An ING employee in the Netherlands wrote this in an internal memo about an applicant for an internship post a few weeks ago. The applicant concerned was “accidentally” copied into the e-mail. ING apologized profusely. Nevertheless, the incident dominated the headlines.

Such an experience is unpleasant for everyone. Nobody wants to be the victim of discrimination, and no company wants to have unethical behavior in the workplace. When it becomes public, that makes matters worse. It has harmed the reputation of ING. From the perspective of corporate governance and risk management, this is interesting. How do you avoid such a thing? That is a challenge on various fronts. The ethical/moral dimension is the trickiest. Furthermore, it is all about controlling behavior and risk management, of course. How are these three fronts connected?

Leading by example
The ethical nature of a company is largely determined by its management. A good example will be followed. Rules about what is and what is not appropriate have no meaning if the management does not set a good example. This is shown time and time again. Sexual harassment, discrimination, bullying, and all other forms of unethical behavior in a company will only be possible if the management gives rise to such action. The wrong people are hired, there is insufficient correction, there is insufficient guidance and insufficient examples. A seemingly innocent joke soon becomes blunt discrimination, fun turns into unpleasantness, an innocent flirtation becomes sexual harassment. It then goes from bad to worse. Unpleasantness turns into tormenting, and sexual harassment turns into sexual violence. The workplace would then be downright unsafe.

Ethics and profits
Risk management is a primary responsibility of the management and the supervisory bodies. Risk management does not only mean that you monitor the figures and generate sufficient turnover and profitability. Risk management also means that you will provide a safe workplace. No roof tiles may fall down. But wrong jokes are not allowed either. If the management underestimates that dimension, that’s when we see that ethics and profits are strongly related. Due to negative publicity, the share loses its value, and customers stay away. Because of that villain from Curacao.

Do you have a question about corporate governance yourself? Please e-mail it to governance@ekvandoorne.com and perhaps your question will be discussed in the next column!

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