HR
For a board and its directors, behaving ethically and acting honestly and with integrity should be a given. It is the responsibility of the board, in conjunction with the Chief Executive and executive management, to set the culture and values of the organisation and the ethical framework within which that culture exists.
Every organisation should have a set of core values under which it operates and these values should be lived by everyone within the organisation, from the top down.
Most large companies will have a statement or code of ethical behaviour outlining the values and ethos under which the organisation operates. However, it is not enough to simply publish such a statement or code, directors must ensure that the company is seen to practice what it preaches and that the principles of the statement are fully endorsed and supported by the actions of the organisation.
An effective director will be guided by strong and clear values, with integrity and ethics at the core of their behaviour and decision-making in the boardroom. It is no surprise, therefore, that the Central Bank of Ireland, in its Fit and Proper Regime, places such emphasis on the need for directors to not only be competent and capable, but to be honest, ethical and to act with integrity.
The Central Bank requires candidates for directorship positions and those who already hold such positions, to demonstrate their ability to perform their function and to stand up to scrutiny against a range of criteria relating to conduct and character. Such a renewed focus on behavioural characteristics and on embedding an ethical ethos in the boardroom will no doubt be a key feature in all boardrooms into the future.
Nothing shapes an organisation's culture more than the visible behaviour of its leaders and it is up to the board and the chairperson to ensure that board members hold values that are compatible with those of the company and that they can be trusted to behave at all times, in accordance with those values.
Behaviour that is at odds with an organisation's culture, values and ethical framework, will often have a negative impact on its reputation, particularly when such behaviour is evident amongst its leadership.
The below ethical health-check poses a number of questions for boards and directors to consider:
- Is there a clear ethics policy, approved and reviewed at appropriate intervals by the board?
- Has the board considered, understood and agreed the process by which its values are embedded in the business?
- Is the policy set out in clear terms and communicated throughout the organisation?
- Is there an effective whistle-blowing policy and a procedure that protects the whistle-blower?
- Do ethical values inform and underpin the board's strategic decision-making?
- Does the board have sufficient evaluation tools in place to monitor adherence to these values?
This health-check should provide a basis for boards to examine the role of ethics within the business and to assess whether ethical behaviour is firmly embedded in the boardroom and through all levels of the organisation.
It is important for the board to recognise the importance of business ethics and the value of operating in a transparent and responsible manner and to set the tone from the top by demonstrating the highest professional standards. By doing so, an organisation can generate goodwill amongst its stakeholders and safeguard and protect its corporate reputation.
An organisation that sacrifices its ethical values can do untold damage to its corporate reputation and to the reputation of the board and its directors.
Maura Quinn, Chief Executive, Institute of Directors in Ireland