What Is a Culture audit? A Guide to Improve Your Workplace Culture

What is a culture audit?

A culture audit is a comprehensive evaluation of an organization's values, work environment, policies, practices, and attitudes. The evaluative process seeks to understand an organization's culture and provide insight into potential areas of concern that may require attention or reform.

Company leaders are often blind to the causes of low productivity or high turnover of employees. While reasons are often multi-dimensional, an internal audit of workplace culture can spotlight issues facing employees, leading to improvements in employee engagement and employee satisfaction.

Corporate culture is more important than ever

In an era where transparency and accountability have become important company signals, businesses, universities, and organizations are seeing the benefits of cultural audits. Recent reports, such as the PWC Global Economic Crime and Fraud Survey 2022, reveal a positive shift: years of combating financial crime through policies, training, monitoring, and other internal controls have substantially curtailed internally driven misconduct.

Indeed, these tangible results highlight the role of strong corporate governance in shaping a resilient organization. The survey indicates that two-thirds of organizations detected their most disruptive fraud incidents through internal controls, a marked improvement from just two years prior. These findings underscore the effectiveness of robust internal measures in identifying potential issues and maintaining integrity within an organization's operations.

Mounting evidence shows that gaps in compliance and governance can cost companies billions in fraud, litigation, and reputational damage. Operational disruption, low employee morale, lost business opportunities, regulatory action, and wavering customer loyalty are just some of the cascading effects of neglecting a company's culture.

In Australia, the Respect at Work Bill adds an additional urgency to address poor workplace culture. From 12 December 2023, it's a compliance requirement for all Australian businesses, universities and organisations to eliminate sexual harassment and sex-based discrimination. A corporate culture audit is a proactive risk management measure that businesses can implement in the process of compliance.

The importance of a culture audit

The purpose of a culture audit extends beyond simple evaluation. It's about identifying disparities between the organizational culture and the company vision you desire, and the workplace culture that actually exists. By revealing inconsistencies, a cultural audit assists organisations in crafting strategies to align their actual and ideal cultures. The audit also serves as a protective mechanism, identifying potential risks that could otherwise go unnoticed. Ultimately, a cultural audit enables organisations to fulfil their legal and ethical obligations while promoting a safe, equitable workplace.

How to conduct a culture audit effectively

Conducting a culture audit requires a systematic approach to gathering and analysing relevant data. This process may involve conducting a cultural survey, reviewing policies and procedures, and assessing the workplace's physical environment. The data collected is then analysed to identify trends, issues, and areas for improvement.

Specific risk areas assessed in a workplace culture audit

Culture audits can address a range of issues within an organization. These may include fraud, the presence of a toxic working environment, a culture of bullying, cases of harassment and sexual violence, potential data leaks and security issues, instances of gender and ethnic discrimination, and pay disputes. By examining these areas, a cultural audit can identify potential hazards and opportunities to improve company culture, enabling organisations to act proactively to address them.

The benefits of an audit on your company culture

1. Early warning: A culture audit allows organizations to detect problems early on, enabling them to address issues before they intensify. Good culture auditing tools allow you to detect trends in employee sentiment. They allow insights into a specific department or office location and even highlight issues with various management levels.
2. Increased trust: By being proactive and transparent in your company's corporate culture, you are signalling to customers, clients, investors and employees your willingness to create a safer workplace environment where misconduct is not tolerated.
3. Regulatory compliance: A company culture audit can help ensure an effective compliance program is in place to meet regulatory standards.
4. Risk minimisation: Through standard reporting and robust analytics, culture audits help identify potential risk areas, reducing financial and reputational losses.
5. Legal protection: Culture audits can also help prevent legal action against a company by identifying and addressing potential liabilities.

Stages of a culture audit

Typically, culture audits consist of three stages: assessment, analysis, and recommendation. With every organisation having a unique setup, size, and risk profile, there are no one-size-fits-all best practices. Companies should ultimately adopt strategies that work efficiently within their specific context.

Stage 1: Assessment

Desktop review

Start by reviewing your organization's documents and policies. Everything from written procedures and staff emails to vision statements and social media profiles can provide valuable insights into your company culture.

Culture survey

Conduct an anonymous survey for all staff members. Ask questions that encourage employees to express their experiences and perceptions of the workplace environment. Sample questions in the context of workplace harassment and financial crime may include:

• Do you feel that the company takes measures to prevent fraudulent activities?
• Have you ever felt uncomfortable due to inappropriate behaviour or comments at work?
• Do you know the workplace procedures for reporting harassment or suspected fraud? If not, how can we improve these processes?

Visit our article on the top employee engagement survey questions you should be asking your employees.

Customer reviews

Pay attention to the importance of your customers' perspectives. Their views can offer extensive insights into your company's culture and approach to fraud and harassment. Customer complaints and feedback can also provide an invaluable understanding of your business. Depending on your goal, it could even be helpful to collate Glassdoor ratings, Google Maps reviews or software reviews as part of the assessment stage. Talking to your customer service representatives can give you good insights into the public perception of your company.

Focus groups

Round off your assessment with focus groups. These sessions with employees or external stakeholders provide an in-depth understanding of your company culture, employee interaction, and perceptions of the company's stance on fraud and harassment.

Stage 2: Analysis

With your data in hand, it's time to analyse it for patterns and trends in your company culture. Organize the results according to elements such as leadership, environment, and employee satisfaction. Your aim should be to gauge whether your company's culture is supportive of its long-term objectives and offers a safe and respectful workplace.

Stage 3: Recommendations

Findings

The final stage involves presenting your findings to the executive team and offering solutions that align the organization more closely with its values, legal obligations and company vision. It's essential to address any issues related to financial crime and harassment identified during the analysis phase. After the audit, communicate the results and planned improvements to senior management and your staff members to foster a culture of transparency and continuous improvement.

Training

At this juncture, the developed strategies should encompass a holistic approach for prevention and response within your company, such as staff training and education programs to heighten awareness, understanding, and responsiveness towards fraud, harassment, and discrimination. These programs can equip employees with the necessary skills to identify red flags, know their rights and responsibilities, and respond appropriately in situations of potential misconduct.

Anonymous reporting tools

In addition, your approach could involve implementing anonymous reporting tools to foster a speak-up culture. Workplace issues typically go undetected when employees believe speaking up will negatively impact their careers or if they feel like their concerns will not be taken seriously. Anonymous reporting tools, like Elker, aid organisations in the early detection of misconduct and offer a secure platform for case investigation. 

Open dialogue and a commitment to transparency

To cultivate an ethical culture, fostering open dialogue and a steadfast commitment to transparency is vital. This involves enhancing workplace policies, periodically reviewing and updating codes of conduct, and ensuring senior management commits to the process of cultural change. Encouraging open conversations about workplace expectations and the repercussions of misconduct can further solidify a culture of safety and support.

Remember, this isn't a one-time initiative. It should be an ongoing, cyclical process, indispensable for continuously assessing the vitality of your corporate ethos. The overarching objective is to nurture an environment where employees feel secure, valued, and listened to, thereby upholding your organization's integrity amidst escalating demands for transparency and accountability.