At this exclusive dinner at The May Fair on 22nd May 25×25, Audeliss and Board Intelligence brought together over 50 prominent Chairs from different organizations to share their insights and experiences on navigating business ethics and building businesses that deliver value for a wide range of stakeholders.
The behavior of corporate businesses is being monitored like never before, not just by regulators and shareholders but also by employees, consumers, and other stakeholders. The discussion centered on how Chairs can ensure that ethics become embedded within their organizations rather than a ‘tick box’ exercise driven by regulatory compliance.
Key challenges for embedding and monitoring ethics
Discussions touched upon some of these key challenges faced by Chairs when ensuring that ethics sit at the heart of the organization.
The quantity of data available
The abundance of data available to boards is a double-edged sword; while it can provide critical insights, it can often overwhelm and obscure key ethical considerations. Chairs face the challenge of filtering this information to ensure that ethical issues are not hidden by sheer volume or inaccurate/manipulated data. They must prioritize and distill data effectively using appropriate tools and focus on the valuable information within these increasing datasets. As one Chair put it, “Getting hold of data is easy, but getting data which really gets to the root of this is hard.”
Understanding the real culture of an organization
For Chairs, truly understanding and articulating the culture means delving deeper than surface interactions and extending engagement beyond traditional board settings. It requires thorough interactions across various levels of the organization to understand the underlying values and behaviors that dictate the real cultural ethos.
Different perceptions of ethical behavior
In large and multinational settings, the definition of ethics can vary significantly. This presents a challenge for Chairs who must develop a universal understanding of ethics that respects regional and cultural differences yet upholds a consistent ethical standard across the organization.
Balancing priorities at the board level
Ethics can often become a secondary concern, overshadowed by more immediate business priorities until a crisis highlights its importance. Chairs must resist the pressure to push it aside and instead advocate for ethics to be a primary focus that permeates every aspect of decision-making and strategic planning.
Key Takeaways
In addressing these and other challenges, a number of themes arose throughout the conversation for embedding ethics within organizational decision-making.
Regulation is not a proxy for ethics
As one Chair noted, “When it comes to regulation – this represents a minimum standard but the board can’t delegate responsibility for ethics to a regulator”. Instead, ethics should stem from a deeper cultural commitment to doing what is right beyond what is legally required. This involves fostering a proactive ethical culture where integrity and accountability are at the forefront, guiding all organizational actions and decisions.
Ethics needs to be a priority – and closely monitored
Ethical oversight should be a top priority for every board, requiring constant vigilance and proactive management. Chairs should assess and understand the prevailing ethical climate and actively shape it. This includes establishing robust mechanisms to monitor ethical practices and creating transparent channels for reporting unethical behavior. Chairs should look to historical examples of ethical lapses in similar organizations to better understand potential risks and implement preventative measures.
It is all about culture, not a checklist
Ethics must be integrated into the daily life of the organization, influencing every action and decision. As one guest summarized, “If you have to address ethics in a structural way then this is a sign that things are wrong in the culture”. Chairs should champion an ethical culture where integrity permeates every business operation and decision-making process, and where ethical considerations are seamlessly woven into the fabric of organizational life.
Leadership by example
The ethical tone set by the board is crucial for the whole organization. They must exemplify the ethical behavior they expect from others, establishing a culture of openness and accountability. Creating a safe environment where employees feel empowered to raise concerns and confident that their voices will be heard is essential. This openness should be supported by regular communication that reinforce the organization’s commitment to ethical standards. As many noted, whistleblowing is a last resort and often comes too late for a board to proactively manage ethical problems.
Stakeholder engagement
Engaging a broad array of stakeholders is crucial for understanding and navigating the complex ethical landscape of modern organizations. This goes beyond the boardroom to include employees, customers, suppliers, and the community. Such engagement helps to align the organization’s ethical practices with external expectations and evolving societal norms. Regular dialogue with stakeholders can also provide fresh perspectives and feedback on the ethical standards, ensuring they remain relevant and robust.
Conclusion
Ethics is often considered a minefield, and it is true that it presents many challenges and responsibilities on the role of the Chair. However, from the discussions across the evening it was clear that Chairs who proactively embed ethics into all board level decision-making and consider it as a crucial component of culture which needs to be supported, nurtured and protected are more likely to build stronger organizations that avoid the reputational and financial damage which can result from unethical behavior.
