Corporate Culture Under Pressure: What Boards Can Do
Considerations for directors as they look to help ensure the company’s culture can stand up to pressure.
As an intangible asset, corporate culture is often hard to value and gauge until it is put to the test. The unprecedented turbulence, uncertainty, and speed of change that have defined 2025 are doing just that.
From the Trump administration’s tariff policies and related economic stress to artificial intelligence-related workforce disruptions and anxieties, employee disengagement, and the erosion of trust in institutions and information, conditions that may strain corporate culture are likely to persist. Strategic agility, smart risk-taking, and resilience—which are vital in the current operating environment—all hinge on corporate culture.
Many boards have intensified their focus on corporate culture in the years following the #MeToo movement and during the COVID-19 pandemic. Nonetheless, the brighter spotlight on earnings and the heightened pressure to meet performance targets, along with workforce anxieties and the disruption of business models and workplace norms, should prompt boards to sharpen their oversight of company culture.
Below are considerations for directors as they look to help ensure the company’s culture can stand up to pressure.
Tone at the Top
To start, directors should work with management to help ensure the fundamentals are in place and visible to employees at all levels of the organization.
These fundamentals include robust risk management processes and ethics and compliance programs, employee training, a whistleblower hotline, and, most importantly, the tone at the top. Reinforcing ethical conduct and integrity and ensuring the company’s culture uplifts transparency, accountability, and responsiveness to stakeholder expectations are the keys to build and maintain trust and protect the company’s reputation.
Holding leaders accountable not only for results but also for how they achieve those results conveys to all employees what is expected and what is rewarded. Beyond setting the tone for behaviors and values throughout the company, the CEO and senior management are responsible for creating a culture that aligns with the company’s strategic goals. Corporate leadership, particularly the CEO, should be visible and approachable.
Directors should recognize that while having the systems and processes in place to report wrongdoing are must-haves, if the culture and power dynamics in the organization are misaligned, or if there’s an implicit penalty for speaking out, even the best processes may fall short. Employees should feel empowered to speak up, ask questions, and raise difficult topics without fear of retaliation.
Boards also should be sensitive to the potential impact of CEO turnover on culture, especially when changes are unplanned or frequent.
Understanding the Company’s Actual Culture
Written corporate values may not reflect the unwritten rules of how things are actually done. Understanding the behaviors that are key to the execution of strategy, the incentives driving them, and whether those behaviors are, in fact, taking place is essential to leverage culture as a source of stability, resilience, and competitive advantage.
Board members should look beyond the tone at the top to understand how company culture looks from the viewpoint of employees at the mid- and lower levels. Reviewing findings from employee surveys, investigations, and hotline reports can help identify yellow and red flags.
Recognizing that every organization has blind spots, management should have mechanisms in place for problems to be raised to the board, when appropriate, so that they can be addressed in a timely manner.
Directors should also consider the ways in which AI may support how a company monitors culture-related indicators; it may be helpful with analyzing employee sentiment in surveys and on social media or identifying potential issues related to employee turnover and engagement. When using a dashboard for reviewing culture-related information and metrics, boards should keep in mind that these dashboards may lack context and consider the information as signals that may require a deeper look.
In addition, it may be helpful for boards to spend time outside the boardroom and corporate headquarters. We continue to hear from directors that there is tremendous value in spending unstructured, unmanaged time visiting company plants and facilities. Directors should watch for the presence of “subcultures” that can develop in different business units and functions, which may positively or negatively affect the company’s overarching culture.
A few hours with a local management team and interfacing with employees can offer board members a clearer picture of company culture and whether it aligns with discussions in the boardroom and with management.
Maintaining Critical Alignments
Directors should assess whether incentive structures and performance management systems reinforce the desired culture and behaviors or encourage excessive risk-taking. A healthy culture can help companies maintain the critical alignment of strategy, risks, talent, and internal controls, particularly during periods of major disruption and uncertainty.
To that end, the audit committee should help ensure that internal audit’s annual audit plan includes a culture and values assessment to evaluate whether employee behaviors align with stated corporate values and to identify areas for improvement. This alignment should be assessed in the areas below.
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Fostering a risk-aware culture that encourages timely identification, escalation, and discussion of risk issues and supports effective risk management beyond formal controls and procedures is essential. This is particularly important, from an oversight perspective, given the increased focus on scenario planning and the calibration of strategy and risk in light of sweeping policy changes, geopolitical volatility, and AI-related disruption.
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Considering the Implications of AI
Along with understanding the efficiencies and opportunities offered by AI, the board should help ensure that management considers the potential risks, which may undermine or alter corporate culture. Such risks include job displacement and work- force restructuring anxiety, the erosion of trust and transparency, data privacy and security concerns, bias and discrimination, the spread of misinformation, and the weakening of ethical standards in the absence of robust AI guardrails and oversight.
Prioritizing Culture as a Corporate Asset
The financial impact of a reputational hit to a company is a stark reminder of the link between a company’s culture and its brand identity and value in the marketplace. On average, share prices drop 35.2 percent and take 425 days to recover to pre-crisis stock levels, according to SenateSHJ’s The Financial Fallout of Corporate Crises: Revealing Insights from the Crisis Index 300 report.
Productivity and performance can also be tied to the culture. Heidrick & Struggles’ 2021 survey report, Aligning Culture with the Bottom Line: How Companies Can Accelerate Progress, shows that companies led by CEOs who intentionally prioritize culture as a top driver of financial performance—and clearly link culture to strategy—achieve financial performance that is significantly better than other companies.
As one of the company’s major assets, corporate culture should be a regular topic of board discussion throughout the year to help ensure ongoing attention and responsiveness to cultural shifts.
Directors should also take a hard look at the board’s own culture and expectations. In the 2025 NACD Trends and Priorities Survey, the candor of conversations between board members and the candor of board-management discussions were cited as the elements of board operations and board-management relations that directors deemed important or very important areas for improvement.
Understanding, monitoring, reinforcing, and calibrating corporate culture requires time, focus, and intention. Prioritizing corporate culture as a strategic asset to the business, with real implications for corporate performance, is pivotal as companies navigate ongoing disruption and uncertainty.
This article first appeared in NACD Directorship Magazine.
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