This article focuses on the role of the Chief Executive Officer (CEO) in creating strong Corporate Governance structures, policies and practices within the organisation, which in turn will create an ethical and sustainable business.
The Board of Directors and the CEO are the linchpins in the fight against unethical business practices in a business and need to be seen and heard to crack down on any inappropriate behaviour.
The CEO’s behaviours and directions are the demonstration of the ethical behaviour of the business and therefore he/she needs to be beyond reproach or even the suspicion of any inappropriate behaviour. This begins with the creation of the required culture within the business, which is achieved through the creation of a the Vision (long term direction), Mission (medium term strategic goals), a set of values (behaviours expected from all working in or with the organisation), practices (policies, procedures) and reporting systems (management accounts, KPI performance, performance management) that are communicated, measured and where needed enforced with a strong hand.
In the past we have seen organisations where the actual culture and the desired culture are not aligned which leads to confusion within the workforce and an unreal image being presented to stakeholders, customers, suppliers and other members of the value chain.
Challenges with this miss-alignment can range from the small matters of people feeling they can come to work late, not put the customer first, take personal calls while supporting a customer in customer service to large scale issues of bribery, theft, abuse of power.
So we hear you asking “What am I as the CEO to do?”
There is no simple answer to this question other than taking up the responsibility to create the desired culture through the application of policies, procedures and leading by example at every level within the organisation. On the other hand there are some activities that will begin to create the right culture within the organisation.
The first responsibility of a the CEO is to create the strategy for the business which needs to include more than revenue, profit, market share and product offering which include;
- What is the Vision, Mission and Values? How will our everyday activities lead to the achievement of these principles?
- What is the culture of the business e.g. we will not engage in any unethical behaviour regardless of the current practices in the industry.
- We will drive our business through policies, procedures and fact e.g. each and every process in the business will be governed by a policy or procedure which has been documented, communicated and understood across all the interested parties internally and externally. Approved policies are better than perceived practices.
- We will drive our business by application of rigorous performance management practices for the business, functions and individuals where expected performance is known by all and factual analysis of results will be used to determine achievement.
- People management practices where people are treated fairly with the respect they deserve while expected to perform within the guidelines set by the business.
- Customer satisfaction expectations are established where the customer is considered to be the most integral part of the value chain and without the loyalty the business is not sustainable. This creates products and services which are aligned with the customer expectations rather than products just in-line with the business expectations.
- Value chain strategy including how we as a business will manage our vendors creating a win-win relationship allowing the industry to grow collectively.
- Competitive fair trade principles where the industry as a whole benefits rather than attempting to undermine or ruin the competitors.
- Leadership and Management style expectations including how we will lead our teams, how we will inspire confidence and how we will create an environment of success for all.
- Creating policies and practices to identify misconduct and breaches of the expected behaviours including terminating any employees who do not follow the expectations of the organisation.
- Creating a culture of collective decision making to ensure naturally occurring bias does not negatively affect the business performance.
- Creating an environment of transparency and confidentiality where the right information is available to the person who needs it at the time it is needed while protecting the business against risks.
- Creating clear roles and responsibilities, levels of authority and accountability for all members of the organisation to ensure they know what is expected of them, what decision making authority they have and what are the consequences of not fulfilling their responsibilities.
- Design and implementation of Corporate Social Responsibility (CSR) strategies including ensuring any activities or funds are appropriately distributed.
In short the role of the CEO within the corporate governance arena is to be the role model for the behaviour and practices expected within the organisation and to be beyond reproach at implementing these practices himself/herself.