Does your Legal Counsel IMPACT your CULTURE

In our last article, we discussed the contribution of the company's legal counsel to the company's health and in this article, we would like to further discuss this point.

 

According to the Boston Consulting Group, organizational health is an organization’s ability to function effectively, to cope with change appropriately, and to grow from within, resulting in high performance.

 

The BCG also conclude that there are five broad dimensions that are common to high performance organizations: Leadership, Design, People, Change Management and Culture.

 

So, in order to achieve high performance, companies need to be healthy and hence, need to focus on their culture.

The question is, to what extent does the legal counsel impacts the company's culture, if at all?

 

At a first glance, it seems that the company's culture is not a topic typically linked to the company’s legal counsel and the legal department.

However, we believe that the legal counsel should in fact not only be a key ally and partner in establishing the corporate culture that supports the company's performance, but that the legal counsel should be leveraged as a main corporate culture influencer.

A few examples to illustrate this:

 

Ethics and Compliance. Ethics and compliance reside in the heart of the company's culture. The legal counsel has an essential role in promoting compliance and ethics in the company, as companies are required to address regulatory compliance as well as ethics within their industry.

 

Occupying the grey area. Law and regulation do not always offer a bright line rule, and there is a lot of gray area. Corporate culture is considered sometimes to be the intangible framework, which is meant to guide individual and organizational behavior when there are gray areas. The legal counsel can fill in the grey areas in a manner, that promotes ethical practices and compliance with the law, that will help to achieve a corporate culture that emphasizes on characteristics and values.

 

Direct contact with the board. The company's board often sets the tone for the company's legal, ethical and compliance culture. A good relationship between the board and the legal counsel, enables the board to set the tone for the company’s culture through the legal counsel.

 

The company, and not the CEO, is the legal counsel's customer. The legal counsel's client is not the CEO, but the company. As such, the legal counsel is expected to push back on management decisions that put the company at legal and other risks. Because of this, a strong legal counsel can assist the company in having a healthy culture.

Advising on issues that extend beyond legal. Companies nowadays, are facing issues involving public policy, the media and social pressure from consumers. Paying a dividend to the shareholders while at the same time, getting a grant from the government due to the Corona crisis, is just one example.

The increasing importance of these issues means that they can pose big risks to companies. The company’s legal counsel is suited to have the official responsibility for these matters, as it is often in charge of the risks the company faces.

 

As described above, a strong corporate culture is essential for a company's health and high performance.

While it may not sound intuitive, that the company's legal counsel can or should affect the company's culture, we believe that the legal counsel's contribution to the company’s culture and as a result, to its health and high performance, is crucial.

If you want to learn how we help our clients to promote a healthier corporate culture, feel free to contact us.   

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