Philippa Foster Back CBE, Director Institute of Business Ethics ...doing business ethically... ...makes for better business Standards in the Boardroom What is the NED’s role in establishing Culture iNED November 2016 Philippa Foster Back CBE, Director Institute of Business Ethics © IBE

Sir Anthony Salz on culture “Culture exists regardless. If left to its own devices, it shapes itself, with the inherent risk that behaviours will not be those desired. Employees will work out for themselves what is valued by leaders to whom they report.” The Salz Review of Barclays Business Practice © IBE

Culture: some questions to ask Our Culture: Have we a common understanding about the way this organisation works? Do we know the dilemmas our staff face day to day? What are the norms of how do we do our work? Do our values drive us? Individually and collectively? What is our leadership style? What example do we set? Do we believe individuals challenge the norm? HOW DO WE KNOW? © IBE

IBE Ethics at Work British Survey 2015 What was the level of awareness of misconduct? 20% What proportion of employees did not raise their concerns about misconduct? 45% © IBE

Reasons why concerns were not raised © IBE Source: IBE Ethics at Work 2015 British survey

Edelman 2016 © IBE

IBE contribution to the discussion.....

Creating an Open Culture A practical solution © IBE

Building a trusted organisation Values Behaviours Ethics & Culture Conduct Trust & Reputation Operational performance Application of ethical values to behaviour © IBE

Values in organisations All organisations operate on the basis of core values – implicit or explicit. The best include business values and ethical values. © IBE

Values in organisations Customer focus Business values Forward thinking Ethical values Customer focus Respect Courage Trust Quality Responsibility Honesty Efficiency Openness Transparency Teamwork Fairness Integrity Reliability Innovation Performance Profitability © IBE

Values and the Organisation Model: How do values have an impact? Core ethical values Basis of a Sustainable Organisation Model Influences conduct & decision making Reinforces a culture of trust & integrity Expressed in an Ethics Policy and Code & The way we do things around here, i.e. our culture individuals Supported by an effective ethics programme company/organisation © IBE

© IBE

Testing whether it is working... Ethical Assurance and staff surveys To assess aspects of ethical culture, such as: Values Internal policies External relationships Awareness Experience Sensitivity Confidence PDRs © IBE

Employee satisfaction with the outcome of speaking up Source: IBE Ethics at Work 2015 British survey

Monitoring non-retaliation © IBE Source IBE 2015 Listed European companies survey

What elements in a corporate culture lead to ethical lapses? Lack of ethical leadership and example at the top Bad behaviour unchecked Paying lip service to positive ethical values (valuing performance at any price) Favouritism Fear of failure (targets, speaking up etc.) Fear of raising concerns Lack of accountability Lack of support mechanisms such as speak-up lines © IBE

Summary © IBE

Operational Performance Business Ethics Values Ethics Behaviours & Culture Conduct Trust & Reputation Opportunity Financial & Operational Performance Risk © IBE ....doing business ethically makes for better business….

Business Ethics matters... Embedding purpose, values , ethics and culture.... Right thing to do Sets tone and culture Supports staff Good place to work Retain and recruit best quality staff Gain and retain trust from your stakeholders and the public Gain reputation Self insurance, mitigate reputation risk © IBE

Thank you www.ibe.org.uk © IBE

About the IBE www.ibe.org.uk The IBE was established in 1986 to encourage high standards of business behaviour based on ethical values. Advice Publications Training Forums Research Education www.ibe.org.uk © IBE 22