Boards must exert influence to prevent scandals
Companies can end up in high-level crises due to toxic internal policies that go unchallenged. When an organization’s whole culture becomes wrapped up in problematic practices, it’s hard to root those issues out. This is where a sound, diligent board of directors comes in. Forbes recently explained that oversight from outside directors is one way to detect and correct worrisome policies before they turn into ethical pitfalls. (Mar.13, Sherman)
Scandals such as the Wells Fargo debacle are tied to norms and expectations that have become twisted. When these issues emanate from seemingly benign strategies or policies from top executives, they can be hard to detect. Board members who have taken on corporate governance and ethics duties should ensure they are gathering information from sources other than company leaders’ reports. While this may seem like a lack of trust, it’s an important part of providing real oversight.
Working with independent sources to verify that operations are proceeding in a healthy and ethical manner can save companies from crises down the line. Boards that take on this role, gathering data from a variety of channels and putting in more than the minimum mandated effort, can keep their firms from going down the path of Volkswagen, Wells Fargo and others.
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