Five reasons why ethical CEOs are in demand
The number of CEOs being held accountable for unethical behaviour is rising under the pressure of increased public scrutiny, according to research from Strategy&, PwC's strategy consulting business.
The 2016 CEO Success study analysed trends in annual CEO succession at the world's largest companies and found a 36% increase (up to 5.3% of all successions) in the number of forced turnovers attributed to ethical lapses, between 2012 and 2016.
Per-Ola Karlsson, Strategy& Partner and Leader of PwC Middle East's Leadership Practice, said: “Our data cannot show — and perhaps no data could — whether there’s more wrongdoing at large corporations today than in the past. However, we doubt that’s the case, based on our own experience working with hundreds of companies over many years.
“Over the last 15 years, five trends have resulted in boards of directors, investors, governments, customers, and the media holding CEOs to a far higher level of accountability for ethical lapses than in the past.”
Five factors in heightened CEO accountability
Perception and visibility have played an important role in raising the standards of business ethics when compared to the practices of a decade ago.
“The increasing incidence of CEOs being forced out of office for ethical lapses may have a positive effect on public opinion over time by demonstrating that bad behaviour is in fact being detected and punished,” said DeAnne Aguirre, PwC Principal in the US.
“In the meantime, CEOs need to lead by example on a personal and organisational level and strive to build and maintain a true culture of integrity.”
Other key findings
- Overall, CEO turnover is gradually falling with 14.9% of the world’s largest 2,500 companies replacing their CEO in 2016, down from 16.6% in 2015.
- Brazil, Russia and India had the highest turnover rate of 17.2% last year.
- 12 women were appointed to the role of CEO globally in 2016.
Ethical conduct and professional integrity are at the heart of the ethos of ICAS and the CA accreditation. The Power of One is an initiative that encourages the highest level of professional conduct from CAs and imparts a duty to influence those around them with a dedication to ethical behaviour.
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