Personal responsibility, is this the remedy to more regulation?

We launched the start of our 2009 Building Public Trust programme last week with our flagship dinner at which we presented a number of awards. Ian Powell, the UK firm's chairman highlighted in his keynote speech that a recent Ipsos MORI poll indicated that business leaders have now joined politicians on the lowest rung of public confidence - some accolade! He went on to say that a disproportionate amount of time had been focused on executive remuneration rather than the crucial area of personal responsibility. He emphasised the need to "avoid a world where those in authority are encouraged simply to go with the flow, to believe unquestioningly the consensus or to assume someone else is in control. Saying no or asking the difficult or, on the face of it, the stupid question, requires courage and a sense of personal responsibility".

Also at the dinner we presented a lifetime achievement award to Sir John Parker, for the work he has done over his career to build trust and confidence in the organisations, both public and private, with whom he has been associated. In his acceptance speech he made a wonderful comment which resonated with the audience - "I've also learned that it's very important in boardroom life, for all participants to leave our egos at home. Your partner or spouse will be much more capable of managing it, than you are and your company will be all the more successful without it being present".

In the same vein, I have recently been involved in discussions around changes to the governance code here in the UK - the Combined Code. It is encouraging that the UK regulators recognise that the quality of corporate governance ultimately depends on behaviour not process. Furthermore, in trying to lift the veil on effective governance there is also a growing recognition that what needs to be reported should focus more on the substance of board activity - what has the board actually done - rather than the current focus on the form - the terms of reference of committees, who sits on each committee etc.

I have in recent years had the pleasure of working with Professor Roger Steare of Cass Business School. Roger, as some of you will remember, has written extensively on the behavioural aspects of business and business ethics. We decided a few weeks ago to write a joint submission in relation to a review which is currently taking place into the effectiveness of the UK Combined Code, focused on the behavioural aspects of good governance. I attach this letter for your information and I know Roger and I would value others’ views on its content and ideas. Governance, as we know, is not an easy issue but I sense we are becoming more aware of the behavioural challenge at its heart and are recognising that the box ticking model on which so much of the western world relies is of limited value.

As always, let me know your views by commenting on the blog, or by email.

David

Comments

[Neil]

David,

If you are interested in increased personal responsibilty as a response to the financial crisis, you should read a report called "Risk Management Gets Personal" from Prof Julien Berkinshaw at London Business School. I came across it when researching a magazine article about risk. A link here:

http://www.aimresearch.org/index.php?page=risk-management-gets-personal