Magazine article New Zealand Management

BOARD TALK : Doug Matheson - Boards Behaving Ethically; the Loss of Public Confidence and Trust in todaya[euro][TM]s Boards and Senior Management Is Widespread. the Director Asked Professional Director and Governance Expert Doug Matheson Why, and What Needs to Be Done?

Magazine article New Zealand Management

BOARD TALK : Doug Matheson - Boards Behaving Ethically; the Loss of Public Confidence and Trust in todaya[euro][TM]s Boards and Senior Management Is Widespread. the Director Asked Professional Director and Governance Expert Doug Matheson Why, and What Needs to Be Done?

Article excerpt

Byline: Doug Matheson

The general public no longer trusts or has confidence in organisational boards and senior management. There is, as a consequence, a growing demand for ethical governance strategies and practices in business.

There has, simultaneously, been an increased stakeholder expectation that business will continuously improve its environmental performance. Public criticism, increased government controls, and growing expectations of better financial performance and accountability have accompanied the decline in trust.

There is also increasingly strong evidence of a positive correlation between sustainable business practices and enhanced financial performance. For instance, investment portfolios that take account of sustainability criteria are performing better than their conventional counterparts. These businesses benefit by attracting and retaining the best employees, from improved customer sales and loyalty and from increased supplier commitment and enhanced community relations.

Ethical and sustainable development is good business. It involves implementing and measuring ethical business practices that benefit all stakeholders to create an increased triple bottom line of financial, social and environmental performance.

Good governance is about long-term sustainable performance through enlightened board and executive leadership. The demonstration of high ethical standards is increasingly important to the long-term interests of any organisation. It speaks of the organisationa[euro]s credibility and trustworthiness, both in its day-to-day operations and longer-term needs and commitments.

A board must set an organisationa[euro]s ethical character, not only by the standards and policies it sets, but also by its actions, including the chief executive it appoints and its oversight of the organisationa[euro]s leadership and management. A commitment to ethical practice and integrity is not organisationally restrictive a[euro]" quite the opposite. Because public attitudes have hardened, organisations which demonstrate ethical behaviour reap positive benefits.

Ethical conduct and practice is increasingly important to how organisations relate to their customers, suppliers and the outside world. They are developing codes of conduct and ethics, specifying how management and employees should behave in their work-a-day relationships. …

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