What is the difference between a hook-up, a fling and a relationship? For a board director of a big company in 2023, this may now be required knowledge.
Reputational risk has become as high a priority as financial risk, but board discussions have historically tended to focus on issues such as product reliability, service quality and compliance, rather than personal conduct. Directors are now increasingly having to make judgments based on what is socially acceptable, as well as legal and ethical, to ensure they maintain the confidence of staff, investors and customers.
Connectivity and heightened media interest also mean reputational risks are greater than in the past. Executives themselves are more exposed because of their social media profiles and online presence. Psychometric and personality tests can give a sense of a person. But even these tests can be gamed to an extent
One way to stop HR issues snowballing into a broader crisis is to give more seniority to human resources directors. Many companies have elevated HR officers to leadership or boardroom roles, enabling them to directly advise the chief executive. Authors of a new report by Hedley May, the executive search firm, said: “The character of a leader is as important as their competence.” Boards must think carefully about the broader leadership team, too. “Understanding the character of those individuals, and their willingness to exercise judgment and be courageous, is just as important as understanding the CEO,” they said.