CEO - Chief Ethics Officer?

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Presentation transcript:

CEO - Chief Ethics Officer? Sun Microsystems Chief Ethics Officer What is a Chief Ethics Officer? What are the pros & cons of having a Chief Ethics Officer? Can ethical standards be imposed top-down? Are Chief Ethics Officers just a fad? Dell Chief Ethics Officer Team: Danny, Krista, Richard

What is a Chief Ethics Officer? What are the key responsibilities of a CEO? Ethics and compliance are still fundamentally line management responsibilities CEO’s role to provide dedicated leadership of the organisation’s ethics and compliance program policy setting and code of conduct creation ethics and compliance education and training operation of an internal reporting mechanism (e.g. whistle blowing) consistent internal investigations and resolution dissemination and monitoring establish organisational support services guidance on ethical or compliance aspects of decisions Why has this new role come about? Recent corporate scandals due to unethical corporate behaviour Increased corporate stakeholder and society concern for sound business practices

Adoption of CEOs has really only occurred within the US

And now its time for…

Ethics BINGO!!!

What are the PRO’s of a CEO? Increases investor confidence in the company Promotes an ethical culture Can act as an advisor to employees on ethical dilemmas Ensures that decisions made by the company are ethical, and prevents potentially damaging decisions Provides a vehicle for dealing with stakeholder concerns Provides better protection to shareholders and other stakeholders Can identify problems and fix them Ensures compliance with increasingly complex regulations Ethical focus may be competitive advantage for the company

What are the CON’s of a CEO? Potential loss of investor confidence in the Chief Executive Officer and the company Additional cost to shareholders CEO may not be taken seriously by Senior Management Potential conflict of interest (salary & bonuses) May lead to decisions that do not maximise shareholder wealth Could lead to worse behaviour if ethical responsibility is outsourced to the CEO May create “police-state” culture within the company

Can ethical standards be imposed top-down? Senior Executives have a critical role to play in creating an ethical culture Top-down imposition of ethical standards is only one way to achieve this Other means include: Leading by example Rewarding and championing ethical behaviour Hiring ethical people Conducting training Incentive alignment

We believe that Chief Ethics Officers are here to stay Many stakeholders are demanding CEOs Legal incentives Investor demand Additional reporting and transparency requirements CEO role supports CSR initiatives It has existed in some form in many businesses previously Legal, HR, Compliance, Risk Management are all areas which have handled it in the past Recent scandals have shown that conflicts of interest can arise from this, thus leading to the creation of the new role