In addition to the structures, policies and processes that provide checks and balances, effective governance includes an organization’s ethics, values and corporate culture. Ethics problems can arise at any level but most corporate efforts at addressing ethical issues have seemed to involve developing comprehensive programs for the entire organization, with limited attention being explicitly paid to those at the top.
Ethical behavior for board members is culturally driven Ethical behavior means acting according to what society, individuals and businesses generally accept as good values. Good values include traits like honesty, dignity, diversity, fairness and respect for individual rights, to name a few. Integrity drives ethical behavior naturally. That’s why the overall company culture is the most important influence on ethical conduct at every corporate level.
A corporation’s culture starts at the top with the board of directors, chief executive or executive director and other top managers. Everyone else within the corporation gets a sense of the corporation’s values through what those people say and what the corporation has to say through its media, advertising, employee communications and other messages.
The values within a corporate culture significantly influence the relationships between the corporation and its vendors, customers and employees. Good ethics mean people within the corporation are honest, fair and respectful toward everyone they deal with inside and outside the company. When ethical behavior is genuine, it sparks ethical conduct in a company’s employees.
All ethical issues point to the board of directors Corporations can perform many of the same activities as people. Corporate entities can form contracts, own property, hire staff and make purchases. Because a corporation is not human, however, there is no way to sanction it or hold it accountable for illegal activity. A corporation doesn’t feel guilt or remorse for having harmed its employees or customers.
Governments and regulatory bodies cannot punish a corporation, but they can hold the people running the corporation accountable. The responsibility for ethical behavior anywhere within the corporation falls squarely on the board of directors because it is responsible for oversight and decision-making.
Reshaping corporate culture is a difficult task A code of ethics is merely a code of ethics unless a culture of ethics drives it. It’s nice to develop a code of ethics on paper that the corporation can send out to vendors, employees and customers, but the real test is whether the board directors and managers put the code into action.
Board directors first need to identify their stakeholders’ legitimate needs and then make sure all their policies and systems align with those needs. The priorities board directors should have at the top of their lists are the tone of their communications, role modeling and oversight to make sure the corporation’s values are being upheld right down to the employees and customers.
Nine recommendations that drive organizational culture Evaluating corporate culture should be a topic on the board agenda. The following tips may help to establish and promote a positive culture of ethical corporate governance.
Effects of poor ethics Poor ethics can cause bad behavior within corporations. When poor ethics trickle down to the lower levels of the entity, it causes good people to make poor and selfish decisions. Devastation can be broad and swift, and it can harm large and small companies’ reputations in the blink of an eye. There’s a lot at stake.
The best thing board directors can do for themselves and their company is to have as strong a commitment to developing a corporate culture with strong ethical values as they do to planning and strategizing the company’s future.
BoardBookit focuses on supporting organizations in their efforts for better governance through the secure connection of their board portal software. Ethical governance comes when boards of directors are able to communicate and report on issues in the boardroom seamlessly.
BoardBookit board management software makes it easier for boards to collaborate and report on critical information for all board members, including executive leadership and committee members, promptly. With rich communication tools like messaging and discussions, boards can stay on top of their ethical corporate culture goals. Leveraging BoardBookit, administrators can report on almost everything, including voting, attendance and activity. All features translate perfectly onto any device, including web, mobile and tablet. For more information on how BoardBookit can support your corporation on its ethical governance journey, start a conversation today.
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