Cultural audits help identify risks and hit targets

By Mollie Tracey

Your business’s culture may be preventing you from achieving targets and increasing risk, but a cultural audit can identify culture strengths and weaknesses and make recommendations for improvement.  

RSM Partner Dan Hutchens conducts cultural audits for WA businesses and says there are two main reasons an organisation will undergo a cultural audit. 

“Firstly, it’s good governance to know what your employees are thinking,” Hutchens says. 

“Businesses can build great processes and have a great strategy but if employees don’t show the right values, your strategy and processes go out the window and you quickly find you are not achieving your goals.  

“The second reason for a cultural audit is because there have been problems within the organisation, such as safety issues or reports of harassment.” 

What is involved in a cultural audit? 

The key method RSM uses for cultural audits are surveys, which Hutchens says have been the most efficient and non-invasive way to obtain the voice of employees. He notes that follow up interviews are the most impactful method, but there needs to be trust – this is why independent firms are preferred for culture audits. 

“Going through a third party means you get an independent and impartial view of the organisation’s culture,” he says. 

“When you have independent people doing the survey, you’ll often get a higher participation rate and different results because people tend to feel more comfortable about being honest with their survey answers.  

“They trust that we are not going to pass on their answers to management.” 

Cultural auditing can also use interviews, although Hutchens says interviews can make some employees feel “interrogated”. Using an experienced practitioner for follow-up interviews is a must. 

“Sometimes we might follow-up a survey response with a short interview if we want to learn more about their answer – because it was serious. If we do conduct interviews, the employees are never identified to management,” he says.  

The right tool to support company strategy, ESG and reduce risk 

“If your culture is bad, you won’t achieve your strategy,” says Hutchens, who believes cultural auditing provides insights about an organisation’s strategic potential (especially weaknesses).  

Cultural audits are also effective at assessing potential compliance breaches.  

An organisation’s ability to achieve its environmental, social and governance (ESG) targets can also be heavily influenced by its culture.   

Hutchens says cultural audits can look at employees’ attitudes towards company ESG policies and targets.  

He gives a hypothetical example of a company with carbon reduction targets to meet. Conducting a cultural audit to ensure employee culture supports these targets will offer real insight. The audit could ask questions such as: 

  • Do you care about reducing your company’s carbon footprint? 
  • Do you think your direct colleagues care about reducing the company’s footprint? 
  • Do your leaders care about reducing the company’s footprint? 

“This will identify if parts of the business are not aligning with the company’s carbon reduction plans,” Hutchens says.  

“Some business units may be doing great and others not so much. Knowing this can support mentoring and guidance at business unit level to ensure alignment with company goals. This could include specific responses e.g. for renumeration plans to align with carbon reduction targets.” 

While executives and directors tend to be risk aware, Hutchens says sometimes operational areas of organisations may not be.    

A cultural audit can help find the areas in the organisation where risk is high and not well managed. This in turn prevents reputation damage and compliance breaches. Survey questions around risk can include: 

  • Do you think your colleagues care about risk management? 
  • Does your direct supervisor manage risk appropriately? 

Cultural audits lead to real, positive change 

A recent cultural audit Hutchens conducted focused on workplace health and safety, specifically looking at employees’ attitudes towards safety.  

“We found 95% of employees thought the supervisors, colleagues, managers, executive and board cared about their safety and making the workplace safer, which was great,” he says. 

“But there was a small number of employees that thought that management weren’t fully focused on their safety due to a shortage of personal protective equipment (PPE) at their site. 

“Once the executive got this message from the cultural audit, they signed off on the PPE immediately and the next week the PPE arrived on site.  

“The problem resulted from a simple breakdown in communication. But now the employees know their executives do care because they spoke, were heard and the message was acted on immediately.” 

Hutchens suggests most organisations can benefit from a cultural audit once a year. If there have been serious ongoing issues, then this frequency can be increased.  

To be part of WA’s peak business organisation, get in touch via 1300 422 492 or membership@cciwa.com

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