The corporation is always right?

The corporation is always right?

“Without justification, the BBC fell short of the high standards of integrity and transparency which are its hallmark.”

That comment was drawn from the executive summary of Lord Dyson’s enquiry into the circumstances surrounding the Princess of Wales’ interview at the BBC. The enquiries findings have been accepted in full by the BBC; with BBC Director-General, Tim Davie, commenting:  “While today’s BBC has significantly better processes and procedures, those that existed at the time should have prevented the interview being secured in this way. The BBC should have made greater effort to get to the bottom of what happened at the time and been more transparent about what it knew.”

Whilst the report has deep significance for the country, not the least as it damages the BBC’s reputation for fair and impartial reporting, it is not the first report which has shown the effect of a less than ideal culture within an organisation. Look back over the records of recent years and it is possible to pick out a succession of company failures, financial or environmental scandals, all of which can be laid at the feet of governance failings.

That those failings are not confined to any one business sector is a salutary reminder of the way in which corporate governance can so easily go astray when ‘group think’ and ‘the benefit of the corporation’ come into play. Directors have a duty in law to act in the best interests of their company, but they also have a duty to employees, customers, investors and others. Even if they did not have those additional duties of care, actions taken in the best interests of the company should not be those which are subsequently found to be less than ideal in law or when considering societal norms.

When corporations start to think that they are always right then it is a sure sign that something has gone awry. It’s hardly surprising therefore that the Financial Reporting Council (FRC) places such store by culture, diversity and succession planning in the boardroom. As Sir Winfred Bischoff commented in the forward to the FRC’s report into corporate culture in 2016: “Strong governance underpins a healthy culture, and boards should demonstrate good practice in the boardroom and promote good governance throughout the business.”

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