Ethics is the Foundation of Good

Corporate Performance and Governance

Ethics is study of standards of behavior

which promote human welfare and the
good. Ethics is about how we behave,
about the standards we hold ourselves
to as well as how we treat each other
even those we do not know.
Ethics
is
not
just
feelings
or
conscience, not the same as religion,
not just following the law, not following
what everybody does, not technology
or science.

Business Ethics is study of

standards of business behavior
which promote human welfare
and the good.
Business Ethics is how we act as
individuals in business, how we
structure
our
business
organizations and the way they
work, how we structure our
business
society,
our
laws

According to the great German

Philosopher Immanuel Kant In
Law, a man is guilty when he
violates the rights of others, in
Ethics; he is guilty if he only thinks
of doing so.
To quote Albert Einstein, try not
to become a man of success but
rather try to become a man of
value.

Most violations of corporate governance

processes are a result of the absence of
properly structured ethics management
processes
in
organizations.
Ethical
cultures must anchor the development
and practice of sound governance
paradigms in today's organization.
Corporate governance is basically about
rules and procedures and ethics is about
values. Corporate governance rules and
regulations will remain ineffective for as
long as they are not supported by strong
ethical values.

An
ethical
foundation
in
corporate
governance is decisive because it helps to
build
enduring
corporate
governance
processes that thrive even in the most
difficult of circumstances.
It is the rock upon which ethical businesses
stand and ethics is the tower of strength
which intrinsically police the behavior of
every leader including those in key positions.
Business ethics must be embedded in
business strategy and embedding ethics in
strategy goes beyond merely mentioning
ethics in the corporate governance policy
document.

It entails company leaders making a

deliberate effort to unlock the ethical value
in the policy document by asking tough
questions such as:
Has the company assigned someone to coordinate the ethics function?
Does the company have a helpline to assist
employees report observed misconduct and
seek help on ethical issues?
Has the company embedded ethics in the
reward management systems?
Does the company monitor, evaluate and
audit ethics performance?
Does the company reward ethical behavior
and punish unethical behavior?

Globally, companies are moving towards

building business ethics performance
indicators
and
measurements
into
employee performance objectives as a
way of cementing the impact of ethics on
the
overall
performance
of
the
organization.
The
resultant
ethics
performance
metrics and competencies are then used
during promotions, salary increases and
to inform decisions on all other key staff
issues, thus sending a clear message to
all and sundry that both job performance
and ethics matters.

Corporate governance rules cannot

simply be written to address every
possible leadership moral breakdown
and imposing more governance rules
without creating a strong ethical
culture will not grow responsible
behavior either.
Rather, it is when leaders embrace
ethics and make a deliberate effort to
embed it in business operations that
ethical cultures are built to form the
basis for good corporate governance.

Real and lasting governance imperatives

can become a reality only when leaders
foster a genuine commitment to grow
ethical
behavior
right
across
the
organization. When leaders embrace
ethical leadership as the basis for good
governance,
they
become
good
communicators of ethics to staff and all
stakeholders through their deeds and
actions.
Companies must build ethical cultures
that should anchor their governance
processes and help to improve business
competitiveness.

Personal modelling of ethical

behavior,
and
exhibiting
accountability and transparency
in
one's
dealings
with
the
business of the organization are
visible elements that will ensure
the leader's positive tone reaches
everyone in the organization.
In today's highly competitive
global
marketplace
ethical
leadership is emerging as a key

Ethical leadership is not simply a

matter of a good upbringing.
Ethical leadership goes beyond
morality
to
focus
on
the
acquisition of ethical skills through
regular ethical leadership training.
Corporate
leaders
must
understand that it is commitment
to practicable ethics that makes all
the difference, not simply a
corporate governance and ethics

The best written set of corporate

governance principles are bound
to fail if ethics are given lip
service
or
fail
to
get
the
seriousness they deserve.
The Ethical Leadership Quotient of
an organization is now a key
indicator for business success on
the global marketplace. For more
details about Ethical Leadership
Scales and Quotients see
http://www.ethicalleadership.com/

In companies today, maximum

performance will only be achieved
by those companies able to trust
their people to make sound
decisions within a condensed timeframe.
Such people will need to exercise a
considerable degree of autonomy.
Yet, at the same time, risk to the
company must be minimized.

There was a time when people

thought
that
risk
could
be
controlled through the application
of detailed rules, regulations and
compliance regimes. It is now
known that this approach is highly
unstable and relatively costly.
Things move too fast and are too
ambiguous for the old paradigm of
command and control to work.
Instead,
prudent
boards
and
management
should
evolve
corporate
cultures
in
which

The challenge for companies is

therefore to create an environment
in which its people feel that the
values and principles at work within
the company are real.
The trouble is that it is extremely
difficult to do this if the company
adopts a minimalist approach and
therefore
seems
prepared
to
sacrifice anything and everything in
the name of increasing shareholder
wealth. Paradoxically, the key to
shareholder wealth is to be found in

Various research studies have shown that a proper

concern with the ethical environment of a corporation
is essential to long-term business success. Many are
familiar with an interesting book, Built to Last:
Successful Habits of Visionary Companies authored
by James Collins and Jerry Porras. Visionary
companies pursue a cluster of objectives, of which
making money is only one and not necessarily the
primary one. Yes, they seek profits, but they're
equally guided by a core ideology core values and a
sense of purpose beyond just making money.
While the visionary companies such as 3M, American
Express, Boeing, Citigroup, Disney, Ford, General
Electric,
HP,
IBM,
Johnson
&
Johnson
etc
outperformed the stock market by 15 times while
their competing companies did by only 2 times.

An organization that deals with the ethical

dimension of all its activities will be, at the
same time, building a high-trust environment.
As we know, high-trust correlates with low
cost. This is especially so when ethical
commitments are reinforced so that they
become part of the deep structure of
organizations.
In these circumstances, blind rule following is
replaced by compliant behavior based on the
voluntary expression of dispositions that
accord with desired practices. A certain degree
of vigilance is still appropriate. However, far
less supervision is required. And where rules
are silent or ambiguous, there is still a basis
for proper action.

All of this relates to the performance of boards

in a very direct way. Directors are required to
provide leadership to the corporation. As such,
they need to model the very values and
principles that they rely upon for the overall
success of the company. But beyond this, there
is a further requirement that was touched upon
above.
This is that directors have a capacity to engage
in the wider kind of debate that current and
future companies will have to address. This
ability is not a skill that can be picked up
overnight. Rather, it needs to be fostered
under the careful guidance of a chairman. Yet,
not all chairmen are equipped for this task.

Working at the chairman's right hand,

a proficient COMPANY SECRETARY will
be far more than an amanuensis - a
person employed to write or type
what another dictates or to copy what
has been written by another.
He or she will also be a trusted
professional adviser possessed of
sound, independent judgment part
of the management team and yet,
somewhat apart.

Business Corporations are like ships at

sea. A marginally competent sailor can
get by when the wind and weather is
fair. However, a combination of technical
excellence,
experience
and
sound
judgment is required by those who
would survive the occasional tempest.
Many boards are forced to pretend that
they are coping even as they feel
themselves caught between Devil and
the Deep Sea.

Every captain needs a confidante who

can act as a sounding board when
tough decisions must be made and
executed.
This means that there will be occasions
when the corporate secretary may need
to adopt a position of providing
disinterested advice that goes beyond
that
of
setting
out
the
formal
requirements of the law and applicable
regulations.

Indeed, it could be argued that

corporate secretaries are bound
to adopt this role because of
their
chosen
status
as
professionals.
Belonging to a profession means
accepting
that
there
is
a
significant (if not overriding)
duty to act in a spirit of public
service.
In
fact,
this
determination to act in this spirit

If the idea of a profession is to have

any significance, then it must hinge
on this notion that professionals
make a bargain with society in which
they promise conscientiously to
serve the public interest even if to
do so may, at times, be at their own
expense.
That is, to be a professional is to
face the very real prospect of having
to act with moral courage.

Ten facets of Ethical Leaders are:

1.
Articulate and embody the purpose
and value of the organization
2.
Focus on organizational success rather
than on personal ego
3.
Find the best people and develop
them
4.
Create a living conversation about
ethics, values and the creation of
value for stakeholders
5.
Create mechanism of dissent

6. Take a charitable
understanding of others
values
7. Make tough calls when being
imaginative
8. Know the limits of the values
and ethical principles they live
9. Frame actions in ethical terms
10.Connect the basic value
proposition to stakeholder
support and societal
legitimacy.