Culture and Ethics in the Board Room: the Ethical Compass of the Company

There have been a number of recent business scandals and corporate collapses that were the direct result of poor ethics. These recent issues have led to a call for a higher standard of business ethics, further regulations and training in ethics. It is important to understand that to effectively impact the ethics of a company, it must begin 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 recognize 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 corporation 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.

Let me ask you a question: how do you think a non-exec impact the cultural and ethical standard of a company?

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