Chapter 9 (Page 79)
The Role of Governance – Ensuring Integrity in Business and Academia
Mordechai Katash
What is Integrity?
Integrity is a multifaceted concept that lies at the heart of moral philosophy and ethics, encompassing honesty, consistency of character, and adherence to moral and ethical principles. Integrity is a quality that is admired in individuals, institutions, and societies alike, signifying the coherence between one's beliefs, words, and actions. Further, Integrity implies a firm adherence to a strict moral or ethical code.
At its core, integrity involves honesty, but it extends beyond truthfulness to embody the wholeness of a person's character. It is about being true to oneself and maintaining consistency in actions, values, methods, measures, principles, expectations, and outcomes. As an example, Integrity can be seen when individuals act according to their beliefs and values across all aspects of life, demonstrating reliability, trustworthiness, and fairness in personal, communal and professional contexts. It requires courage, resilience and a long- time horizon thinking, as maintaining integrity often means standing up for what one believes is right, even in the face of adversity or when it comes to personal cost.
In organisational contexts, integrity is foundational to establishing trust and ethical conduct - as integrity must be exemplified, and taught by Governance and Executive Leadership personnel. It affects the culture and ethical climate of the organisation and has a positive correlation with influencing how decisions are made and how employees interact. A culture of integrity is characterised by transparency, fairness, and accountability, where ethical behaviour is encouraged and celebrated, and unethical practices are promptly addressed and are not tolerated.
The significance of integrity goes way beyond individual, communal and organisational levels, impacting society as a whole. Societies that value integrity tend to foster justice, equality, and respect for all individuals, creating an environment where ethical norms and principles guide behaviour, and where individuals can trust in the fairness and transparency of governmental institutions, and private & publicly listed entities.
One of the most comprehensive research and discussions on integrity can be found in the work of philosopher Stephen L. Carter in his book "Integrity" (1996). Carter explains integrity as a personal virtue but also an absolute societal necessity, emphasising its role in the fabric of social trust and the functioning of democratic institutions. In his writing, Carter argues that integrity involves three key steps:
1. Establishing what is right and what is wrong;
2. Acting on what one has established, even at personal cost; and
3. Stating openly your fundamental values, as they pertain to integrity.
Carter's analysis highlights the complexity of integrity and its critical importance in all spheres of life.
Integrity, therefore, is not just an ethical directive but a lived experience, reflecting a commitment to ethical consistency that underpins trust, accountability, and respect in interpersonal, organisational and communal relations
What is Governance?
Governance is a concept that puts in the spotlight the structures, processes, and traditions through which power is exercised and decisions are made and implemented across various types of organisations, including governmental bodies, corporations, and non-profit entities. It is essentially about who has power, who makes decisions, and how other stakeholders make their voices heard.
The Governance Institute of Australia suggests that “Governance encompasses the system by which an organisation is controlled and operates, and the mechanisms by which it, and its people, are held to account. Ethics, risk management, compliance and administration are all elements of governance.”
The essence of governance lies in its ability to establish the policies and practices that guide an entity, ensuring that it achieves its objectives in a manner that is accountable and responsive to the needs of all stakeholders involved. This involves a complex interplay of legislation, regulations, company or institutional policies, and customs that define the relationships between various stakeholders, including the board of directors, managers, shareholders, creditors, auditors, regulators, and other parties with interests in the organization.
At the heart of governance is the principle of accountability. Entities are expected to conduct their affairs under a framework that allows for effective oversight, ensuring that actions and decisions are taken responsibly and in the best interest of the wider community. This includes mechanisms for monitoring performance, enforcing standards, and taking corrective action when necessary.
Transparency is another critical component of governance. It requires that decisions and their enforcement are conducted in a manner that follows clear rules and procedures, and that information is freely available and directly accessible to those who will be affected by such decisions and their enforcement. This openness is crucial for building trust and ensuring that stakeholders can make informed decisions about their interactions with the organization.
In the public sector, governance relates to the processes by which public institutions conduct public affairs and manage public resources. The United Nations Development Programme (UNDP) highlights principles such as participation, rule of law, transparency, responsiveness, consensus orientation, equity, effectiveness and efficiency, accountability, and strategic vision as key to good governance. These principles ensure that public administration is conducted in a manner that is inclusive, fair, and fosters economic and social development.
Good governance is essential for any society to function effectively. It ensures that social and economic resources are managed responsibly and that decisions are made in an equitable manner and in the best interests of the population. The World Bank has identified good governance as a key ingredient for sustainable development, emphasizing the importance of accountability, effective public service delivery, and the management of a country's resources for the benefit of its people.
In summary, governance is a very broad and multifaceted concept that plays a critical role in the success and sustainability of organisations and societies; hence decision-makers must contextualise and create a governance structure that is customised and suitable for its charter, constitution and activities.
The governance structure of Corporate and Academia
The governance structure of corporations is designed to facilitate effective decision-making, oversight, and accountability within the company. It typically involves a set of rules, practices, and processes by which a company is directed and controlled. Most organisations have a written document, such as a constitution, charter, and mission statement, that stresses the purpose the organisation was formed. Key components of corporate governance include the board of directors, executive management, and shareholders.
The board of directors is responsible for overseeing the company's strategic direction, ensuring integrity, and accountability, and making strategic decisions on major company issues. Executive management, including the CEO and other senior executives, handles the day-to-day operations and implements the board's directives. Shareholders, as the company's owners, have the right to vote on critical matters, such as the election of board members and other significant and strategic resolutions.
Effective corporate governance structures balance the interests of a company's many stakeholders, including shareholders, management, customers, suppliers, financiers, government, and the community. Good governance practices are crucial for ensuring transparency, fairness, and accountability within corporations, contributing to their sustainability and the protection of stakeholders' rights. These structures are vital for maintaining investor confidence and trust, enhancing brand equity, increasing customer loyalty and ultimately exceeding the company’s goals and objectives.
The governance structure in academia is crucial for maintaining the standards and integrity of educational institutions. Most higher education institutions have a governance structure that includes a board of trustees or committee members, an academic senate, and an administrative hierarchy, which is typically led by a president or chancellor. In most academic institutions, the board oversees fiscal and policy decisions, whereas the senate addresses academic affairs, and the administration manages the daily operations of the academic institution. This structure was put in place to ensure a division of responsibilities, enabling a balance between strategic oversight and academic freedom.
This tripartite-shared governance model promotes a collaborative environment where each body has defined roles, working together to fulfil the institution's mission while upholding academic excellence and integrity.
Role of Governance in driving a culture of Integrity
Governance plays a pivotal role in fostering a culture of integrity within an organisation. It creates the structural and procedural framework necessary for upholding ethical standards and ensuring that organisational practices are aligned with core values and legal requirements. When governance is robust, it not only enforces compliance but also encourages behaviours that contribute to a trustworthy and principled organisational environment.
The Board of Directors, as part of the governance body, holds the key responsibility of driving and instilling a culture of integrity. They set the tone at the top by clearly communicating expectations and the importance of integrity and openly demonstrating a commitment to ethical behaviour through their actions, which ultimately serves as a model for the rest of the organisation.
Effective governance structures implement policies and mechanisms that promote integrity, such as codes of conduct, ethics training programs, and whistle-blower policies. Governance must also include and initiate rigorous oversight, such as internal audits and control systems, to monitor adherence to these ethical policies and identify and address areas where the organisation may be falling short.
Governance is also responsible for setting up systems for accountability. If breaches of integrity occur, there must be clear consequences and governance mechanisms should ensure that these are enforced consistently and fairly.
In summary, the role of governance in driving a culture of integrity is multifaceted and essential. It involves setting the ethical tone, establishing clear policies, enforcing accountability, promoting transparency, and facilitating inclusive and ethical decision-making. A strong governance framework is the backbone of an organisational culture that values and practices integrity.
References
Carter, S. L. (1996). Integrity. HarperCollins Publishers. Birnbaum, R. (2004). How Colleges Work: The Cybernetics of Academic Organization and Leadership. Jossey-Bass.
Governance Institute of Australia: https://www.governanceinstitute.com.au/resources/what-isgovernance/ Monks, R. A. G., & Minow, N. (2011). Corporate Governance (5th ed.). Wiley. Treviño, L. K., & Nelson, K. A. (2016). Managing business ethics: Straight talk about how to do it right (7th ed.). John Wiley & Sons. United Nations Development Programme (UNDP). "Governance for Sustainable Human Development: A UNDP Policy Document." 1997. Western Sydney University - https://www.westernsydney.edu.au/ World Bank. "What is Governance?" - https://www.worldbank.org/en/topic/governance
Integrity in Business and Academia
Whateley, G. Kopanakis, D and Bofinger, I. (2024) Integrity in Business and Academia Volume 17 ISBN 978-1-7635027-9-6
The term integrity is bandied around a bit these days – but it is a critical element of both business and academia. The more it is talked about – the better. A recent book (Whateley, Kopanakis and Bofinger – 2024) goes into considerable detail on the topic with 29 chapters exploring a range of applications and contexts (both in business and academia) in which integrity plays a vital part in ensuring that standards are maintained and businesses flourish.