Ethics should be the focus of corporate culture
Governance can be a far-reaching tool for contributing to growth or change of direction, but over regulation remains a concern, according to participants at a debate hosted by ACCA (the Association of Chartered Certified Accountants) in Brussels.
The main drivers of individuals’ and groups’ behaviour in organisations were debated at the two-hour high-level ACCA roundtable as part of a one-year international research project called Channelling Corporate Behaviour.
Having a healthy corporate culture, with particular focus on ethics, should be seen as a necessity; but it poses a huge challenge for both businesses and regulators, said the roundtable participants.
The meeting focussed on what causes people to do things which are dysfunctional for the organisation in which they work. Regulation clearly has a place, particularly in financial services and where public or employee safety is a concern, but there was considerable scepticism from many about the need for any more. A more collaborative regulation process could promote better compliance and better behaviour. An important factor in creating an open culture is getting rid of the fear of failure. This, however, according to attendees at the debate, probably cannot be regulated.
Other issues that were debated at the ACCA roundtable included the board composition and the information it gets. Boards need, but do not always get, timely unbiased information and there tends to be an asymmetry of information between the executive and non-executive board members. The prevailing wisdom that more non-executive directors (NEDs) is a good thing was questioned, particularly as it can be easier for a NED to keep quiet and not challenge a decision if there are many other NEDS in the same meeting. It was noted that there is evidence that smaller boards tend to make better decisions than do big ones.
Paul Moxey, ACCA’s head of corporate governance and risk management, said: 'It is misguided to go for a simple solution to a complex problem and getting culture right is complex. There are no simple fixes. However, we must develop better measures for assessing what makes for long-term organisational success and find ways to reward good behaviour. A higher level of accountability can be achieved through greater transparency- sunlight can be highly effective in encouraging best behaviour.'
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Notes to Editors
- The meeting was part of a year-long international project co-funded by the academic research funding body ESRC. Similar meetings have so far been held in London, New York, Bangalore and Dubai. The project will report at the end of June. The meeting in Brussels was attended by senior figures from business, the EC, the EP and representative bodies.
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