Written by GRC Practice Director, Alex Hollis
According to the 15th Global Fraud Survey, 38% of organizations say bribery/corrupt practices occur widely in business, and 11% admit it’s a common practice to win business in their sector.
Do you remember when…
The CEO and CFO of manufacturing conglomerate Tyco International, were found guilty of stealing $600 million from the company after they threw a $2 million party at the company’s expense?
Or when Lance Armstrong’s doping confession saw the Tour de France champion stripped of his title and several sponsorships?
What about the time retailer Wal-Mart faced claims from up to 1.5 million female U.S. employees on the grounds of discrimination. And then it was ordered to pay $78 million in compensation for not paying staff for working during breaks?
They’re pretty extreme stories, but the truth is that these headlines aren’t that outrageous. It would seem that ethics, or rather a lack of them, is prevalent within organizations.
Corporate governance and business ethics go hand-in-hand
If your business operates ethically, it means you’re choosing to do the right thing because you believe it’s the right thing to do – not because it will win you more business, save you money, or because a certain regulation says you should.
Furthermore, it stands to reason that if you’re operating ethically, you have no issue being transparent. And when you’re transparent, it’s much harder for fraud and security risks to come into play, and your organization earns a higher level of trust.
The top 3 most trusted brands are:
- UK: AA, the Post Office, and Boots
- US: Claritin, NyQuil, and Tylenol
Creating a culture of integrity
If you want your business to thrive and grow, you need to protect your shareholder value. Achieving this requires you to create an environment of integrity, which is based on transparency and accountability.
Research from EY shows that 97% of organizations believe it’s important to demonstrate they operate with integrity. And encouragingly, according to the OECD, two-thirds of organizations indicate their board has severed a relationship with a business partner because of the risks of serious corporate misconduct, citing reputational damage as the main driver behind the decision.
When you act with integrity, you naturally improve your customer and public perception of your brand, which in turn boosts your performance and profitability. But, creating such a culture is dependent on you applying the right values by which your team can make daily decisions.
The principles of good decision making
You can’t please everyone, all of the time. However, if people can look at the data and understand how you reached a certain conclusion, they may not like your decision, but they can respect why it was made.
The ability to go back in time and replay what happened through a logical, evidence-based and transparent decision-making process is what will enable your organization to operate with integrity. And provided you’ve followed what is the right thing to do, you’ve also acted ethically.
A report from McKinsey highlights some of the process steps that are strongly associated with good decision making. They include things like:
- Involving multiple people based on their skills/experience
- The value of discussion and debate
- Making people responsible and accountable for making a decision
- Creating approval criteria for the decision
If you’re looking to boost your corporate governance and demonstrate that your organization operates ethically and with integrity, our recent webinar is a great starting point. In it, we discuss a framework you should consider adopting to enhance your integrated risk management, which touches every part of your organization.