THE ROLE OF STATE CORPORATIONS BOARDS IN PROMOTING ETHICAL LEADERSHIP

Transcription

1 R E P U B L I C O F K E N Y A E X E C U T I V E O FFICE OF THE PRESIDENT THE ROLE OF STATE CORPORATIONS BOARDS IN PROMOTING ETHICAL LEADERSHIP State Corporation Boards Induction: Mombasa Continental Resort, 28 th September 5 th December, 2015

2 Ethical Leadership and the Constitution Mwongozo is anchored on The Constitution of Kenya 2010: Article 10 National values and principles of governance Chapter 6, Article 73 Emphasis on public trust, honor and dignity of public offices Article 232 Reinforces personal Integrity, values and principles of public service., which also provides for efficiency, effectiveness and economic use of resource

3 BACKGROUND. Ethics- the moral principles that govern a person s or group s behaviour Ethics is the foundation of good governance. Ethical leadership is the willingness to accept responsibility and involves acting and leading ethically Ethical leadership requires a clear and coherent ethical framework for decision making.

4 Mwongozo Chapter 4: Ethical leadership and Corporate Citizenship Governance Statement The operations of the organization should be guided by ethical practices that seek to promote good corporate citizenship. Governance Principle The organization should commit to operate ethically and promote corporate social responsibility and investments.

5 4.1 ETHICS AND INTEGRITY Integrity is defined as. adherence to moral and ethical principles The board should: Provide ethical leadership in the management of the organization. Establish the core values of the organization and ensure that the values are aligned to the constitution of Kenya and underpin sustainable practices. Ensure that all members of the organization adhere to the core values. Ensure that the corporate strategy includes measurable targets for improving ethical behavior. Ensure that the ethical practices of the organization are effectively monitored.

6 4.2. Code of Conduct and Ethics A set of principles designed to help organizations conduct business honestly and with integrity. The board should: Ensure that a code of conduct and ethics is developed. Ensure that all members of the organization subscribe to the code of conduct and ethics. Review the code of conduct and ethics as necessary. Promote ethical conduct and sanction misconduct. Ensure that a corporate gifts policy is in place. Receive from the committee responsible for governance and compliance, a report on the level of adherence to the code of conduct and ethics by members of the organization.

7 . 4.3 Conflict of Interest A situation that has the potential to undermine the impartiality of a person because of the possibility of a clash between the person's self-interest and public interest. The board should: Ensure that a policy on management of conflict of interest is place. Board members shall: Declare any real or perceived conflict of interest with the organization upon appointment to the board Declare to the board any real or perceived conflict of interest that may subsequently arise Not take part in any discussions or decision-making regarding any subject or transaction in which they have conflict of interest Not influence in any manner whatsoever decision-making on any matter in which they have interest.

8 . 4.4 Corporate Reputation and Image Reputations are overall assessments of organizations by their stakeholders. The board should: Ensure that the organization develops a strategy on corporate reputation and image. Promote a positive image of the organization.

9 4.5 Corporate Social Responsibility and Investment CSR," is a corporation's initiatives to assess and take responsibility for the company's effects on environmental and social wellbeing The board should ensure: That a policy on good corporate citizenship is in place That the policy on good corporate citizenship is implemented That a sustainable and appropriate budget is allocated for corporate social responsibility and investment That the organization respects and promotes sustainable environment

10 . 4.6 Whistle-Blowing Whistle blowing reveals wrongdoing within an organization to the public or to those in positions of authority. The board should ensure that: There is a whistle-blowing policy in the organization The whistle-blowing policy protects and prohibits victimization of those who disclose or provide information in good faith An independent party is responsible for receiving and investigating reports received

11 Importance of ethics in the Public Sector Ethical behavior leads to trust and a sound enduring reputation for an organization Improves transparency and accountability in the state corporations Leads to prudent utilization of public resources Reduces corruption due to improved moral standards

12 Importance of ethics in the Public Sector Leads to competitive advantage Leads to improved performance and revenues Attracts investors and enhances investor confidence Improves legal and regulatory compliance Ethical leaders build a Legacy

13 Challenges to Ethical Leadership Challenges are situations which hinder the fulfillment of ethical requirements. Self-Interest Combination of commercial pressure and inherent greed. Advocacy Temptation to support an opinion purely to advocate a position that is not supported with relevant evidence or degree of objectivity Familiarity Nature of relationship with a party becomes too sympathetic that it compromises the objective requirement of the code

14 Challenges to Ethical leadership Intimidation Where there exists directly or indirectly material or psycho-social threats that prevent one from working objectively Futility of determinism Resignation to the status quo: We have trouble fighting own natural inclination so why bother

15 Role of Leadership In Ethical Culture The role of leadership is critical in creating and upholding ethical culture through: Rewarding and celebrating ethical conduct Demonstrate unequivocal importance of ethics from the top (CEO-Chief Ethics Officer!) Making ethics essential for career advancement Publicly reward ethical behavior and punish lapses

16 Food for thought: Singapore 1963 Singapore today

17 Thank You