Address to the Institute of Directors in Ireland Annual Autumn Luncheon
14th September 2012
Go raibh maith agaibh as an bhfáilte chineálta a chuir sibh romhaim agus as mé a chur in bhur láthair go mórchroíoch.
I was delighted to note in your letter of invitation reference to my inaugural speech and its call for a centrality for ethics in all areas of life. There has been a loss of trust, a perceived failure of integrity in recent years that cannot be ignored as part of the contributory context to our dreadful economic circumstances.
If we are to see trust returned we must recognize that many professionals in whom trust was placed failed to live up to what was expected of them; failed to honour values of their professions that constituted a discipline, indeed degraded values which were seen by some as a survival from a pre-modern time that was not defined by the excess and excitement of speculation.
The economic challenges we all face now are not the random consequences of history. Rather they constitute the legacy of certain assumptions about economic models that were allowed to constitute an orthodoxy that went unchallenged – even in the face of hard evidence that a speculation-based boom was unsustainable and would inevitably lead to bust. That period was characterised by an aggressive individualism and an almost reverential approach to wealth and consumption for its own sake. The version of Ireland which prevailed during those years was one which was not in keeping with the best values of a Republic and is, I hope, now the subject of reflection and ready for rejection.
Our people are still struggling with the consequences of that failure as they seek to cope with unprecedented economic turmoil. We are in the middle of one of most challenging times in our history. As business people, you will be all too aware of the hard realities facing employers and employees. The recent live register figures show 434,000 people unemployed; of this figure, 44.2% is classified as long-term unemployed. There are 434,000 personal stories behind each and every one of those people looking for the dignity of work. In addition, many of our young people are forced again by economic circumstances to emigrate depriving our community of their energy, talent and creativity.
I say these things not to add my voice to the chorus of recriminations of what went wrong and who is to blame. While it is legitimate to demand accountability for failures of responsibility and vigilance, polemical debates which seek to divide people and sectors will not advance the agenda of recovery and renewal which needs to be urgently advanced and rapidly implemented.
That work of renewal, which is as relevant in the private sector as it is in the public space, is I know a priority for the Institute of Directors – especially in the area of corporate governance.
Molaim sibh as an mbéim atá á cur agaibh feabhsú leanúnach a dhéanamh ar chaighdeáin an rialachais chorparáidigh. Ina theannta sin molaim sibh as éifeachtacht agus feidhmíocht na stiúrthóirí agus na mbord ar fud na hÉireann a fheabhsú.
[I commend your continued focus on improving corporate governance standards and on enhancing the effectiveness and performance of directors and boards throughout Ireland.]
In many ways, corporate governance can be regarded as a moral compass to guide a company’s actions. They are a fundamental part of the ethical infrastructure that is required if good business practices are to be sustained. As you know, many laws and codes of conduct are already in place and more are expected. However, vigilance and commitment will be required to ensure that corporate governance is regarded as more than an idealistic aspiration or, worse, just another piece of red tape to be complied with. I know that the Institute’s approach to corporate governance transcends a mere technical compliance with the rules and also embraces the more fundamental question of purpose and values. An ethical visionary choice endures best if it is chosen rather than having to be imposed, but happen it must.
I was very interested to read recently about the contents of the recent MacTaggart Lecture in Edinburgh. The speaker made a number of interesting statements with which I find myself in sympathy. They include the following:
“I believe one of the biggest lessons of the past year has been the need for any organization to discuss, affirm and institutionalize a rigorous set of values based on explicit statement of purpose.”;
“We need to learn how to be comfortable with articulating purpose and reject the idea that money is the only effective measure of all things or that the free market is the only sorting mechanism.”;
“It’s increasingly apparent that the absence of purpose – or of a moral language – within government, media or business, could become one of the most dangerous own goals for capitalism and for freedom.”; and
“Profit without purpose is a recipe for disaster”.
The speaker was not a left of centre politician or academic but Elisabeth Murdoch, the daughter of Rupert Murdoch and a very successful business woman in her own right. I find it encouraging that her reflections from the coal-face of commercial media and broadcasting have led to the conclusions that purpose and values must be at the heart of sustainable organisations; that short-term profit cannot be the only measure of business success; and that the market cannot be the sole arbiter of what is fair and reasonable.
While I have no direct experience of running a business in the private sector, I have had the experience of founding a Government Department – the Departments of Arts, Culture and the Gaeltacht – and introducing new incentives for film and music. I know and have met lots of businesspeople recently who are struggling to make a living and maintain employment. I can fully imagine and empathise with the pressures and demands that attach to running a business as a Manager or Director and the acute sense of responsibility towards one’s employees, investors and shareholders.
I am very conscious that, at present, many businesses are expending all their energies on simply surviving in this most challenging environment. I pay tribute to them for their commitment and the employment and wealth for all that it creates.
In this context of stress and strain, some may feel that devoting energy to such intangible issues as purpose, values and ethics is a distraction from the hard issues of profit and share price. However, as the economy claws its way back to recovery, we do need to think deeply about the nature and shape of the future economic model that Ireland wishes to embrace; one that is genuinely fit for purpose in a holistic way – not just in terms of efficiency and competiveness but also as regards personal ethics and social responsibility.
Surely one of the key lessons of the failure of recent years is that a successful economy without fairness is simply not sustainable over the longer term. Having experienced the failure of recent years and endured the pain of its consequences, returning to the status quo ante is not a viable option – neither morally nor in terms of its practical workability. We need together to imagine and devise an economy that operates on ethical principles, is inherently integrated into a just society and allows all our citizens to fairly participate in its prosperity.
The work of recovery and renewal – which I sense is already well under way – will take time and effort. With its focus on robust corporate governance, encouraging best professional practice and providing a form of solidarity and mutual support for Directors, this Institute is playing an important part in that process of renewal.
In facing into the work of renewal, we are of course not without considerable resources. If we learn the lessons of the past – avoid bubbles and tigers, keep the economy real and build it for people to last – I am very confident that Ireland’s future is very bright. The people of Ireland are extraordinarily resilient, creative and innovative. The reservoirs of talent are abundant across various sectors – including our arts, sports, business and science and technology communities.
In our history, the Irish have shown themselves to be great adapters, modernisers and innovators. That capacity for courageous imagining, creative thinking and sheer hard work will, I believe, get us through the current challenges and renew this country. If we ever doubted our collective ability to come through this crisis, we should take hope and encouragement from the extraordinary success of our Olympic and Paralympic athletes over recent weeks; they are the living embodiment of our limitless possibilities – ár feidireachtaí gan teoireann.
De bharr bhur gcuid iarrachtaí leanúnacha, tá ról tábhachtach ag an Institiúid sa phróiseas athnuachana náisúnta sin agus i bhfíorú na bhféideartheachtaí gan teorainn i saol an ghnó agus na bainistíochta in Éirinn.
[Through your continued efforts, the Institute has an important role in this process of national renewal and of realising the limitless possibilities of Irish business and management.]Thank you once again for your invitation.