As a CFO you might be forgiven for thinking the finance world has become obsessed with corporate governance. The excessive coverage given to corporate scandals means the spotlights, rightly or wrongly, have been trained on the finance function. So it is surprising to learn that a mere 19% of global business leaders think that fresh corporate governance legislation will lead to an improved code of ethical behaviour.
These results, drawn from a survey of CEOs by Corporate Reputation Watch, also show that 50% of CEOs place product and service problems on a par with unethical corporate behaviour as the most tangible threats to corporate reputation.
Changing practices within corporates, however, reveal that CEOs are taking notice of the stricter regulatory environment. Three-quarters of CEOs are looking to address internal controls, while 64% are reviewing auditor relationships with 55% of respondents revising codes of conduct.
“Business leaders have come under fire from all quarters and are now held to higher standards of ethics, business principles and accountability,” says Andrew Laurence, chairman EMEA of Hill & Knowlton, the communications consultant. “In a less trusting market, our survey finds that with company’s performance now inextricably linked to the reputation of the organisation and its management, CEOs are taking greater personal responsibility to protect and enhance corporate image.”
For any CFOs aspiring to become CEO it will be interesting to learn that almost three quarters of company boards place the ability of a CEO to protect and enhance corporate reputation as an important factor when recruiting. European and Asian respondents think reputation can benefit stock price (51% and 65% respectively), while their US counterparts (34%) think the reputation-stock price relationship is less marked.
Bob Reynolds, senior client partner at Korn/Ferry International, the recruitment company, says: “Convincing talented executives to join organisations with a poor reputation is a real test of an executive recruiter’s skills, even when the executive is being recruited specifically to address the reputation issue.”
And corporate reputation is just as important for the CEO in charge as it is for the company. “Conversely, it is also the case that candidates from firms with a poor reputation often find it more difficult to become finalists for top board positions,” adds Reynolds.
