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Personal accountability and ethical leadership are key to rebuilding the much shaken credibility of many North America corporations, stated Rose Patten, Executive Vice-President Human Resources and Head, Office of Strategic Management, BMO Financial Group, in an address today to the Canadian Centre for Ethics and Corporate Policy.
The recent scandals that have undermined the reputations of so many companies all share a common element, Patten noted. “In each case, ethical leadership and corporate values went askew….and if the CEO doesn’t hold ethical conduct front and centre, if senior executives are pushing self-serving agendas, if boards of directors act in a lackadaisical manner…then core values become meaningless,” she said.
Given the high profile corporate meltdowns of the recent past, Patten stated that successful organizations must “begin the long, painful process of restoring confidence and foster cultures and work environments where employees behave in the right ways.”
“If there is a sea change in corporate values that tide must flow from the very top. Senior executives must lead by example, set high standards for living our corporate values, and corrective measures must exist for those who deviate from those corporate values.”
Patten stated that BMO Financial Group has taken concrete steps to establish leadership in ethical corporate governance. She pointed to a number of areas in which BMO’s practices have encouraged personal responsibility and accountability. They include tying executive options more closely to longer-term corporate and share performance, and reinforcing the notion that personal and corporate behaviour must go beyond the “letter of the law” to embracing the “spirit of the law”.
The bar for senior executives must always be raised because “when corporate integrity is at stake, nothing can replace executive vigilance, nothing can match personal accountability,” she said. “By keeping the questions: Is it fair? Is it right? Is it legal? front and centre as a guide in decision making, we can go a long way to ensuring that honesty, integrity and the highest ethical standards underlie everything we do and every decision we make.”
Patten believes that corporations must go beyond simply adopting a set of written codes or values. Those values must not only be embedded in the culture, but supported and measured regularly. “Shared values affect performance: they provide a stable base for guiding employee decisions and actions…they form an integral part of an organization’s value proposition to customers and employees and create a source of competitive advantage,” she said.
Patten concluded by stating that “an organization’s success, in fact its very survival, depends on ethical leadership.”
The full text of Rose Patten’s speech may be found at BMO’s website at www.bmo.com/speeches.
BMO Financial Group (TSX, NYSE: BMO) – founded in 1817 as Bank of Montreal, Canada’s first bank – is a diversified financial services provider. With average assets of $259 billion as at January 31, 2003 and more than 34,000 employees, BMO provides a broad range of retail banking, wealth management and investment banking products and solutions. BMO serves clients across Canada and in the United States through its Canadian retail arm BMO Bank of Montreal, Chicago-based Harris Bank, a major U.S. mid-west financial services organization which also has wealth management offices across the United States, and BMO Nesbitt Burns, one of North America's leading full-service investment firms.
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