There is no doubt that a proactive board approach is vital to maintaining the integrity of any organisation. Board directors have a significant role in upholding the values and integrity of the business, supporting the leadership and employees in that business, and feeling that they are able to act in an authentic and comfortable way, one that is aligned with their own integrity compass.
However, these are broad, grey areas that can only be defined by the organisation itself so that it aligns with the business, its values and culture, the expectations of its people, customers and industry. Plus, these definitions must focus on what’s right for the business and it’s stakeholders, not just what it needs to do to tick the box on ethics.
To that end in EY state that Boards should consider the following questions:
How does the organisation define integrity and embody the relevant values?
How is the board monitoring key integrity risks and holding the management accountable?
How are staff engaged on ethics and integrity, and are reporting mechanisms available and effective?
Has the organisation considered using technology and nonfinancial data points to identify and monitor early warning signs?
What is the maturity of the organisation’s integrity framework and how does the organisation plan to work toward industry best practices?
While businesses understand that integrity is crucial for success, ethical lapses persist, and boards play a key role in reducing this gap.
Perhaps it is time for boards to consider an integrity strategy. This has to be broader, deeper, and more demanding than only a legal compliance initiative.
Why? It is broader in that it seeks to enable responsible conduct. Deeper in that it cuts to the ethos and operating systems of the organisation and its people, their guiding values and how they think and act. It is also more demanding because it means focused efforts by the Board and senior management that have to define the responsibilities and aspirations that constitute an organisation’s overall ethical compass.
On this topic, Harvard Business Review is harsh yet fair: “unethical business practice involving the tacit, if not explicit, cooperation of others reflecting the values, attitudes, beliefs, language, and behavioural patterns that define an organisation’s operating culture. Ethics, then, is as much an organisational as a personal issue”.
Ethical decisions in the digital age
If we then apply our personal and operational ethical style around making decisions in the digital age, directors must consider how their leaders and fellow board members practice ethical decision-making and the way in which they behave.
The answer lies in considering three critical principles for ethical decision-making:
Transparency
Responsibility
Empathy
These principles are essential for all leaders to consider as they navigate the challenges and opportunities of today, particularly those of the digital era.
CDR
This has led to a specific focus on Corporate Digital Responsibility (CDR), a growing area of interest for organisations. It blends ethics and governance issues with consideration for how they apply within the digital domain. CDR has moved up the corporate agenda in the past two years because of the growth of digital technology. High-profile security and technology failures by organisations have put CDR in the spotlight.
In the past, marketing departments were the sole operators of data and digital technologies. Today, whole businesses are built on data and digital content.
The implications for directors
Leaders must think about how decisions can impact others through good and bad consequences moving forward.
This is where the personal and professional intertwine. Where the internal compass intersects with those on the external perimeter. Those on the external side could be customers, shareholders, consumers or staff and quite often it is all of the above.
Boards and the CEO, in particular, must lead this charge. They must acknowledge their role in shaping organisational ethics and seize every opportunity to create a climate that can strengthen the relationships and reputations on which their companies’ success depends and display behaviours through leadership that uphold these ethics.
On a personal front, I believe it is incumbent upon us, as directors, to stay true to our own values and integrity. To walk away when you are misaligned and your respect for those in positions around you has dwindled to almost zero. When the rhetoric is just that, without substance. I know I have, as have some incredible colleagues of mine. In the end, you have to set an example and you have to be able to look at yourself in the mirror.
These integrity gaps will be visible in the behaviours of fellow board members, the way the CEO and senior team operate, much staff turnover and the culture that is ultimately the unavoidable outcome. Whether decisions are around digital infiltration or managing the resourcing around the transformation of the business, it all comes down to the way things get done – the integrity of the process.
About the author: Cheryl Hayman is an independent non-executive director in Ai Media Technologies Ltd, Beston Foods, Hancock and Gore Ltd.