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The Chair's blog - March 2019

31 Mar 2019

charlotteAs May draws near, we’re coming up to a significant 10 year anniversary – though not one that will be marked with any celebration.

It was a decade ago that the Daily Telegraph began publishing leaked details of MPs expenses, leading to outrage at the mockery some individuals had made in their use of taxpayers’ hard-earned money.

The scale and nature of some of the claims sparked derision and fury in equal measure. We wouldn’t have expected our colleagues, friends, neighbours and indeed the average person to behave in that manner, let alone our elected representatives.

The wider debate, however, around the conduct of those in the public sphere was not new. In 1994 the UK Government had established a Committee on Standards in Public Life. The Committee’s then-chair, Lord Nolan, was tasked with coming up with recommendations to improve behaviour and standards.

In the Committee’s first report, it urged all bodies to draw up Codes of Conduct and incorporate means of independent scrutiny, and also set out what it described as the seven principles of public life: Honesty, Integrity, Selflessness, Leadership, Objectivity, Openness, and Accountability.

In the same report, the Committee underlined that “conduct in public life is more rigorously scrutinised than it was in the past”. This was said in 1995. In the 24 years since, and the rise of social media, the trend seems only to have intensified.

This debate has immense relevance to businesses big and small. CEOs of large companies have long been in the spotlight, but never more so than today, and never with so much riding on their ability to deal with this attention. To take an extreme example, when last year Mark Zuckerberg faced questions at a congressional hearing, his performance saw the value of Facebook rise by $17bn in a matter of hours.

But firms of all size are finding their actions as an organisation more and more under scrutiny too. Suppliers, consumers, and workforce alike are a few taps of a keyboard away from broadcasting their views. Few businesses can afford to go viral for the wrong reasons.

In some respects, you could argue that the Nolan Principles of Honesty, Openness, and Accountability have been foisted upon private enterprises whether they would pursue them or not. In order to make the most of this new reality, businesses must seek to embrace these principles where they can, instilling them across their culture. This is something we are acting upon at the IoD.

Speaking of culture, one way by which boards are increasingly seeking to gauge the culture of their organisation is through the internal audit function. While internal audit has long had an important role flagging up risks, more and more firms are considering its potential to encompass a broader scope, acting as a meaningful barometer for the board across various areas.

With this in mind, the IoD was delighted to team up with the CIIA, leading to the launch of two new reports on the topic last month. The first report provides guidance for directors on the ins and outs of internal audit, while the second sketches out how the profession’s impact on corporate governance may increase in the years ahead.

As an organisation, I think it’s important that we are open to such collaboration when it benefits our members and can have a broader positive social impact. For instance, visiting IoD Yorkshire to give their annual lecture in March, I was enthused to learn more about the work they are doing to link with local business schools, including at Leeds University, to enhance our service to members while boosting the business community as a whole.

Earlier in the month, I also much enjoyed joining fellow leaders of other business groups for a ‘Question Time’ panel event to celebrate Wales Week and St David’s Day.

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