The importance of discussing your boardroom ethics

What are the ethics of your boardroom? By what values and principles do you operate? Are they clear? Are they shared? Do they work?

Ethical leadership and boardroom practices are important – ignore them at your peril (if you think that’s an exaggeration, imagine for a moment that you had a reputation for being unethical; what possible positive effect could that have?!)

Where are your ethics (or lack of) most obvious? They can be found in the decisions you make, and why – both as an individual director and as a member of the board.

What are ethics?

The Oxford dictionary: “moral principles that govern a person’s behaviour or the conducting of an activity.”

Ethics is the answer to the question, what should you do? Another way to put it is that acting ethically is doing the right thing. When deciding what the ‘right thing’ to do is, there are a number of perspectives at play:

• The organisation as a part of modern society – How does the decision impact the wider world. This might be about where you source your goods or materials, and how they are created/gathered. What impact will you have on the local or national community… or planet?
• The organisation itself – How does the decision reflect the collective nature or culture of the board team and the declared values of the organisation?
• The board as a team or entity – What does the decision say about the board and the relationships at play within that unit?
• The individual director – Each individual board member has their own personal perspective and set of values by which they operate.

Ethical decision making

Another way to look at the issue is to ask who is influencing the decision… You? The workforce? Stakeholders and investors? Customers and clients? Society (local, national, international)? The planet?…

Ethical decision-making can be straightforward, but only if you’re clear on which combination of values and principles are guiding the decisions. And for that you need discussion.

Not all interests are aligned.

Some are downright contradictory, at least on the surface (e.g. let’s say you’re a manufacturer – arguably, investors are primarily in their returns, which means raising profits and keeping costs and overheads to a minimum. However, environmental issues (and possibly legislation) require you to spend money on better recycling and waste disposal. This may appear to be a conflict, but should profits and dividends take precedence over the planet? There’s an entry point to an ethics discussion right there.)

Perhaps you adopt a hierarchy of interests? The company will prioritise X, unless it conflicts with Y, in which case Y takes priority…

Again, it’s about having the discussion.

Why be ethical?

It’s not just about being able to look at yourself in the mirror, there are clear benefits to running an organisation ethically. For a start, these things tend to work top down and any board has to consider the example it’s setting in terms of culture and reputation. If you’re seen as embodying integrity, respect, trust, fairness, transparency, and honesty in your leadership practice, the rest of the company culture is likely to follow (and you wouldn’t want a workforce that was devious, disrespectful, untrustworthy, discriminatory, mendacious and dishonest… would you?)

Trustworthy, ethical leadership from the board filters throughout the organisation. The results are loyalty, lower turnover, higher productivity, and better morale.

Maybe you feel very clear on your ethics, personal and boardroom. That’s good. But unless there’s a shared understanding of the board’s ethics, the likelihood is that the values that drive your collective decision making are those of whoever can dominate. Nor can you take for granted that everyone knows what the ‘right thing’ is.

If you haven’t discussed the issue of ethics as a board, you can’t know for sure.

Whether it’s a deeper insight that’s required or facilitation of that boardroom discussion, we can support you. Give us a call on 01582 463465; we’re here to help.