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Raising the bar – will directors raise their hand?

BHS, Carillion and now the Post Office: all corporate scandals that have had a negative effect on the esteem in which business leadership is held, exposing examples of directors demonstrating a concerning lack of integrity and misplaced values.

The gasps of disbelief in the Post Office public inquiry show that the public gallery was horrified as the evidence showed some of those at the top table lacked even a basic understanding of how their organisation worked, they did not read or did not understand important information shared with them, they lacked curiosity and failed to challenge what they were told,  and they perpetuated a good news culture.  It has left a sore wound, and trust needs to be rebuilt.

The IOD, working with the support of BDO, is taking baby steps towards that monumental challenge. In June 2024, the IOD launched a consultation for views on their draft Code for Directors. Their vision was a voluntary code of conduct, with directors in all sectors, in organisations of all sizes, pledging to follow a roadmap to help clarify their thinking and improve decision making.

Having received strong support from the majority of those who responded to the Consultation, on the 23rd October the Code was issued.

It is described as a behavioural framework that can help directors build and maintain the trust of the wider public in their business activities and a tool to help directors navigate the complex trade-offs that they deal with every day.

The code is structured around 6 principles:

  • Leading by example
  • Integrity
  • Transparency
  • Accountability
  • Fairness
  • Responsible business.

These aren’t new principles. Rather, they have been adopted from the 7 Nolan Principles for Public Life published in 1995.

Each principle is explained, then underpinned with a series of undertaking directors are invite to sign up to and finished off with a series of happy outcomes.

Having read all of the undertakings, whilst not groundbreaking, the top 5 that are worthy of mention in the context of making clear the leadership we expect today from directors are the following:

  1. Consider the impact of my behaviour on employees, fellow directors and other stakeholders
  2. Challenge words, behaviours or attitudes that fall below expectations
  3. Encourage the adoption of a speak up measures which enable employees and other relevant stakeholders to report concerns about any misconduct or actions that are not aligned to the organisation’s values
  4. Be open to feedback and, where applicable, make improvements based on that feedback
  5. Oversee and hold the organisation to account in respect of its performance and embodiment of the organisation’s values

Whilst voluntary in nature, both new and long serving directors would be well advised to read, understand and commit to these undertakings that will help not only the reputation and success of their businesses, but will help ensure standards of health and safety are as good as they ought to be.

Source: Osborn Abas Hunt / Yellow Triangle November Newsletter https://www.oahlaw.com/