Organisations frequently prioritise the behaviour of their employees when assessing factors, such as engagement, productivity, and attendance.
However, the conduct of Directors and Senior Leaders is equally, if not more, critical to the overall health and reputation of an organisation. Recent events underline this point dramatically.
Just reading through the press, a typical and topical example is the recent suspension of shares in Chill Brands, a relatively small company listed on the New York Stock Exchange. This suspension followed allegations that two Directors acted against the organisation’s interests.
The accusations include attempts to personally acquire the organisation’s domain name, chill.com and the unauthorised disbursement of $400,000 to themselves. By any stretch of the imagination, accusations of inappropriate behaviour!
The New Code of Conduct from the IOD
The Institute of Directors (IOD) has issued a new draft Code of Conduct for Directors for final consultation. Many might argue that this guidance is long overdue.
Nonetheless, its publication is a positive step towards promoting ethical behaviour and accountability among those at the helm of organisations. The code makes it clear that this is on top of the already existing statutory and regulatory burden placed on all Directors.
Key Principles of the IOD Code of Conduct
The newly issued Code of Conduct aims to set clear expectations for Directors, outlining the standards of behaviour necessary to foster trust and integrity within organisations of all types and sizes, whether the Directors work in the private, public or not-for-profit sectors. While the specific details of the Code are comprehensive, the following principles are among the most crucial:
- Leading by Example – demonstrating exemplary standards of behaviour in personal conduct and decision-making.
- Integrity – acting with honesty, adhering to strong ethical values, and doing the right thing.
- Transparency – communicating, acting and making decisions openly, honestly and clearly.
- Accountability – taking personal responsibility for actions and their consequences.
- Fairness – treating people equitably, without discrimination or bias.
- Responsible Business – integrating ethical and sustainable practices into business decisions, considering societal and environmental impacts.
Action Points for Organisations
To ensure that Directors uphold these standards, and to mitigate the risk of misconduct, organisations can take several practical steps:
- Implement and communicate the Code of Conduct
- Foster an inclusive culture where leaders take personal responsibility, act honestly and reasonably
- Encourage whistleblowing
- Undertake regular ethical audits
Conclusion
While organisations often focus on the conduct of their employees, it is essential to recognise that the behaviour of Directors plays a crucial role in maintaining corporate integrity and trust.
The introduction of the IOD’s Code of Conduct is a useful reminder to Directors that employees are sometimes not the problem.
The guidance provided in this article is just that – guidance. Before taking any action, make sure that you know what you are doing, or call an expert for specific advice.
