Effective Corporate Governance and Accountability: How Boards Must Shape Culture

We live in an era that demands a higher standard of corporate governance and accountability, and a values-based code of conduct, one that goes beyond what the law requires. Under the U.S. Sentencing Guidelines, boards hold the ultimate responsibility for corporate ethics and by extension their expression in a formal code of business conduct. Corporate boards are increasingly expected to demonstrate ethical leadership in order to ensure their organization's culture. Culture, not compliance; and values, not rules are the lens by which a company's corporate governance and accountability will be judged from now on.

In light of these new standards for ethics in business, boards must help their organizations transition from a culture of rules and laws to a culture of principled performance to accomplish their oversight responsibilities. In a self-governing culture, employees are taught to conduct themselves according to values such as honesty, trust, respect, integrity, openness and responsibility. Values, outlined in a formal code of conduct, inspire people to do the right thing. It is the responsibility of boards to lead the way by example through using an effective framework for corporate governance and accountability.

The U.S. Federal Sentencing Guidelines now make it clear that responsibility for good values is a top-down affair, starting with effective corporate governance and accountability. Here are five ways for board members to foster a strong ethical corporate culture to help their organizations succeed and win:

1. Invest sufficient time in the right areas by making business ethics and culture a priority throughout every level of the organization.
2. Find out what is going on with your own eyes and ears by gathering objective information and going "into the trenches" to interact with business units.
3. Help the company enlist the right people who value character and ethical leadership as well as skill.
4. Examine, ask and assess the essential questions to minimize the chance for future surprises.
5. Align motivations, incentives and inspiration to create a committed culture of enduring significance and value.

Since 1993, LRN has been a pioneer in the field of ethics training, helping nearly 300 companies to build a higher standard of corporate governance and accountability, by creating and implementing effective corporate ethics training and compliance risk programs into practice.

LRN's dedicated team of 350 professionals brings a wealth of experience ranging from academia, business, multimedia, software and technology to work with you to create a culture that instills corporate governance and accountability with new communication and educational training tools that promote and reinforce your code of business conduct as well as your compliance training program. Go to LRN.com to learn how you can develop corporate compliance and ethics training programs and that will inspire principled corporate governance and accountability throughout your organization.