November 12, 2024

TRENDING

OFFICE RUMOURS IN CORPORATE GOVERNANCE

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By Felix Owaga Okatch, okatchfelix@gmail.com,

Whenever and wherever human beings interact, there are bound to be many good and unpalatable issues of human nature being expressed and experienced. In business entities and corporations, there are bound to arise rumours. This is becasue at this point human beings interact and have very many diverse needs, prejudices, personalities and temperaments. These can be for better or worse in an organization. To begin with, let us define the word “rumour.”

The current Oxford English Dictionary defines rumour as a general talk or hearsay of doubtful accuracy; a current but unverified statement or assertion (e.g. heard rumour that CEO/MD/ directors have some scandal. This could be sensational like a sexual harassment in the office, at the work place or an affair that has a tendancy to lean towards that direction).

This might be a talk of doubtful accuracy and sensational in nature. In corporate governance, a question
which arises as far as rumours are concerned is that, should a director get involved in rumour or hearsay about his organization? How about a chairman, a director, Chief Executive Officer (CEO) or any other
member of staff and top management? If that is the case then what crosses our minds is that should a chairman, board member or CEO call for an urgent meeting to deliberate on rumour?

(A hear say ofdoubtful accuracy). Is it worth calling for an urgent meeting to discuss hearsay about an organization from whatever source? Would a hearsay that is not addressed in the nip affect an organizational performance? At what point would management and board consider hearsay as necessary? Would such a managerial adventure of pursuing hearsay be like chasing wind as reported in Ecclesiastes?

Also consider the other side of a coin. If the rumour was “true” and action not taken in time, board would be hanging the CEO due to personal gains and many more.Note that instances where board members gang up to destabilize a CEO are also very prevalent. Remember at the opening paragraph that people have different personalities, biases and temperaments. Perceptions always differ and can sometimes degenerate into irreconcilable differences, both at management and board levels. Generally, rumours are very bad for an organization.

They arise where there is lack of trust and commitment to company strategy and goals. In some cases, if they are directed against a CEO, he /she will tend to lose focus.The CEO might forget to chase an antelope and pay unnecessary attention to a passing squirrel. Rumours will lower morale of those victimized. It will make working relationships poor and distrustful. Just as human beings are different and their reactions to situations depend on personality and temperament, so is the difficulty to determine how to solve rumours.

An organization’s culture also has the potential to ignite and spread rumours more. However rumours that border on them can be disastrous.When a rumour of whatever nature arises in an organization there are some possible ways of reducing them so that injury to an organization is minimized; they include;

(a) The board member who is privy to the rumour communicates with the chairman.
(b)The chairman communicates the rumour to the CEO / company secretary who will then investigate
(c) The chairman communicates to the board after receiving a response from CEO / company secretary.
(d)The board deliberates on the matter as an AOB (Any Other Business) at a regular or special board meeting. The course of action is then agreed upon. This would entail disciplinary action so that the
tone at the top is clearly cascaded into an organization.
(e) A CEO can also present to a board a policy paper and direction that would curtail rumours in future. This policy must reduce too much staff turnover and complaints which could have arisen due to

Sometimes rumours can entail very serious allegations. These could incriminate a CEO, directors getting involved in sexual harassment with staff or among them in a way that causes ridicule to the perception
of an organization. It could also involve staff where misappropriation of company resources are concerned in some instancesna CEO could waste company assets through some unethical dealings with third parties at his advantage and at cost to a company or organization is concerned. There could also be instances where a shrewd and bad CEO can take advantage of a disjointed board.

Generally, rumours are very bad for an organization. They arise where there is lack of trust and commitment to company strategy and goals. In some cases, if they are directed against a CEO, he /she will tend to lose focus. The CEO might forget to chase an antelope and pay unnecessary attention to a passing squirrel.

How would you apportion such blame? Sometimes rumours can entail very serious allegations. These could incriminate a CEO, directors getting involved in sexual harassment with staff or among them in a way that causes ridicule to the perception of an organization. It could also involve staff where misappropriation of company resources are concerned in some instances a CEO could waste company assets through some unethical dealings with third parties at his advantage and at cost to a company or organization is concerned.

There could also be instances where a shrewd and bad CEO can take advantage of a disjointed board. In some cases the like bush fire or ameliorate it. However, in the realm of good corporate governance the chairman, company secretary and CEO need to evaluate a “rumour” and decide whether to table it as
an agenda item at a board meeting or not. A special meeting need not be called to evaluate a rumour.

The main agenda items that concern corporate strategy and goals needs to be given priority Rumours are bad because some of them can get personal at management and board level to the detriment of an organization and the parties affected by the rumours. Just to give an example of a bad rumour, sex harassment in the office is not easy to prove. Witch hunt of one staff against the other is also not easy to prove and many past bad rumours. The CEO needs to take extra care because this could also lead the board to lose faith in him /her.

(f ) At management level, the rumours also need to be resolved methodically lest it causes some innocent by standers to be injured in the cross fire by stray bullets.

Views expressed herein are personal and do not have any relations directly or otherwise with any institution in general or in particular where I serve as a director, council member or as a consultant. This presentation is made for academic and educational purposes only. Any injury caused to a third party is regretted since it was not intended to be so.

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