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Four Vs Model of Governance
Better Board Governance (BBG) presents its four Vs of governance as a comprehensive model to improve board and organization performance. The four Vs are: Virtue, Vision, Value and Victory.
V1—Virtue
The continuing raft of corporate scandals bears witness to the notion that business ethics as currently defined and practiced in the United States have failed to provide the framework for “doing the right thing” in the boardroom. he companies most in the news for the ethical lapses like Adelphia Communications, Enron and Worldcom each had a carefully crafted and published “code of ethics” that did not prevent wrongdoing. Most codes of ethics in American corporations can be reduced to the following:
Don’t break the law or violate corporate policies; and Follow a set
of platitudes that encourage “nice play” with other employees
In his essay entitled “Complete Guide to Ethics Management: An Ethics Toolkit for Managers,” Carter McNamara noted, “Codes are insufficient if intended only to ensure that policies are legal.” How then can a board of directors ensure that an organization and all its people behave as they should?
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First, stop talking about ethics and start focusing on virtues. For decades, business ethics has been considered by many as “what one can get away with short of breaking the law.” More recently, it appears that the standard has been further relaxed to “break the law and see if one can get away with it.” While business ethics may have careened into the realm of the situational (read irrelevant), virtues have not. Virtue remains stalwart, resolute, unyielding, and universally accepted as portraying excellence in moral character and behavior.
Second, place the responsibility for shaping virtuous behavior, individually and institutionally, squarely on the shoulders of the board. Keep the onus for developing, promoting, and monitoring virtuous behavior out of the hands of the human resources or legal departments and put it where it belongs, at the top of the organization. Employees, suppliers, customers and investors will notice the increased visibility and be ready to adopt new standards of behavior.
Third, appoint a board member as virtues leader. Many companies have gone to the idea of a “lead” director that places additional responsibility and authority in the hands of one director who is uniquely qualified to perform certain leadership functions. The concept of a “virtues” director who can not only model moral behaviors but also promote them in others should not be too foreign a concept.
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