Both are valuable tools to promote ethical conduct and responsible governance.
I recently joined the board of my local retail cooperative and at the annual general meeting, I not only returned a signed copy of the director oath of office but also recited it in front of the members in attendance, both in person and virtually. I was the only newly elected director, but all the directors recited the oath. Should this practice be adopted by all cooperatives, and how is this practice any different from signing a code of conduct?
An oath of office and a board code of conduct serve different purposes and have distinct advantages. While it’s not a matter of one being inherently better than the other, their effectiveness depends on the specific context and requirements of an organization. Here’s a breakdown of some of their advantages.
Director Oath of Office
- Commitment and Fiduciary Duty: A director oath of office emphasizes the individual director’s commitment to fulfilling their fiduciary duties to the organization and its stakeholders. It reinforces their responsibility to act in the organization’s best interests.
- Ethical Conduct: An oath of office can include a pledge to adhere to ethical principles and conduct oneself with integrity. This serves as a personal commitment to uphold high ethical standards while carrying out their directorial duties.
- Legal Accountability: A director oath of office can create a legal obligation for directors to act in accordance with applicable laws and regulations. This can provide a basis for holding directors accountable if they fail to fulfill their obligations.
Here’s an excerpt from the oath of office I took for the retail cooperative:
I recognize that, in taking my place on the board of directors of the Co-operative Association, I have accepted an important stewardship position. I understand the role and responsibilities of the board of directors and pledge to carry them out to the best of my abilities.
- I will contribute to the mission, vision, goals and strategic initiatives of the cooperative.
- I will not knowingly violate the provisions of the Alberta Cooperatives Act or the bylaws of the cooperative and if a violation becomes known to me, I will disclose to the board chair.
- I will patronize the business of the cooperative to the best of my ability.
- I will support the decisions of the board of directors and recognize the confidentiality of the discussions that lead to those decisions.
- I will assist the member-owners of the cooperative to understand and fulfill their responsibilities as member-owners.
It was a very powerful pledge to make in front of the member-owners, employee-owners and the rest of the directors.
Board Code of Conduct
- Collective Standards: A board code of conduct establishes a set of standards and guidelines that apply to the board collectively. It outlines the expected behavior, responsibilities and ethical principles that directors should adhere to as a group.
- Consistency: A code of conduct promotes consistency and uniformity in the board’s behavior. It ensures that all directors are aware of and abide by the same principles, fostering a shared understanding of acceptable conduct.
- Governance and Decision-Making: A code of conduct can provide guidance on how the board should approach governance matters and decision-making. It may include guidelines for conflict of interest, confidentiality, transparency and other critical aspects of board functioning.
An oath of office can be applicable and beneficial in various business structures, including cooperatives. While the specific language and context of the oath may differ depending on the organization’s structure, the fundamental purpose remains the same: to emphasize the commitment of directors to their fiduciary duties and ethical conduct.
In the case of cooperatives, where the business is owned and governed by its members, an oath of office can play a crucial role in reinforcing the directors’ dedication to serving the best interests of the cooperative and its members. It can emphasize the principles of democratic control, member participation and such cooperative values as equity, fairness and social responsibility.
By taking an oath of office, cooperative directors can demonstrate their commitment to upholding the cooperative’s mission, promoting member welfare, and ensuring transparent and accountable governance. This can be particularly important in cooperatives where the members’ trust and engagement are essential to the organization’s success.
Ultimately, the effectiveness of an oath of office in any business structure, including cooperatives, depends on the sincerity and commitment of the directors to honor their obligations and act in the organization’s best interests. It should be accompanied by a robust governance framework, clear policies and mechanisms for accountability to ensure that the principles outlined in the oath are translated into action.
In summary, a director oath of office emphasizes individual commitment and legal obligations, while a board code of conduct focuses on collective standards and guidelines for board behavior. Both are valuable tools to promote ethical conduct and responsible governance, but their suitability depends on the specific needs and governance structure of an organization. Many organizations may choose to adopt both measures to ensure a comprehensive approach to director conduct.
Taras Nohas, CMC, IC.D., CCD, is principal and senior consultant at TN Governance and Strategy. He can help put together a purposeful and strategic approach to ensure directors get on board and bring more to the table. For more information, contact CUES at p&S@cues.org.