For many businesses, ethics, values and beliefs will be challenged when financial survival is at stake. This is when boards need to act as a moral centre.
In the midst of all the uncertainties surrounding COVID-19, how the board agrees on priorities with management and demonstrates the values of the organisation in acting on those priorities matters. The processes used and decisions made will reveal the moral centre of the organisation during the crisis and beyond. Most decision processes include steps for assessing the situation, generating options, evaluating options and selecting a course of action. What is rarely described in these processes is the step that can be most stable, that can provide an anchor, a solid source of centre — core beliefs and values. These are the elements that shape mindsets and understanding of the most relevant options; and for making choices about what can be done versus what should be.
20 tips for directors to be at their best during the crisis
A crisis such as this is all about rapid innovation under stress and amidst fear. There is fear of risk to lives and livelihoods, fear of unpredictable cashflow — or, for some, no cashflow — fear of short-term and long-term unknowns. This is unlike the crises covered in most crisis management plans. Standard risk management frameworks for evaluating likelihoods and consequences apply to only a small portion of the issues currently in play. Boards and management are faced with myriad moral conflicts around how to behave with levels of uncertainty that cannot be measured.
In the absence of real agreement about what espoused values mean in action, the decisions taken now will reveal what really matters to those in authority. Will it be business vs people — a failure of imagination based on a rush to action, in turn based on mindsets and routine thinking about enforcing rules or agreements made before the crisis? Or will it be something else?
Ethics are paramount
When faced with choices between equally unpalatable alternatives, a way forward for boards is to focus not on answers, but on decision processes that are ethical and allow negative effects to be mitigated. This is where collaboration and creative processes are valuable. Difficult decisions will have to be made. But if the board can make them while respecting the rights and views of important stakeholders (customers, staff, suppliers, communities) and shareholders, it may be possible to find a more palatable, positive way forward.
The banking Royal Commission noted, “Proper governance requires setting priorities. Setting priorities requires choices. Sometimes the choice is between conflicting goals or conflicting courses of action… there remains a reluctance in some entities to form and then to give practical effect to their understanding of what is ethical, of what is efficient honest and fair, of what is the ‘right’ thing to do.”
We have witnessed communities and customers calling for boards to ensure ethics are considered at every stage of decision-making. Ethics, values and beliefs will most certainly be challenged now while financial viability is front and centre for so many businesses. Now is the time for boards to step up and ensure there is a moral centre guiding the responses of their organisation to COVID-19.
Dr Melinda Muth FAICD is an AICD facilitator and co-author of Setting the Tone from the Top: How directors use conversation to shape culture.
Making the tough calls
One of the most difficult decisions an employer will make is whether or not to dismiss employees during an economic downturn. The Ethics Centre has published a list of ethical considerations that might be taken into account by employers in this situation. This is an edited extract of an article by The Ethics Centre.
Save what can be saved Don’t destroy all for the sake of a few.
Give reasons Show people the proof of necessity.
Retain the essential Some people are of vital importance.
Cut the optional If feasible and practical, use income for the essential purpose of preserving jobs.
Treat everyone with compassion Both those who leave and those who remain will be wounded by the decisions you make.
Share the pain Consider offering everybody the opportunity to work less hours, for less money.
Seek volunteers If sacrifices must be made, ask for volunteers.
Honour your promises Be bound by specific commitments.
Look to the future Ensure your purpose inspires those who remain.
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