a talking shop where the chaps talk to the chaps, as the highlighted section proves.
And until it changes the only thing to say about it is that it is unfit for purpose.
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As you may know, Richard, there’s been an ongoing debate in the academic literature over the years since Peters and Waterman’s bestselling 1982 book, ‘In Search of Excellence: Lessons from America’s Best-Run Companies’, as to the extent that culture is an organisational variable that can be manipulated/changed.
Following Peters and Waterman’s lead, an industry grew up around designing and delivering (manipulating) cultural change within organisations such that it supports an organisation’s aims as effectively as possible. But others argue that the concept of organisational culture should be seen as a ‘root metaphor’ ‘…culture is not outside anything, but permeates the entire organization. There is a cultural dimension everywhere, which then points at the shared meanings involved. (Alvesson, 2002, pp. 25—7).
Whatever view one supports there’s no questioning the fact (proven over and over again in the research) that organisational culture is difficult to change and doing so takes a lot of effort/resources and takes a long time – particularly in a large organisation and/or across a whole sector/industry – as here. Anyone who claims otherwise is seriously misrepresenting reality or being taken in by the fact that in many cases where cultural change is claimed to have taken place what has really occurred is that people adapt their behavior to what they see/believe fits the new culture, while attitudes remain much as they were. Furthermore, cultural change has to be driven from the top and by example, and therefore if cultural change is being driven by people who are themselves tainted by the culture they claim to be seeking to change it’s highly unlikely to be successful.
You aren’t suggesting there might be some window dressing are you?
Heaven forbid!
I attended the event and wrote this report, in case is of interest: http://www.theaccountant-online.com/features/comment-uk-frc-refreshes-cadburys-governance-legacy-with-a-conference-on-corporate-culture-but-what-the-city-needs-is-to-tackle-its-memory-problem-5011907/
Philippa Foster Back, director of the Institute of Business Ethics, when summarizing the event, noticed that tax issues hadn’t been discussed.
I personally disliked certain comments which belittle the action of government and regulation.
I understand that the FRC wants to reach out and promote dialogue/debate but it cannot forget that above all it should be a tough regulator.
Even more personal is the fact that the chairman of an arm manufacturer was a speaker in the first panel. I’m not sure what lessons about good corporate culture and governance can be given by a corporation that can objectively profit from war and the death of people.
I’m sure other “experienced business leaders” as well as the critics Richard mentions, would have been a better choice for the discussions.
I have tweeted your comments
Philippa’s comments seem especially pertinent
The last thing the FRC should tolerate is an anti-tax stance
See my letter to Sir Win today: you are welcome to use it
Thanks, will use it