The Leadership Development Programme*, under the guidance of Ashridge Business School, recently discussed how company secretaries can support the delivery of a successful ethics policy – and, in so doing, establish their credibility as the ‘go to’ expert on governance issues.
It is important to have a simple definition of ethical behaviour which resonates with work colleagues, such as ‘being professional’, ‘keeping our promises’, ‘this is the way we do business’ or ‘safeguarding our licence to operate’; or the more sophisticated definition of ‘delivering stakeholders’ legitimate expectations’.
Company secretaries have a governance leadership opportunity to take a strategic view on ethics, and to advise the board accordingly. Ways in which this influence can be brought to bear are as follows:
1. Interpreting ethics beyond the narrow compliance definition, and placing it in a wider governance context
2. Looking at how the board achieves oversight – is an Ethics and Compliance Committee an appropriate vehicle, or otherwise how does the issue get embedded within a CR, or CSR, or Sustainability, Committee?
3. ‘Holding the pen’ #1 – The company secretary controls the Terms of Reference of committees, which brings a significant level of influence and power
4. ‘Holding the pen’ #2 – The company secretary also controls the process of drafting Policies
5. Using the board evaluation exercise to ask a question on directors’ views on the company’s ethics performance
6. Making the company’s ethics programme an item in the Internal Audit work plan
7. Ensuring ethics features in the risk register
8. Reviewing the whistleblowing arrangements and considering transitioning to an independent external hotline
9. Making arrangements for the hotline number to be easily accessed in private (eg by a wallet card for all members of staff which contains other emergency and essential numbers, or a letter sent to all employees at their home address)
10. Encouraging use of the hotline number, (‘sell the benefits’). Yes, there will be vexatious and time-wasting complaints, but there will be at least a few genuine and important cases reported
11. Helping the board and senior executives, and others, understand that an increasing use of the hotline is a sign of success …
12. …. and that appropriate disclosure (through the Annual Report, and website) will build confidence among stakeholders
13. Suggesting (to IT) other user-friendly solutions, such as a Whistleblowing app
14. Stepping back (or encouraging someone else to do so) to review the control and culture arrangements in the context of ‘who are we, what do we stand for, have we got the balance right’ – the recent Thomas Cook and TalkTalk cases (my previous blog) are evidence of a failure to do this. Today’s news of i) the record £26m fine of Npower “for failing to treat customers fairly”, and ii) Sports Direct’s review of the terms and conditions of its agency workforce following criticism of being “a bad advert for British business” are just another two examples
15. Taking a helicopter view of the possible impact of remuneration and incentivisation programmes on behaviours
16. Recommending an Awards initiative (used with caution) to reward good performance
17. Listening to what is going on in the business through the various meetings attended
18. Making a deliberate effort to talk to other people in the business, developing that same ‘line of sight’ we encourage directors to adopt, getting a feel for what’s going on, and asking colleagues ‘what’s on your mind?’ (it’s not only CEOs who don’t sleep at night!)
19. Using the ear of the chairman, selected non-Execs, and/or other key influencers in the business to probe, ask challenging questions and get beneath the veneer of appearance that everything is under control (a particularly powerful option, and a gift of influence few possess)
20. Finally, being aware, and reminding colleagues, that the company secretary is a ‘principal officer of the company’, and is in a position to request that their advice is heeded, even if their recommendations are not accepted.
Company secretaries can enjoy, and deploy, the power and benefit of being at the nexus of information sharing at a senior level in the company to become a champion of ethical behaviour – and gain profile and credibility within the business as a consequence.