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Building High-Performance Boards
By- Institute of Directors | Authored by- Mr. Praveen Krishna | Mr. M. P. Vijay Kumar
Feb 07, 2025
Effective Corporate Governance with Ethical Business Conduct (EBC)
In today's rapidly changing business environment, a high-performance board goes beyond mere decision-making. It serves as the backbone of a company's strategic direction, ethical standards, and sustainability objectives. Successful boards integrate effective corporate governance (CG) with Ethical Business Conduct (EBC), creating a foundation for long-term competitiveness, organizational growth, and value creation.
Ethical conduct is not simply about compliance; it creates lasting value through trust, transparency, and accountability.
EBC as a source of competitive advantage
A strong EBC framework does more than ensure legal compliance; it provides a vital competitive edge. Organizations that promote transparency, fairness, and accountability enhance their reputation, attracting stakeholders who align with these values. This trust fosters strong, long-term relationships with employees, customers, suppliers, and government entities, helping the company build lasting partnerships.
Additionally, with increasing consumer and investor focus on ethical practices, companies committed to EBC find themselves at a strategic advantage. Ethical conduct not only safeguards the company's reputation but also mitigates risks such as fraud, corruption, and legal repercussions. By adhering to high ethical standards, boards can protect the organization's market position and ensure its continued success.
With increasing consumer and investor focus on ethical practices, companies committed to EBC find themselves at a strategic advantage.
Understanding ethical challenges
Ethical challenges are diverse and dynamic, varying across industries, regions, and organizational scales. They are continuously shaped by evolving societal norms, environmental issues, and technological advancements. For instance, the growing emphasis on sustainability and climate change demands greater environmental transparency from businesses.
Boards must remain nimble, continuously reassessing and adapting their governance frameworks to stay ahead of emerging ethical challenges. This responsiveness ensures that businesses align with shifting stakeholder expectations, maintaining both ethical integrity and a competitive edge.
Corporate Culture: The Board's Central Role
Boards play a critical role in shaping corporate culture, influencing decision-making, behavior, and long-term sustainability. To foster a high-performance board, it's essential for directors to establish and promote a corporate culture aligned with the company's core values and strategic vision. Emphasizing accountability, transparency, and ethical behavior should be at the heart of the company's operations.
It is also vital for boards to evaluate their organizational culture regularly, ensuring they practice the values they wish to instill across the company. Self-assessment helps ensure that governance strategies reflect the company's ethical commitments. Using tools like employee surveys and cultural audits provides valuable insights into cultural alignment and identifies areas for improvement.
By setting up clear channels for feedback, boards can enhance cultural alignment and promote continuous improvements in behavior. This ongoing evaluation ensures that the board remains accountable and fosters an ethical, performance driven environment.
Data-driven insights: Uncovering hidden patterns
In the modern business world, high-performance boards must utilize data analytics to gain deeper insights into organizational performance. Advanced data tools allow boards to detect trends and underlying patterns, making it easier to align strategies with ethical standards and sustainability goals.
Granular data collection—such as employee engagement metrics and customer feedback—gives boards the insights needed to evaluate the health of the organization. Monitoring factors like turnover rates and leadership effectiveness can uncover potential challenges or opportunities that might otherwise be overlooked. By correlating data from financial performance, customer satisfaction, and compliance, boards can make informed, ethical decisions that drive both business growth and integrity.
Interactive dashboards and real-time data tools enable boards to adjust strategies quickly, ensuring responsiveness to emerging challenges. This datadriven approach provides a competitive advantage, helping boards navigate the ever-changing business environment.
A practitioner's guide to implementing an ethical morale across the organisation
3 Key Ways Board Members Impact EBC
Board members are crucial in shaping the ethical culture of an organization. One of their most significant roles is to ask, "Is it ethical?" at each stage of decision-making. This simple yet powerful question ensures that ethical considerations remain central to business operations.
Boards also set the tone for leadership behaviour, fostering a culture of transparency and accountability across the organization. By holding executives accountable for their actions, boards establish a foundation of trust and integrity. Ethical behaviour at the top level influences the broader organizational culture, ensuring that ethics are integrated into every facet of the business.
Moreover, boards influence employee conduct by aligning incentives with the company's ethical values. When employees are rewarded for ethical actions, they are more likely to behave responsibly, reinforcing a culture of integrity. Aligning rewards with ethical behaviour strengthens the company's commitment to corporate responsibility.
While no organization is immune to mistakes, the EBC framework encourages boards to address errors openly, take corrective actions, and communicate transparently. Acknowledging and resolving issues promptly preserves stakeholder trust and reinforces the company's commitment to ethical conduct.
The Sify Way: Tenets for ethical business conduct
Sify's approach to ethical business conduct has been honed over 25 years and is built on seven core principles:
• Put customers' needs first
• Be accountable
• Treat others with dignity
• Be action-oriented
• Have the courage to confront issues
• Always remember that you are part of the team
• Protect the company's interests
These guiding principles form the foundation of Sify's ethical culture and offer a model for other companies looking to establish or strengthen their own EBC framework.
Conclusion
High-performance boards excel by seamlessly integrating corporate governance, sustainability, and ethical business conduct. By prioritizing EBC, shaping a strong corporate culture, and leveraging datadriven insights, boards can nurture long-term relationships with stakeholders, ensuring organizational success. Ethical conduct is not simply about compliance; it creates lasting value through trust, transparency, and accountability.
Boards that regularly assess their cultural alignment, promote ethical behaviour, and adapt to shifting business dynamics are best positioned for sustainable growth. A holistic approach to governance enables high-performance boards to drive future success, ensuring resilience and competitiveness in an ever changing market.
Back to HomeAuthors
Mr. M. P. Vijay Kumar
He is the Executive Director and Group CFO of Sify Technologies. He is also an Independent Director and Chairman of the Audit Committee on the Board of The Life Insurance Corporation of India and an Independent Director on the Boards of Geojit Financial Services Limited and Heritage Foods Limited. He also serves as a Member of the IFRS Interpretation committee of International Accounting Standards Board and IFRS Advisory Council of the IFRS Foundation, London.
Mr. Praveen Krishna
He is the Head of Investor & Public Relations, Corporate Communications at Sify Technologies, India
Owned by: Institute of Directors, India
Disclaimer: The opinions expressed in the articles/ stories are the personal opinions of the author. IOD/ Editor is not responsible for the accuracy, completeness, suitability, or validity of any information in those articles. The information, facts or opinions expressed in the articles/ speeches do not reflect the views of IOD/ Editor and IOD/ Editor does not assume any responsibility or liability for the same.
