Building an ethical culture

Blog
04 March 2020

Tags: Corporate governance, Performance, Code of Ethics , Ethical Values

In this blog Prof. David Grayson CBE, Chair of the Trustees, discusses practical steps that a company can take, “when times are good”.

In his recent IBE blog, Mark Chambers rightly observes that 
“many organisations are only spurred to look at their culture and take the steps to embed ethical values at the heart of their decision making after things have gone badly wrong and customers, shareholders and colleagues have suffered as a result.”

Instead of waiting for a crisis, Mark argues, “it would be far better for boards to act proactively when times are good.” I agree. His blog set me thinking about what are the practical steps that a company can take, “when times are good?”

There obviously needs to be an up to date Code of Ethics or Statement of Business Principles in place, clear Values and a comprehensive and on-going communication plan around these. So, checking, when the Code and Values were last reviewed and updated is important and a practical starting point.

Beyond this, boards should be checking that the company is hiring against the Values and the Code: specific skills can be taught/enhanced. It is much harder to change an employee’s values. Is the organisation inducting on the Code and the Values? Is the Code and dilemmas in implementing the Code and living the values, an integral part of on-going training – especially is it included regularly in the Learning & Development programmes of current leaders and those assessed as high-flyer potential? We know that organisations – like fish – rot from the head down – so ethical and values-driven leadership is crucial. So, are the strategies and work programmes of the Heads of Ethics & Compliance and of Learning & Development fully aligned and regularly reviewed against each other?

When “times are good,” it is important that boards review with management that KPI (Key Performance Indicators) for staff do indeed reinforce – and don’t accidentally undermine – the Code of Ethics and organisational values. This means checking that managers are appraising, rewarding and promoting their employees both on what the employee has achieved, but also how they achieved their results. One practical metrics maybe the board could ask for is: “how many employees have had some or all of their bonuses withheld, even if they exceeded their targets, if they achieved their targets in ways inconsistent with the values of the business?” 

Similar questions can be asked for any company recognition schemes and which projects and exemplar employees do company leaders speak about and publicise. And, of course, boards should be considering: are we ourselves and our senior company leaders “walking the talk” and living the values? For example, in terms of the Corporate Tax Strategy we have approved, executive compensation schemes and ensuring that the organisation is paying the Living Wage and eradicating in-work poverty. As Mark rightly argues, this is all easier to check “when times are good.”

Author

Professor David Grayson CBE
Professor David Grayson CBE

Chair

David is Emeritus Professor of Corporate Responsibility at Cranfield School of Management. From 2007-2017, he was director of the Doughty Centre for Corporate Responsibility and Professor of Corporate Responsibility.

David became Chair of the Trustees Board on 01 April 2019.

He joined Cranfield in April 2007, after a thirty year career as a social entrepreneur and campaigner for responsible business, diversity, and small business development. This included founding Project North East which has now worked in nearly 60 countries around the world; being the founding CEO of the Prince's Youth Business Trust and serving as a managing-director of Business in the Community.

David has an Honorary Doctorate of Law from London South Bank University and was a visiting Senior Fellow at the CSR Initiative of the Kennedy School of Government, Harvard (2005-10).

He has served on various charity and public sector boards over the past 30 years. These have included the boards of the National Co-operative Development Agency, The Prince of Wales' Innovation Trust and the Strategic Rail Authority. He chaired the National Disability Council and the Business Link Accreditation Board; in each case appointed by the Major Government and re-appointed by the Blair administration.

He is currently chairman of the national charity Carers UK championing the role of 6.5million Britons caring for a loved one. He is a former chairman of one of the UK's larger social enterprises and largest eldercare providers, Housing & Care 21 during which the organisation made corporate history by becoming the first-ever not-for-profit successfully to acquire a publicly quoted group of companies. David received an OBE for services to industry in 1994 and a CBE for services to disability in 1999.

David has written a number of books on responsible business and corporate sustainability including most recently: ‘All in - The Future of Business Leadership’ with Chris Coulter and Mark Lee. He is part of the faculty of the Forward Institute and of the Circle of Advisers for Business Fights Poverty

The Guardian has named David as one of ten top global tweeters on sustainable leadership alongside Al Gore, Tim Cook - CEO of Apple, and Facebook's COO Sheryl Sandberg

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