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Permeating The Tone From The Top

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April 18, 2014

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Blog, Corporate Governance, Corporate Values, Leadership

MVVSGOIMT

 

Those who succeed will be the men and women – and we need far more women in leadership roles – who set the right ‘tone at the top’ taking a long-term view and recognising that their businesses are fully a part of society and not apart from it.

Excerpt from Foreword to “The Board Charter – Promoting business in society” by Fiona Woolf, CBE, Lord Mayor of London

In recent months I have seen renewed commitment to the well- established principal of Boards (and indeed Leaders more generally) setting an appropriate “Tone from the Top”. Whilst much of the recent discussion is provoked by behaviour in the world of banking, the importance of the Tone from the Top is emphasised in broader Corporate Governance initiatives – for example the Reshaping the Role of Business in Society initiative  led by Tomorrows Company and Mazars that places an emphasis on sustainability and value creation for all stakeholders and is proposing a new Board Charter. Tone from the Top is a broadly recognised foundation for workplace accident prevention, anti bribery, diversity/inclusion, audit quality…..….

There is evident synergy between the encouragement to set Tone from the Top and the values based management movement. As Caroline Rees, the President of Shift,  has commented in the context of doing business without harm to human rights, the Tone from the Top necessitates embedding values right across enterprises (Have procurement been told?) so that they are really embedded in company DNA. At a recent Genius Methods Tone from the Top Panel discussion I was heartened to hear that one Board’s first question in regard to a potential new CEO was “What are the CEO designate’s values?”

Permiating the Tone from the Top Throughout an Enterprise.

Clear, effective, communication of an appropriate “Tone from the Top” is but a first step to meeting the challenge of securing alignment of Corporate Strategy, Vision and Values and the people delivering an enterprise’s products or services. I am concerned that insufficient attention is being focused on sharing preferred practices for achieving this. In my response to the Banking Standards Review Feb 2014 Consultation Paper (The Banking Standards Review is the start of a process that is intended to encourage better banking in the UK. The goal is to create a new organisation to help raise standards of competence and behaviour among bankers doing business in this country), I commented that:

 “I would like to see a commitment to developing tools and techniques that could be applied across the industry.  I have a particular concern that the implementation of activities to set the “Tone from the Top” are inadequately measured and that “blockages” in the cascade of such messages and behaviour are not effectively identified.”

 Examples of the actions I have in mind to help permeate the “Tone from the Top” are as follows

  • Establish a transparent line of site from vision, values and strategic themes agreed by the Board to the goals, objectives and initiatives we are asking our people to work on. Moreover institutionalise measures to determine the current and forecast performance of each initiative.
  • Complement hard performance metrics with qualitative assessments of “How” performance was achieved
  • Encourage staff to ask “is this consistent with our values” questions – for both new activities and existing processes
  • Establish frequent (monthly) pulse surveys to gain a sense of the staff’s perception of the enterprise’s performance in living the stated values.
  • Implement or enhance 360 surveys to include questions to assess peers, seniors and juniors visible commitment to enterprise values
  • Require annual contribution summaries in which people at all levels articulate how their activities during the year have contributed to living the values of the enterprise.
  • Use the Annual contribution summaries to inform decisions on bonuses, pay increases and performance.
  • Establish a mechanism to enable all staff to highlight cases where they consider enterprise values to be compromised. Perhaps to the General Counsels’ office so that this is clearly separated from personnel management activities.
  • Set a clear expectation that Executive and Non Executive Directors and Managers spend time “Managing by Walking About”. A book that I recently read (Looking down on Leaders by Iain J. Martin) included a great example where during the due diligence of a Chemical Company with a stated value of safety, a financial controller asked for a tour of the facility and asked for a number of storage tanks to be opened. What should have been full tanks were in most cases empty – the toxic chemicals having leaked away into the surrounding soil (causing very material pollution).
  • Establish a standard agenda item at both Senior Executive and Board Meetings where the effectiveness of the Tone from the Top is critically debated (informed by data from the activities suggested above, analysis of social media (and any other indicators) and Executive / Board members insights from their own contact with staff, customers etc. )

Whilst some of the points may give an impression of attempting to regulate, my strong belief is that our challenge is more one of culture. To quote Paul Gibson “Culture eats regulation for breakfast”

Finally, a quote from comments made by Lady Susan Rice CBE (Managing Director Lloyds Banking Group Scotland) at the launch of The Board Charter – Promoting business in society.

“There is an Irish proverb that says “May you have the hindsight to know where you‘ve been; the foresight to know where you are going; and the insight to know when you have gone too far. “Maybe if boards of banks all operated that way, we‘d collectively be in better shape”

Please contact me if you sense that Efficienarta could help you improve the effectiveness of the Tone that you are setting from the top of your enterprise.

Huw Morris

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