Building an ethical decision-making framework and a board putting it into practice takes honest discussion and courage. Facilitator Dr Matthew Turnour FAICD, a director and the chair of Neumann & Turnour Lawyers, discusses decision-making with guest speaker Doug Jones GAICD, group CEO at Metcash. 

    Issues come to boards and directors in a “complex swirl of factors” creating many challenges, says Dr Matthew Turnour FAICD. Making an ethical decision can be hard. By unpacking those factors, Turnour says a board can establish a framework that can guide decision-makers “with good goals and good guidelines” towards the outcomes required under the law, and within the culture of the organisation.

    Start with the right questions

    “Consider for yourself: what are the main reasons or drivers for ethical decision-making?” says Turnour, emphasising this question is a good starting point for board members. “If we don’t adequately frame the questions at the beginning, our chances of getting an ethical decision at the end are significantly reduced. We’ve got to start with asking the right questions.”

    He suggests unpacking the complex issues and notes the need to be conscious of diversity and time pressure. Increasing diversity on boards can slow the decision-making process, with the need to listen to one another and analyse and understand one another’s perspectives, he says.

    “These are not just matters of knowledge, but also matters of courage. If we even know what the answer is, we may be unwilling to decide it. There is a need to be honest about where we are up to on these things and know that it is not just about knowing the right thing, but having the courage to do it.”

    Also, he notes, an increasing expectation of accountability and transparency brings with it the need to find a consensus and be able to explain it.

    Where does ethics sit?

    Turnour says it is helpful to locate ethics between the law and culture. “If the law is what we must do, and it derives from what we should do, then we’ve got a tool for understanding punitive sanctions arising from ethical frames… while the culture of our organisation resides in the hearts and souls of its people.”

    He uses a Good Governance Grid to consider, “Do our goals give expression to ethical beliefs and values that are congruent with the communities in which we work and do our goals comply with the law? Turning to the guidelines, do our constituent documents, our policies, our agreements, the way we document and set the parameters within which we’re going to function — do these express our DNA? Are they acceptable and accepted within the broader community in which we function and do our guidelines comply with the law?”

    Bigger than strategy or purpose

    Ethical decision-making in practice is larger than both strategy and purpose, according to Doug Jones GAICD, group CEO at wholesale retailer Metcash. “It stands to reason that the most powerful articulation of the system is when your purpose and strategy are well-aligned. But those also need to be well-aligned with the board’s interpretation of law, ethics and societal standards, and that interpretation and articulation doesn’t happen without proper consideration,” he says.

    “It’s not set-and-forget. Having a clear view of the ethics that an organisation wants to espouse and wants to live up to, and the societal standards that one wants to conform to, is an important area for the board to consider. It’s an important area for the executive management team as well.”

    Jones notes that a healthy and high-performing board, like any high-performing team, brings a level of humility that keeps it open to different perspectives.

    “Group-think arrogance, if I may say that, and the idea that perhaps we know what we’re doing and we know we don’t need to listen to anyone else, is probably a good indicator that there’s a risk you may be missing someone else’s perspective.

    “So, beyond actively seeking insights, whether it’s data opinions, I would also encourage boards to check in with themselves as to whether they’re open to having conversations that consider perspectives that perhaps are not natural to them.”

    Turnour notes that the “centrality of purpose” described by Jones should drive ethical decision-making and the obsessions that flow from a defined purpose can assist in the implementation, within the context of a particular organisation.

    “How that is drawn out in retail might be quite different from how it would work in the schooling context, or in a mining context,” he says. “We need to bring our own lenses and our own life experiences to the model.”

    This is a summary of the AICD online webinar, Ethical decision-making frameworks in practice, recorded live in November 2023 (recording available until 14 November 2024).

    Find other AICD webinars here.

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