THE BLOG
07/08/2011 06:34 pm ET | Updated Sep 07, 2011

Boards Must Communicate Core Values That Guide Decision Making

The recent verdict in the Casey Anthony trial and the unfolding controversy surrounding News of the World illustrate the inherent uncertainty in our world. We frequently can only anticipate probabilities or likely outcomes of our actions. The greatest certainty is uncertainty. Middle management faces unique external environmental and internal organizational pressures to increase market share and profitability in a difficult world economy. For this reason, directors have a special responsibility to communicate a clear understanding of what standards and values determine what is acceptable and unacceptable conduct in achieving these goals. As many have stated, the tone at the top is critical in effective corporate governance and integrity.

In our criminal justice system a core value is the concern that an innocent person may be wrongfully convicted of a crime. For that reason, the legal standard of proof beyond a reasonable doubt has been used from at least the late 1600s. Most U.S. courts use standardized jury instructions concerning reasonable doubt. A typical jury instruction may say: "Proof beyond a reasonable doubt is proof of such a convincing character that you would be willing to rely and act upon it without hesitation in the most important of your own affairs."

An easy classic formula for business integrity is the Golden Rule. In "your own affairs," would you want done to you what the business is proposing to do? If not, more study and thought is required prior to acting. A fundamental problem may be that the tactics employed, such as those used in obtaining a news scoop, place the viability of the entire organization at risk. Both a jury weighing reasonable doubt and executives contemplating a business strategy must have some understanding of fundamental norms and standards of integrity that are to be brought to the question at hand.

There are many declarations of basic human rights that are more expansive than simply what the legal system demands. Indeed, how confident would one be of the integrity of a potential business associate who stated "I only do what the law requires me to do." Boards of Directors should clearly communicate the broad normative standards within which tactical decisions will be made. Additionally, and of equal importance, by example and enforcement, the Board must make it clear that these are not simply window dressing but an integral part of the corporate culture. The Board that fails to adequately address the fundamental issue of organizational normative standards and core values should not be surprised that decisions are made to maximize short term profitability by any means, even if these decisions result in the destruction of the enterprise.