Ethics and Integrity in the Boardroom

Corporate harassment scandals have dominated recent headlines. With organisations such as Uber, Lululemon and Save the Children finding themselves in the center of the public eye. How do boards manage the impending result on their ethics and integrity?

16-03-2019

Business

Corporate harassment scandals have dominated recent headlines. With organisations such as Uber, Lululemon and Save the Children finding themselves in the center of the public eye. The most recent organisation to face the wrath of the public eye was Sir Philip Green’s retail empire Taveta Investments. Though Sir Phillip profusely denies the claims, the organisation has been under pressure for months amid staff allegations of sexual harassment, racial abuse and bullying against him.

Baroness Karen Brady took the decision to step down as chair of Taveta Investments last week on the back of the allegations, stating she felt a “real sense of duty and integrity” to staff at the retail empire. Brady's departure from the board has since sparked further conversation about the state of ethics and integrity in large business.

Integrity is considered to be crucial to an organisation’s culture and a requirement for effective dynamics of a business. According to Deloitte’s Global Principles of Business Conduct, integrity can be outlined in two points. The first point states business owners should be straightforward and honest in their professional opinions and business relationships. The second states business owners should be truthful about the services they provide, knowledge possessed and experience gained.

Company boards usually entrust the majority of decision making to those they’ve hired as managers, believing that their knowledge, experience and ideas will enable them to effectively lead by example and display morally correct behaviour If a manager breaks the ethical and integral guidelines expected of them, board members may lose their confidence in this individual and make the decision to step down.

An effective board should always be concerned about integrity inside and outside the boardroom. Though setting the cultural tone is typically the responsibility of the CEO, while the board still plays an active role in establishing the tone from the top, understanding compliance requirements and establishing the expectations for senior management. The board should confirm that integrity policies are established by management and that only the most appropriate messaging is in place throughout the organisation.

According to a study conducted by a leading center for self-employment, company boards continue to improve when it comes to appointing appropriate CEO’s. However, the number of CEOs who’ve had to leave a business because of ethical misconduct has risen sharply in the last five years. This is often due to instances where the CEO or other executives are blamed for a scandal or mismanagement such as fraud, bribery or insider trading.

What choices does a board member have after losing confidence in a CEO or manager? Read our blog to learn more

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