Ethics and the everyday discourse of leadership

For many boards of directors, values have become a “nice to have” rather than an integral part of decision-making. Why?

It was an ordinary board meeting. The senior management team presented next year’s plan, and we, the board members, discussed the opportunities and challenges.  One board member threw out an idea to increase revenue and everyone mulled it over. Another board member suggested that the idea was not in accord with the values of the organization and after further thought, everyone agreed. We went on to the next topic. At the break, I noticed that the board chair went to the board member who had raised the values issue and murmured, “Well done.”

I didn’t think about the discussion again until a few weeks later, when I was preparing a webcast on building an ethical culture. I then realized that this seemingly unremarkable interchange of views was a perfect illustration of how a board of directors should be dealing with ethics.

  • It demonstrated that raising ethical issues is part of the ordinary discourse of leadership.
  • It underlined the importance of the whole board believing in the values of the organization — a board member raising an ethics issue should not be made to feel isolated or stupid.
  • It reminded me that it’s easy for any one of us to overlook the ethical implications of an idea.  When the board member raised the issue of our values, I was busy thinking about whether the idea was practical and could in fact increase revenue.
  • It emphasized the fact that raising ethical implications is not something that “good” people do to prevent “bad” people from doing something unethical. The member who came up with the original idea is not a less ethical person — it was an idea worth listening to. A good board will talk through both sides and reach a consensus.
  • It demonstrated the importance of the board chair ensuring that ethical issues are discussed and seen to be worthy of discussion.
  • Senior management, which is rewarded based on goals that include profit and revenue growth, was reminded that the board takes its values seriously. The discussion reinforced the ethical culture built and nurtured by the CEO.

What seemed a very ordinary discussion at this board meeting is, in reality, very difficult to achieve. Judging by the news headlines, many boards don’t accomplish it. Why not?

Many things can go wrong. A board can abdicate responsibility for values, and simply convince itself that senior management is made up of good people so no further work is required. Or it relies on legal opinions to be its criteria for what is right.  Groupthink can take over, so a director who feels there is an ethical issue may be reluctant to raise it because no one else has said anything. (Boards are like playgrounds — we all want to fit in.)  A dichotomy can develop whereby the “soft” directors raise the ethical issues and the hard-nosed business directors deal with the really important issues such as strategy and making the numbers. The result is that values become a “nice to have,” which is fatal to an ethical culture.

A good board of directors is a group of smart, skilled, experienced individuals who also bring egos, insecurities and biases to the table.

I am sure I am not the only board member who has driven home from a meeting worrying that I said something stupid.  A great board chair leverages the strengths of the members and manages the other baggage.

Inevitably, good boards sometimes make bad decisions — predictions turn out to be wrong, competitors move in unexpected ways, important issues are missed. We can on occasion think we are making the right ethical decision, which in hindsight turns out to be wrongheaded. But if the bad decision is a result of board members being afraid to speak out, or boards adopting the majority view without listening to all the arguments, that is a true failure.