IFA / EDHEC ALUMNI: Ethics and Governance

110 business leaders and administrators were gathered on Tuesday, May 22nd on the Executive Campus of  EDHEC in Paris to discuss ethics and governance: " ethics and governance: the role of the board of governors in ethics of the company ".

What is the consideration of the ethics in the board of directors ?

How the board can make sure that the ethics is applied well in the business operational decisions ?

To answer these questions and feed the writing of a summary by the business ethics commission of IFA, we were lucky to hear personalities' point of view recognized in boards of directors):

Eric de Charbonnière, President of council of surveillance of Michelin, member of the Ethics Board EDHEC
Alain Grossman, Administrator of companies, Administrator of IFA and President of the Business ethics commission of IFA
Prince de Luxembourg Jean Nassau, Chairman-WSSA (Water Solution South Africa), member of Ethics Board
Jean-Louis Flamand, Special Financial Projects, Valve Precision, Administrator of companies and of EDHEC Alumni,
Daniel Lebègue, President of the IFA, Administrator of companies
Geert Demuijnck, PhD, Professor and researcher in the EDHEC,

After an opening of the session by Bruno de Pampelonne, EDHEC Alumni President, CEO at Tikehau IM, who called back the creation of the Ethics Board EDHEC and the partnership EDHEC Alumni / IFA signed in July, 2011, Daniel Lebègue, President of the IFA presented the activities of the IFA and introduces the Ethical subject of Governance.
Geert Demuijnck, PhD, Professor and researcher in the EDHEC, the presenter of the debate, then reminded that the ethics is important for the EDHEC. It is historically anchored in the culture of the School, which has its pond in the North and which values the notion of Responsibility in its credo. The school set up International Ethics Board, composed of managers of companies and of professors. This International Ethics Board aims at exceeding the academic analysis of the stakes in the Business Ethics to confront them with the expectations of the business world and the society. The School also has, integrated the ethics into the programs of the EDHEC Business School. Indeed, as called back by Jean Nassau de Luxembourg during the debate, the ethics is a personal question which must be taught as soon as possible: " what  is just? " And not only " what do we have we the right to do or not? "Because sometimes we have the right to make things which are not ethical. It is for that reason that training Ethics is important, allowing the students to reflect on the good questions and adapt their future leader behavior.

Alain Grossman delivered 9 tracks of reflection about business ethics which articulate around 2 axes:
-      The Commitment, the implication and the time granted by the board of directorsin its functioning to assure the consideration of the ethics in the company: exemplary nature of the board; organization of a code and  of an Ethics Committee, inscription of the ethical questions in the board schedule, drastic selection of the administrators, organization of the debate, introduction of the ethical criteria in the modes of strategic decision.
-      The supervision and the control by the board : make sure of the implementation of the ethical charter in the company, be regularly informed and ask relevant questions, appoint an Ethical person in charge, to organize the debate within the company and the reporting to the executive committee and to the board, take into account the ethical commitment of the managers in their annual evaluation and in the determination of the variable part of it.

During the evening, the following ideas were discussed:
-      The exemplary behavior of the leader and of the board based on the personal conviction is essential.
-      The ethics can be taught and discussed to bring the persons to ask the good questions. The ethics is an individual notion with regard to the morality which is a set of rules. The ethics addresses the leader in its process of decision
-      To Organize the debate around the ethics in the company and in the board is key. First of all to create a common reference table and a free place of exchanges for the various stakeholders of the company but also to avoid the drift bound to the pressure of the figure ( economic and financial performance).
-      The ethics of the affairs builds itself thanks to the crises
-      The dissociation of the powers favors the ethical behavior of the leaders. Tools exist, such as the outer audits in case we have no absolved dissociation between management and board of governors.
- The ways of functioning of boards of directors evolved a lot lately in Europe, favoring the debate and the progress of the Ethics. In the USA, the governance has a bigger wealth and a bigger anteriority than in Europe. It seems that in France we discover now the rules of governance. It may be connected to the fact that the Anglo-Saxon countries are less " banquarisés ": 75 % of the financing of companies results from the market while in France 75 % comes from banks.
-      The Ethics Committee can be connected either with the executive management, or with the board of directors according to the culture of the company. In every case, it has to have a not filtered access to the board and conversely.
-      The evolution of the modes of evaluation of the companies’performance  favors ethical behavior. New modes are introduced as the integration of not economic criteria into the attribution of managers’ bonuses (safety of the employees, the social climate, the carbon footprint) or the reporting RSE which asks to the companies to report their financial extra performance.
-      According to a study over 40 years, companies adopting ethical behavior outperform. A contrario, the costs of the fraud and all the forms of non-compliances of the behavior represent on average 5 % of the GDP (GROSS DOMESTIC PRODUCT) of countries.
     The approach by the risks allows to favor the ethics. Indeed, the majority of the accidents are not economic and financial accidents. Ex: Siemens ( corruption), France Telecom (human being) …
-      Integrate non financial criteria into the strategic decisions of the company allows the progress of Ethics. By ex: in case of major acquisition, are the cultures of the 2 companies compatible?
-      The international development and the meeting of the other cultures bring to an enrichment of the Ethics. The Ethics is global.
The evening continued in a friendly atmosphere where administrators, students of the apprenticeship program, business leaders were able to continue to exchange and to networke around a buffet

More information about  Geert Demuijnck
Find the slides of the presentation