Raising standards, not eyebrows: Why ethics in governance is more important than ever
Ethics, organisational culture and public perceptions around integrity and trustworthiness are inextricably entwined. Regardless of the type of organisation, be it public or private sector, boards play a pivotal role in establishing and steering the ethical culture within an organisation. Yet often it’s not until a whistle-blower acts, despite prevailing codes of conduct and agreed organisational ethical values, that significant, sometimes catastrophic problems are identified and addressed.
“The latest thinking, increasingly recognised by leading business, draws attention to the ‘triple bottom line’ — social, environmental and financial. Business is now expected to perform well in all three areas,” says Simon Longstaff, Director of The Ethics Centre Sydney. This suggests that more is required for a successful and ethical organisation than an attitude of ‘compliance’ with regulatory standards, risk management and a narrow focus on profit. Fundamental to achieving this is a capacity at board-level for robust ethical thinking.
At the same time, public trust in societal institutions continues to slide. According to the annual Edelman Trust Barometer, it is the second year in a row that trust fell across all four pillars in Australia. Whether it has been political institutions, hospitals, media, Catholic and other religious institutions, and most recently the financial services sector, recent years have seen rolling scandals that, at their heart, involved a disconnect or incongruence between espoused organisational values and behaviours expressed in everyday practices.
How does this happen and how can boards do better?
This session will:
- Provide introductory information about why ethics is central to governance decisions.
- Examine significant research projects that provide insights into conduct and workplace integrity in both public and private sector organisations, such as the Global Ethics Survey.
- Look to translational lessons for boards from formal Inquiries that have a failure of ethics as a central concern: various hospital inquiries; the Royal Commission into Institutional Responses to Child Sexual Abuse; and the current Banking royal commission, and APRA’s Final Report of the Prudential Inquiry into the Commonwealth Bank of Australia.
- Identify some practical tools that can help board members bring ethics explicitly into decision making.
Boards need to be able to ‘sniff the smoke’ before they can see the fire. A deeper understanding of ethics can help do just that. More broadly, ethics is central to organisations understanding the nature of the bargain that their business must honour and their wider obligations to the community.
DPD Units: 5