Ethics, culture and the board

The tone for any organisation is set from the top. The board sets the values that are to be lived by the organisation and maintains oversight to ensure they are being adhered to.

Board culture

The board itself has a culture: visible patterns of behaviour which emerge from the less visible shared values that have become integrated into how the board works. Some of these values and assumptions are demonstrated in:

• the board and director roles – is the board more of an ‘institutional guardian’ or a ‘public watchdog’? Are board members more ‘free agents’ or ‘group members’?
• the relative power of the board and the executive
• the board’s approach to ethics
• the relative board focus on internal versus external considerations or short-term versus long-term issues
• the extent to which the board focuses on task versus relationship matters

However, a board must ask itself how far the organisational culture stems from the board, and how far the board culture is a reflection of the wider organisational culture. In most cases, it is likely a combination of both.

One determining factor in how the board influences the wider culture can be its composition and the method of appointment of board members. A new board member joining from within the organisation or the sport will bring their cultural expectations moulded by their time interacting with the organisation. An external appointment is less prone to adopt the existing culture of the board, potentially bringing some aspects that may adjust the culture, though they will be unlikely to totally change the existing culture, at least not immediately.

Influencing and nudging the board to recognise the existing culture – building on the positives and marginalising the negatives – can create a board that has greater effect and impact. Board members themselves may be too close to the practicalities, discussions and operations to have a clear view of the culture. Therefore, the most insightful observers of organisational culture are often outsiders. Equally, the individual sitting outside or alongside the board, but within the organisation, can also have insight into the culture of the board and can become a positive influence if there is a need for adjustment or change.

Boards can influence their cultures by:

• making explicit their assumptions around these issues so they can be reconsidered if necessary
• role-modelling (especially by the chair)
• communicating more widely
• increasing board diversity

Ethical culture through board team trust

If an ethical culture is dictated by how a board governs, what will most inform a board’s attitude? Cass Business School’s corporate philosopher Professor Roger Steare argues that it is not through a fixation on additional compliance and structural policies. Instead, a board culture that manages all elements well will be based on shared values and an understanding of the ‘spirit of the law’. This arises from individual character and integrity and will then inform judgement. In turn, this creates behaviours of trust, both within the boardroom dynamic and also outside the boardroom between the board and its key stakeholders. Therefore, an ethical culture in the boardroom – one that will be able to manage all elements appropriately – is one that is based on trust.

This conclusion is similar to the argument made from research by the Great Place to Work Institute, a global workplace consulting firm that compiles best workplaces lists in 29 countries. Its research showed that trust is the bedrock of a positive organisational culture and that a high trust culture defines a great workplace regardless of organisational size, sector or country. Therefore, the ethical practice of developing trust within the board team becomes important.

Trust will bring a higher level of psychological safety, enabling a team to benefit from higher levels of cognitive conflict.

One of the ways that team trust has been conceptualised and measured is through Stephen Covey’s work on the ‘speed of trust’ and his Team Trust Index. His research identifies 13 behaviours that can be measured and benchmarked to high-performing teams. The questions explore the results of self-reported trust in each behaviour – i.e. ‘How do you typically behave within this team?’ – and asks each individual to rate members of the team in each of the behaviours.

The behaviours break down i