Author's Name: Mark Schultz
Date: Fri 27 Nov 2015

VW, 7-Eleven & CBA – the boards cannot absolve themselves from responsibility

The recent and ongoing saga of these organisations again raises the issue of the duties and responsibilities of corporate non-executive directors. Irrespective of the size of the business, the nature of the operations and the organisation structure, the board of directors retain the ultimate responsibility and no amount of posturing can remove them from this position.

The performance of Volkswagon, 7-Eleven and the Commonwealth Bank have, I believe, dented the confidence of stakeholders in the capacity and capability of directors to fairly and responsibly undertake their duties as custodians of the organisation. To “always act in the best interests of the organisation” does not mean that profits must be optimised no matter what the financial or social cost to customers, staff or the community. Somewhere, somehow in the decision-making process, someone with real authority thought it would be ok to cheat the system, customers or staff. The question is, how far up the organisation chart did such an approach to decision–making go? And, should the Board be held responsible for such poor decisions?

The first question can only be answered by those from within each organisation, and it is doubtful we will ever really know the truth. The second question however is not so murky! The Board has ultimate responsibility for the performance of their organisation – individual directors and the Chief Executives of those organisations are paid considerable sums of money to do their jobs and with those vast sums of money comes a vast amount of responsibility. In each case there has been a fundamental break down in values, principles, culture and a basic understanding of what is the right thing to do – and if the Board isn’t responsible for this key attribute of business performance, who is?

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