Culture and ethics in the boardroom: the ethical compass of the company. Your role as a non-executive director and board members
Business scandals and corporate collapses may be the direct result of poor ethics. Each scandal leads to a call for a higher standard of business ethics, further regulations and training in ethics. It is important to understand that effectively impacting the ethics of a company begins in the boardroom. Ethics are intrinsically a vital aspect of every business decision; it is inextricably bound to the very culture of a company. The culture and ethics seen in the boardroom reveal the ultimate aggregate culture and ethics of the company as a whole.
The inability to legislate morals and ethics
There are a significant number of people who believe that more regulations are needed to help improve business ethics; however, history has proven that ethics cannot be regulated, it must be adopted as a part of a company’s primary culture. The trust that has been lost in business, must be rebuilt through the directors who create business cultures that are capable and willing to recognise and engage ethical risk.
The cost of scandal and crisis
In recent years, there has been no shortage of business scandals and corporate collapses associated with poor ethics. The actions of many of the key executives, and the mute attitudes of their directors, have come under public scrutiny. There have been allegations of fraudulent management, corruption and bribery, just to name a few. These cases, and many others like them, have created cause for concern in relation to business ethics.
These are all issues that the non-executive directors of any organisation must grapple with. While the director is expected to be a team player, they are faced with the challenge of being able to effectively engage the enigmatic issues that are facing the company. Ethics should be high on the priority list, because without a culture that is built on ethical superiority, it will be impossible to maintain the trust of the public. Losing the support and trust of the public is the precursor to corporate collapse.
Business ethics is greater than corporate citizenship
Despite the fact that a significant number of regulators, business school professors, and business commentators advocate a higher standard of corporate citizenship, business ethics cannot be viewed as an optional exercise in corporate citizenship, meaning that they must be viewed as being fundamental to the governance and efficacious management of every company. Decisions at every level of a company have ethical implications, whether in the boardroom or at managerial levels. This is why the culture has to flow freely from the top. If you wish to change a culture of a company, you must begin in the boardroom
Inevitably, there will be risks involved in any business; however, when those risks are engaged at the expense of the shareholders, every ethical avenue must be open. There will be times in which the risk must be completely avoided, and other times in which it must be mitigated or transferred; however, the decision must always be made from an ethical platform.
New to the non-executive director role and interested in learning about ethics in the boardroom? We invite you to visit our NED Accelerator Programme page. A Ethics module is part of the course curriculum. Here are some of the students comments on the module: “Very well put in a concise manner and well delivered”; “Very practical session on setting the right tone from the top”; “An excellent presentation, which encapsulated all the “right” behaviours that should be in every organisation”.
Experienced NEDs looking for positions and professional development opportunities, join NEDonBoard, the Institute of Board Members.