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Conduct – it’s everyone’s responsibility
The critical questions NEDs are asking
Earlier this year we surveyed the Deloitte Director community on the importance of conduct. 79% of participants indicated that managing conduct is an increasingly important part of their role.
This was reaffirmed in our recent Director events held in Sydney and Melbourne where over 50 of Australia’s most senior, influential and experienced Directors came together to discuss, define and debate how good conduct can present opportunities for strategic advantage.
It sounds straightforward, but in a multi-faceted organisation, setting good conduct, whether top down or bottom up, is increasingly difficult to manage, monitor, and maintain.
There is simply no room for anything to fly under the reputation radar anymore.
Conduct: two clear concepts
As conduct increasingly comes under the spotlight, the two clear concepts that define it are:
- The importance for organisations to be equipped to deliver fair and suitable outcomes for key stakeholders, including clearly defining and articulating what those outcomes should be
- The manner in which an organisation monitors and supervises key practices is important to enable them to demonstrate that they are delivering fair and suitable outcomes for key stakeholders.
Now more than ever, the tone from the top needs to be ‘echoed from the bottom’.
Five in focus
What does this all mean for the Non-Executive Director (NED) community? Five key points stood out from our series of conduct events that all NEDs can take on board:
- Culture is fundamental in shaping conduct and it cannot be delegated. It must be on the executive’s list of top priorities as well as a feature of board discussions
- Values – C- suite executives need to own their organisation’s values. They need to determine how they relate to business strategy and take responsibility for shaping them. Being able to walk the talk is paramount, as they reflect on the impact of their own behaviours to achieve the desired culture
- Conduct is increasingly recognised as part of a company’s DNA and the way an organisation does business
- Transparency is a core focus – it is the window into trust and enables a robust foundation of accountability
- Understanding – it is important for organisations to understand the outcomes they want to deliver to key stakeholders and demonstrate that they do in fact deliver those expected and agreed outcomes.
Asking the right questions
From insights to analysis, having a framework of questions can drive a firm wide responsibility around conduct.
These are some of the critical questions NEDs have been asking to ensure their organisation’s behaviours and practices deliver fair and suitable outcomes for customers, employees, suppliers and markets:
- Does our culture enhance or undermine our governance, risk and controls environment?
- Where are there conduct vulnerabilities within our organisation?
- What gets in the way of us delivering all our expected outcomes?
- Where are the opportunities within our organisation to deliver expected outcomes?
- Do our frameworks equip us to deliver expected outcomes and monitor these outcomes?
Overall, it’s critical that across an organisation’s agenda, conduct moves front and centre stage.