The World’s Most Ethical Boards: What top boards do differently

Intro: Welcome to the Corporate Director Podcast, where we discuss the experiences and ideas behind what's working in corporate board governance in our digital tech-fueled world. Here, you'll discover new insights from corporate leaders and governance researchers with compelling stories about corporate governance, strategy, board culture, risk management, digital transformation, and more.

Dottie Schindlinger: Hi, everybody, and welcome back to the Corporate Director Podcast, the voice of modern governance. My name is Dottie Schindlinger, executive director of the Diligent Institute, and I'm joined once again by, by two amazing co-hosts, Meghan Day, strategy leader here at Diligent, and Kira Ciccarelli, head of research for Diligent Institute.

Meghan, Kira, how are you both doing today?

Meghan Day: Great, Dottie.

Kira Ciccarelli: Pretty good.

Dottie Schindlinger: I'm so excited to be back with you all.

Kira Ciccarelli: I know. It

Dottie Schindlinger: feels like it's been so long. It's been a minute. Gallivanting around the world, you two.

Yeah. Well, that and also, uh, I- I'll just come clean with our audience. I had a, I had a pretty awful respiratory virus for about six weeks, and so I didn't have a voice for a total of 14 days.

Like, literally nothing but squeaks. So it's nice to be almost 100%, although I can't guarantee that at some point I won't sound a little bit like Peter Brady when he went through puberty. It might happen, everybody. Just be prepared.

You might have to stop give, uh... You might have to give up that reference-

uh, Dottie. I, I saw Kira nod- ... but I think she might have no idea.

I know Brady. Brady Bunch. Right. Yeah. There you go. You got it. I'm there. I feel like our director audience might know- Y- yeah ... the Brady Bunch though, Meghan. Yes. I'm pretty sure. But, I mean, it is

very iconic when Peter Brady lost his voice.

Well, but Meghan, to your point, we have been traveling quite a bit, and in fact, Kira and I just came back from a really incredible opportunity in Brussels that we went to last week called the Digital Trust Summit.

Fans of the show may recall Dominique Shelton Leipzig, who's been a guest on the show and is someone that we've spoken about quite frequently because of her work on AI trust and really building trustworthy AI, ethical AI. This was something that people are kinda starting to call digital Davos or AI Davos, um, because it was a combination of EU policymakers, business leaders, and actually artists, uh, mostly film and, and performing artists, coming together to talk about how do we ensure that AI tools are ethical, trustworthy, and have permission to use the content that they are displaying.

So have you actually gotten consent to show this person's face and likeness and voice in your AI results? It, it was a really incredible day. Uh, Kira, what were your takeaways from the day?

Kira Ciccarelli: I think for me it was just really eye-opening to get the EU perspective. I think sometimes we get a little bit myopic in the US, and we end up focusing just on what's happening immediately around us.

But I think we saw it in the past with the, and we continue to see it, with the ESG/sustainability conversation, and now I think we're seeing it in the AI realm as well. But the European picture looks quite a bit different from the way it looks in America.

Dottie Schindlinger: Well, and, and to that point, Kira, there's a big milestone coming up on August 2nd with the EU AI Act really going fully into, uh, force.

And to be candid, I'm- Not entirely sure how many American companies are kinda ready for this, and it, it does have broad reach, you know? I'm here '

cause I was like, "Uh, what? I don't even know what you're talking about."

Yeah. I mean, I, I'm, I'm having, I'm having deja vu, Meghan, of, uh... Remember GDPR- Of course ... and when suddenly the ticking clock was, you know, I think it was, what was it, like, July 1st of 2018, suddenly everything had to be ready, and we were like, "Huh?

What? What do we have to do?" Um, yeah, so it's kinda like that, and I, I... It's not something I've heard talked about at many conferences. I haven't had many conversations with it, you know, with American directors about it. But quite frankly, if you do business in the EU, eh, you should kinda take a look at this and make sure you're ready.

There's, there's some real teeth to this law, you know, including making sure that any part of your AI supply chain is in compliance. So worth spending some time talking about it, looking at it. I know this was a big topic of conversation at the conference. And I would also just say, you know, look, it was really exciting to have the opportunity, Kira and I, to present our research and to talk a little bit about what Diligent is doing around AI in front of this group.

You know, we, we-- I mean, not to name-drop too much, but, like, you know, Cate Blanchett was there, Steven Soderbergh was there, Darren Aro- Aronofsky was there. It was a pretty rarefied combination of people. But me being me, the people I was most excited to meet were the two co-authors of the EU AI Act Axel Voss and, uh, Brandon Benfeith.

It was great to have a chance to talk with them over dinner and find out a little bit about what went into that process. It was fascinating. You know, again, governance geek here. But yeah, I, I think it's an amazing event. Directors, if you're not familiar with the Digital Trust Summit, put this one on your list for next year.

It, it probably is gonna be in Brussels again next year, which I think is smart, you know, given all that the EU is doing around governance of AI, and it's worth going. This was an amazing learning opportunity, and, and really everybody who was there was there to help to contribute to solutions. It wasn't another opportunity to just get together and hand-wring about all the risk.

This was like, "Yeah, yeah. Okay, what are we doing about it?" The whole focus of the day was solutions for fill-in-the-blank risk, and that was very inspiring. It was really, um, reassuring. There's a lot going on. There's a lot going on. So highly, highly recommend. So this is probably a good segue to talk about the interview that you got to do, Meghan.

Do you wanna kinda cue us up? So speaking of ethics, um, you had an opportunity to talk to sorta two ethical leaders, I would say.

Yeah, we have a great relationship with Ethisphere, who publishes and has published for a long time really the signature report on the world's most ethical companies, something that I know we have paid attention to here at Diligent for a long time.

And we've had the opportunity to dive a little bit, uh, deeper and differently into some of that work, specifically related to boards of directors. So we had a great conversation with, uh, Neta Meidav, who's from our compliance business unit, and Erica Salmon Byrne, who is chief strategy officer over at Ethisphere, about the trends that they're seeing and the implications for, uh, boards around the world.

Kira Ciccarelli: And I think to Dottie's point about the Digital Trust Summit, uh, I won't spoil too much, but we've been talking with Erica a little bit about what the survey might potentially look like next year, and it looks like questions around ethical use of AI, governance of AI, are definitely gonna be thrown into the mix there as well.

Dottie Schindlinger: And they already are, to an extent. Awesome. Well, let's give the interview a listen, and we'll come back and talk about what we heard

Meghan Day: Joining us on the Corporate Director podcast today is Erika Salmon Byrne, chief strategy officer at Ethisphere, and Nada Mehdav, vice president of business and product strategy for ethics and compliance at Diligent, and previously founder and CEO of Vault, now part of the Diligent family. Both played a key role in a special report from Ethisphere and Diligent inside the world's most ethical boardrooms, and we're very excited to talk to both of these guests today about that.

Thanks for joining us.

Erica Salmon Byrne: Thank you so much for having me.

Neta Meidav: Thank you.

To start us off, Erika, Nada, um, I would love a 30-second overview of who you are professionally to share with our audience. Erika, maybe let's start with you.

Erica Salmon Byrne: Great. Thank you, Meghan. Um, so Erika Salmon Byrne, as Meghan mentioned, I have the privilege of serving currently as the chief strategy officer at Ethisphere and executive chair of the Business Ethics Leadership Alliance, which is our membership group of multinational companies that come together, uh, under the motto of there's no competition in compliance.

So I have spent the last two decades of my career really heavily focused on proactive compliance sharing, so really trying to cross-pollinate good ideas from one company to the other. Because at the end of the day, um, what everyone in the ethics and compliance space is doing is trying to manage people-created risk.

And as I like to say, there's only so many ways people are gonna people. So that's, that's my focus. Love that. Nada, what about you?

Neta Meidav: So, um, I am a founder of a company that pioneer technology in the ethics and compliance space called Vault Platform. Um, today, Vault is proudly part of Diligent, and we offer new, innovative ways for employees to speak up, not just employees, um, third parties as well, to speak up and raise any type of concerns about any type of ethical breaches in the company and for companies to investigate better, uh, and resolve cases, uh, in a, in a more efficient way and to have the data in their hands about, uh, what's happening at the stern of the ship.

And so very much, uh, uh, bringing the, the technology edge to this, uh, uh, to this arena.

Before we dive into the report on the world's most ethical boardrooms, Erika, for those who may not be familiar, Ethisphere is really known for your World's Most Ethical Companies list, something that's been around for, uh, many years.

Uh, would love for you to just talk a little bit more about that list and, uh, its storied history.

Erica Salmon Byrne: Yeah. Um, thank you, Meghan. So for those of your listeners that are not familiar with the World's Most Ethical Companies process, uh, I'm glad we're starting here 'cause that is the data set that informed this particular report that we produced with the team at Diligent.

So the World's Most Ethical Companies process is something that Ethisphere's been doing for 20 years. We started it in 2006, uh, largely to sha- to shed a light on companies that were engaged in good practices. If everybody listening remembers the early 2000s, we had so many examples in the news of companies engaged in misconduct, and we wanted to try to find a way to celebrate companies that were very quietly doing the right thing.

And that was the genesis of the process at the time, and it still really is sort of the underpinning ethos. Today's process looks very different than the process 20 years ago because today's companies look very different than companies 20 years ago. So someone who is interested in applying for World's Most Ethical Companies goes through a survey, um, where, uh, we collect about 250, 260 data points on practices across six different categories depend- and the 250 to 260 depends on the skip logic.

So we look at your practices, the design of your ethics and compliance program. We look at your governance practices that very heavily influence this report, obviously. We look at the way in which you are measuring and supporting your speak-up culture, um, which is one of the first ways that I crossed paths with Meta years ago And then we look at your third-party risk management protocols, and we look at the way in which you are thinking about your material non-financial risk factors, which is basically your impact on your key stakeholder groups.

Uh, you respond to the survey, you submit documents for the review team. The review team grades those documents, uh, and combines them with your survey answers and decides who to recognize in any given year. This year, we had 138 companies on the list representing 47 industries in 19 countries. So very diverse.

Truly is world's most. Um, you know, it's not just one or two countries. Um, very diverse list, uh, from a, a wide variety of different countries, different industries, different organizations representing both nonprofit, privately held, PE-backed, family-owned, and publicly traded companies. So really runs the gamut in terms of, uh, the kinds of organizations that are recognized in any given year.

Yeah, it's a fascinating list every year to comb through, and I'm really excited to take a look at this new report, which really zeroes in on the board's role within those most ethical companies. So, Nada, I would love for you to talk a little bit more about the report, the background, the genesis of this.

Neta Meidav: Yes. So this really came about as, as an exercise, uh, of curiosity between Ethisphere and, and ourselves at, uh, Diligent and the Diligent Institute. And, uh, the idea behind this was both of us, Ethisphere and Diligent, have such a rich, uh, and broad set of specific data. So as Erika just described, you know, Ethisphere is, is indexing the world's most ethical companies and the-- and what makes an ethical company.

Whilst for us at Diligent with, you know, most companies in the world are using our boards product, we have a very in-depth understanding of what makes good governance and what, uh, and, and, you know, and how boards function. And so combining these two sets of data into a new, almost you can, you can call it an index, but it's really to understand the mechanics behind what makes a, a board an ethical board.

So looking, uh, into the data of the world's most ethical companies and understanding what the most functioning boards look like. And the connection between that and E&C data and E&C experience, sorry, ethics and compliance, I should not be using the shorthand here on the podcast, um, is incredibly important.

So the way we, the way we analyzed this is that we looked at The fact that 20% of the applicant score is now made up of governance-focused criteria. So we looked into that specific group where governance has scored highest, and then we started to derive the, the mechanics behind this, what makes it an ethical board, and, um, and we found, you know, really, really great, uh, and interesting data, uh, that, uh, is all described in this report that I encourage you all to read.

Meghan Day: Well, one of the big themes in the report is that the most ethical boards are more independent and more diverse, not just compliant on paper. Erika, what did the data show about independence and diversity in that top governance cohort, and why do those high floors, not just high scores, really matter in practice?

Erica Salmon Byrne: Yeah. So Meghan, the, the interesting thing over the course of the last 10 years is we've been kind of watching the, the metrics on the companies that qualify as World's Most Ethical Companies in any given year compared to some of the other measurements of both independence and diversity. And if you think about the ultimate job of the board, um, the, the responsibility of the board to safeguard the organization's assets and guide management with strategic insights, that is a, a great jumping off point to think about why both independence and diversity would matter.

So I'm gonna start for a second with the assets piece, because one of the things that, that really informs the work we do here at Ethisphere is the recognition that the vast majority of today's companies, their value is made up of intangible assets. So some of the research we have seen out there, um, Ocean Tomo, for example, has done a wonderful job looking at this issue, is that between 80 and 90% of the average company's value is intangible assets.

And that's a complete flip from where we were in the '70s, where most of it was tangible assets. It was inventory, it was factories, it was equipment, it was, you know, things you could hire guards for and write insurance policies for. And today, it's confidential company information. It's your, um, intellectual property.

It's the way in which you're protecting your patents and your trademarks. It's your people. It's your reputation. It's your brand. Those are the kinds of things that make up the value of organizations today, and that is far harder to safeguard in the traditional ways. And so if you think about that reality, so you've got a board of directors that is put in place to, uh, steward the assets of the business.

The assets of the business are intangible. That is gonna require a different set of background, uh, and, and, and expertise than we have traditionally seen on boards. And so the best boards are starting with really strong skills matrices, and we saw, uh, some great examples of this in this year's, this past year's WME submission.

Really strong skills matrices that are tied to their risk assessments, that are tied to their strategic planning processes. So it's not just what skills do we have on the board? It's not even just what skills do we need to have on the board. The best boards are then going that next step further and saying, "Why do we need these skills on the board?"

Right? What is it that we are looking for strategically as a business that we can look for backgrounds, guidance, independent, an independent point of view from the people who we are actually putting into these board seats? And then you've got the independence from management piece, uh, which is critically important when things go wrong, in particular.

Uh, you know, and, and, you know, we have lots of examples of CEOs or, or other, uh, senior leaders at companies, um, be- being asked to, uh, to depart over the course of the last year and a half. We have the Nestle CEO situation. We have the BP CEO situation. We have the BP chair situation. So if you think about the, the importance of having a strong lead independent director in those circumstances that is distant from management, that really is the reason why I think we, uh, we see such deltas between the independent...

the number of independent directors on WME companies and what we see in some other organizations. And then on diversity, look, this has been a hot button topic for a lot of organizations. But I would remind your listeners, diversity means that you are walking into a room where you are bringing your point of view.

And in a world where your assets are intangible, your point of view is the thing that is the greatest value in those conversations. And so that I think is another reason why we continue to see boards really concentrating on, do we have the right mix of skills? Do we have the right mix of voices? Do we have the right mix of backgrounds so that we are, as a board, as capable of po- as possible of keeping up with the volatility of the business we're stewarding, looking around corners, and thinking strategically about the business?

'Cause that's their job at the end of the day.

Meghan Day: Well, in line with that is expertise, and the report also highlights deep ethics and compliance expertise in the boardroom and also richer information flows from interactive ethics and compliance sessions to outside experts and independent materials. Nada, how are the most ethical boards actually building that expertise and ensuring they're hearing more than just management's point of view?

Neta Meidav: For sure. Well, first of all, um, they're bringing their own expertise. So on top of, uh, you know, as Erika mentioned, a point of view, they're bringing their own expertise in here. Let's start already with what I find to be a fascinating point of data looking into the World's Most Ethical Boards is that across all honorees for World's Most Ethical Companies, many boards can point to at least, uh, one director, uh, that has a substantial E&C background.

So that's, you know, already a great starting point for us. But the top-- this top-scoring group that we're looking at, uh, that we named the World's Most Ethical Boards, is one that more likely to have more than one director, so multiple directors, and they actually have operative experience running ethics and compliance programs.

So they've been operators in this actual space, and, and they bring this very hands-on experience into the boardroom. Um, so that's already kind of a, you know, when we're thinking of the composition of the board and what they're, what they, what they bring, that is incredibly, incredibly important. Beyond that, what is also the...

you know, and whilst, as I said, it's a, it's a really great, um, uh, thing to see that this composition includes people, multiple people with operative experience, still important to say, uh, and note that a data point that, uh, was less favorable for us to see, definitely, um, a place of improvement, is that across all honorees, only 11% of directors have served as a chief ethics or compliance officer in the past.

Um, and it is slightly improved for our focus group of World's Most Ethical Boards with 14%. So improvement there, still low numbers. What I'm sure Erika and I would love to see is that number growing over the years and more chief ethics and compliance officers are a- being offered a seat at the table.

Beyond that, um, it's interesting to look into information flows and engagement. So what we found is, um, a striking number of 86% of our focus group of World's Most Ethical Boards, they provide interactive sessions on ethics and compliance, such as case studies or tabletop exercises, versus just 52% across all the honorees.

And we're finding that 100%, so without exceptions, 100% of the World's Most Ethical Boards receive written materials such as reports and articles and regulatory guidance, um, from independent sources. So they're not just counting on, you know, on their own internal produced materials, but they are sourcing this external point of view and, uh, and counting on that as well.

Um, so yeah, these are just few of those examples.

Meghan Day: That's great. The report also points to a couple of other differentiators, things like structured onboarding across key functions, field exposure and site visits, and one of my favorite topics, director assessments. Erika, can you walk us through what some of those practices look like and how you think they really change the quality of oversight?

Erica Salmon Byrne: So I'm, I'm gonna pick on two particular pieces, um, Meghan, of, of what we found when we dug into the data. And like Neda said at the beginning, I would encourage any of your listeners that are curious about this to, to take a look at the full report itself 'cause it has a, a ton of additional data that we're not gonna have time to get to today.

I wanna start with director assessments. So as I mentioned at the... a little bit earlier in the episode, we're seeing a really strong evolution in j- in skills matrices. And the strong evolution in skills matrices is absolutely tied to better director assessments. Because if you know what it is you need on the board, you're then better able to figure out whether or not you are getting what you need on the board.

And so one of the places that we have seen, um, substantial evolution over the years is around both director assessments and things like committee chair tenure. So for a long time, we've been vo- talking about tenure on the board overall, but what about tenure on a particular committee, right? How quickly do I get stale on my fifth, sixth, seventh, eighth year serving on the audit committee?

Maybe I should rotate and serve on nom gov for a couple of years and bring my audit committee respective, perspective to my ni- my nom gov chair role, or to my nom gov committee role. And so we are seeing structured work to rotate committee chairs, to onboard committee chairs, not just new directors.

We're seeing very structured work to think about what does good assessment look like. And part of the job of good assessment is moving out directors who are no longer contributing effectively. And it is the hardest thing for a board to do because these are collegial groups who have known each other for a long time.

And if, you know, somebody's falling asleep in meetings, it's very challenging to say, "Maybe, you know, maybe this isn't the best use of your time any longer." But if you've got a structured assessment process that is tied to a good skills matrix, you are more likely to be able to do that tough work, that hard conversation, because you have a structure that was put in place for everybody to agree on.

It's kind of like, you know, Locke's Utopia. We're all deciding in advance what role we're gonna have without knowing whether we're a farmer or a builder. If we are all deciding in advance that we are gonna tie our assessment process to a strong skills matrix, we are agreeing that this is what the company needs, and it makes it a little bit easier to have those really challenging personal conversations.

So we see in this particular cohort more formal assessments as opposed to ad hoc assessments. We see more external assessments as opposed to the general counsel and the nom gov chair being like, "Yeah, so-and-so's fine. Maybe they're not really doing the pre-read. Maybe they're not showing up when they should be, but it's fine.

They're still important. They've got a great relationship with so-and-so." I- i- the more formal you get, the, uh, more external you get, the more 360 you get where directors are evaluating each other, the better those processes, uh, become. And that unstructured onboarding, you know, we real- uh, at the... Again, if you think about the board's role to oversee intangible asset protection, they've gotta understand the business.

And so in this cohort, we also see far more directors being asked to visit sites. We see, uh, a broader group of people they're sitting down with as part of an onboarding process. We see them as part of succession planning, meeting people in other jurisdictions that would potentially be good candidates to take on senior roles.

That's one of their biggest jobs, is succ- you know, thinking about succession planning. Well, if you never go to EMEA, where the person who is in the succession channel is located, then how do you know that you're doing a good job with succession planning, right? You have to engage with the business, and that is the other thing I, you know, that, that I would, um, that I would highlight, Meghan, that's in the report, is also that's part of the reason why we're seeing, uh, directors sit on fewer and fewer boards.

So the average amongst the WME cohort is going down. It's two and a half at this point. Uh, and that's, I think part of the reason for that is a real focus on, "Hey, I'm getting paid a good salary to take on this oversight role. I'm not gonna do six of them because I can't do them well."

Meghan Day: Well, we could have a whole episode separately on that topic.

But- ... looking ahead and sticking to the, the topic here at hand, which is the most, most ethical boardroom profile, if a board wants to move closer to that, you know, what are one or two concrete steps that you each believe they should take to become more ethical and better steward long-term value? Nada, let's start with you.

Neta Meidav: So for me, it's all about making time for ethics and compliance, and to be methodological about it, so not a one-off exercise, but to have some sort of, uh, ongoing commitment and cadence to hear from your ethics officer. Invite the ethics officer into the boardroom to present findings, ask them tough questions, push them about program efficiency.

You know, often, often than not, we hear from ethics officers who need to make the case for why, you know, for why program quality and efficiency need to win the attention of the, of the board. Well, let's, you know, let's turn the tables around. This should... The board should be demanding quite a lot from its ethics team and, and ask questions like, "Do our people actually trust the speak-up channels?

Um, how do you know? Prove that. You know, how can you prove that? What i- what are the benchmarks? Do we create psychological safety in the process? How much time does it take us to resolve cases? What can we do to go to be better? How can we reso- resolve them more quickly? How can we close the loop more quickly for the reporter?"

And, um, and do we track any data about retaliation? So really, the board should be asking these questions. And, and the way I see it is that it creates this mutually productive relationship between the ethics officer and the board, um, where they're pushing each other upwards, right? Um, that's, uh, that's how I, that's kind of how I envision it.

Um, so that'll be for me.

Erica Salmon Byrne: Yeah, I agree with everything Nada just said. I think those are critically important steps. The thing I would add to it, um, Meghan, would be I would strongly encourage the board, to the extent that they are not doing ethics and compliance related tabletop exercises, to treat them as seriously as they do cybersecurity exercises.

So really ta- And, and look, there are so many fact patterns out there that are available for, for directors to use, to sit down as a team and say, "Okay, here's the fact pattern of the thing that happened in our industry." Not could it happen here, because that's far too easy to answer no. What would it look like here?

How would it happen here? What would our version of this be? Because doing that re- repeatedly doing that kind of an exercise is one of the ways that you get to some of what Nada was just raising, which is, "Hey, wait, we haven't heard anything from anybody in EMEA in 18 months. What's going on in EMEA?

Could this, could, could something like this be happening there? Could something like this be happening in our Asia Pac region? Could something like this be ha- I mean, there's so much M&A right now. Could something like this be happening inside the company we've just paid $4 billion for and we're gonna have a problem on our hands," right?

Those are the kinds of questions directors need to be asking themselves. And putting it in the format of a case study is one of the ways that you can take some of the personal sting out of talking about, you know, whether or not you've, your CEO is engaged in inappropriate relationships, which is a headline we keep seeing over and over again.

Um, that can be a tricky situation to discuss as a board, especially if your CEO is also the chair. But if you talk about it as, like, this thing that happened to someone else, and we're pulling out the pieces that could possibly happen to us with that same level of reputational challenge, and what would it look like here, and how would we know?

That is one of the things that I would be, I would want to be pushing for if I was serving in a, uh, an independent director role today.

Neta Meidav: Erica, summer is coming. Do you think we'll get another Coldplay moment maybe this summer? Taylor Swift concert? I don't know.

Erica Salmon Byrne: Yeah. We'll see. We'll see.

Meghan Day: Well, before we let you both go, a couple of questions that we ask all of our guests that I'd like to end with.

Uh, so Erica, let's start with you. What do you think will be the biggest difference between boardrooms today and 10 years from now?

Erica Salmon Byrne: Dashboards. I think the biggest difference is gonna be dashboards. I think that, um, and I... It's not gonna take us 10 years to get there. Uh, I think that over the course of the next couple of years, we're going to see a tremendous evolution in the way in which boards are being fed information about what's happening with the business.

I think we're going to see consolidated dashboards that are gonna be bringing together data from a, a whole host of sister control functions. We're seeing this now in some of the best companies coordinating what their, what audit is talking to the board about, with what ethics and compliance is talking to the board about, with what procurement is talking to the board about.

But interactive, uh, the ability to interactively see live feed data, um, I think is gonna be one of the things that, that is a tremendous change, and it's not gonna take us 10 years to get there. Neta, what about you?

Neta Meidav: Well, if I can make a guess, I think that in much less than 10 years, uh, we will see agentic board members.

Uh, we will see agents taking the role of, of board members or just adding experience, adding perspective, adding, uh, some sort of domain expertise, um, and acting like, like, uh, uh, wizards with, uh, with answers on boards. And, uh, and those, uh, agentic board members are, are coming our way. I even know a company that, uh, develops them.

Uh, so, uh- ... uh, really excited to see how AI transforms this particular room as well.

Meghan Day: Love that. Well, what was the last thing you read, watched, or listened to that made you think about governance in a new light?

Erica Salmon Byrne: And this is not a pandering answer, Meghan, but, uh, I have been binging, um, episodes of the Corporate Director Podcast because it was not something that was part of my regular listening feed, um, before we did the work that, uh, we've done with the Diligent team over the course of the last several months.

And, you know, there's a, there's a really wide variety of, of guests that you all have had on the show, and that, I think, is the thing that I am most excited about. I- Neta's answer about agentic AI board members scares the pants off of me, um, for a whole host of reasons we don't have time to get into. Um, the thing that gives me the most hope for the boardrooms of the future is the way in which we're all learning from different disciplines.

There is so much that we can learn from academic research. There's so much we can learn from organizational psychology. There's so much we can learn from all of these different disciplines that are really teaching us so much about how people work, how people work with each other, and e- eventually how people are gonna work with AI.

Um, because at the end of the day, you know, it is going, that is going to be a relationship that is going to evolve, and we are gonna have to figure out how to manage it. So, um, I've really been enjoying listening to, uh, the Corporate Director Podcast.

Meghan Day: Aw. Well, thank you. We're always happy to gain another listener.

Well, last but not least, I would love to hear from both of you, what is your current passion project?

Erica Salmon Byrne: My current passion project, uh, the hill I, w- uh, the proverbial hill I'm gonna die on, Meghan, is, um, doing everything I can to improve the relationship between the ethics and compliance community that Ethisphere serves and their partners in human resources.

It is not always an easy relationship, but it is a critically important relationship. And so I have been doing, um, a lot of thinking and writing and talking and speaking to that particular audience to try to point out all the ways in which, um, a strong partnership with human resources is actually a two plus two equals seven situation.

Um, not even two plus two equals five. It is a enormous value accelerator if done well. Um, but it is definitely one, uh, it is a, a fraught relationship in far too many organizations still, and that's to the detriment of those organizations and to their employees.

Neta Meidav: For me, um, within Diligent, my, my passion project, um, is, uh, that actually brought Erica and me together here on this podcast, is very much, uh, around partnerships.

Um, and truly all kinds of partnerships looking into both business, um, product and technology. Um, and there are some truly exciting alliances that are, um, that are, uh, coming into play that, uh, we would love to talk about soon. And that's, you know, that's, that's a, that's always a, a, you know, for me a, a, a great part of the business to work on when you work on partnerships and you're bring- and you're building alliances because it's about the, the business rationale, but it's really about the...

it's really about people and relationships and, and, you know, and how you make one plus one be three. And, and, and I'm, I'm, I'm really excited about those. Kind of, uh, my extracurricular passion project, uh, continues to be working with female founders and ensuring more females are, uh, entering into, um, the world of startups.

Specifically, I had the pleasure of meeting, um, and mentoring, uh, women in the GRC and legal space. Um, so also allowing me to bring some of my, uh, domain expertise to, to, to that. But, uh, anything we can do to make women more present in the entrepreneurial world is, um, uh, continues to be my passion project.

Meghan Day: Love that. Well, thank you so much for joining us on the show today. Really enjoyed today's conversation. Thank you so much for having me.

Neta Meidav: Thank you. Bye-bye.

Kira Ciccarelli: Great interview, Meghan. Always nice to talk to the two of them, and I think what sticks out to me in particular is this emphasis on making sure that your directors are sort of ethics literate and this idea around board education. It, it just goes so much further beyond a strict compliance perspective

Meghan Day: Definitely.

And I think here in the US, it's funny, uh, y- come back to your comments earlier about the sort of myopic US point of view here. Uh, uh, it's very true, I think, from an ethics pers- perspective too. I think we are so oriented around compliance here, but some of the foundation of what it means to be an ethical organization is, is often not, uh, as top of mind or front and center in some of the conversations happening at the boardroom as perhaps they need to be.

Yeah, I, I think one of the things that, um, you know, always sort of jumps out at me when I read this report that we did together is how there is such a tight connection between being a really ethical boardroom, ethical company, and company performance. I mean, for me, that's sort of the, that's sort of the bottom line, right?

The literal bottom line is your company performs better if you're per- if you are operating ethically. I mean, it, it seems kind of like a no-brainer, but maybe it's not. You know, maybe it's not a no-brainer these days. I mean, they, yeah.

You know, it reminds me, Dottie, of your, your oldie but goodie, that, uh, modern governance report from, gosh-

2019?

Yeah, I was gonna say, uh, a long- Yeah ... time ago now. But the, the themes, I think, do still carry over and remain to be true.

Yeah, there's, there's good business reasons to do the right things, right? And in this case, I think, um, y- I also just think it was really interesting to have the opportunity to, to join forces with Ethisphere and take a look at this data set with fresh eyes, right?

They've been doing this report for so long. And I know we talked about this on a, on a previous episode, but I just really like that we had this opportunity to come in and say, "Hey, you've collected all this information on what the boards of the most ethical companies are doing. Can we write about that?

Can we take a look at that and see what we, what surfaces for us?" And I was really interested in, in some of the findings there. You know, it really stood out that the boards of the most ethical companies do operate a little differently. They have people who have a background in ethics and compliance on the board.

You know, they, um, they have, they have a little bit more of a focus on ethics and compliance. And I think because of that, it, it just means all good things for how the company operates and how successful they are. So, you know, I guess the, the, the moral of this tale is just do the right things, folks. Just do the right things.

Doing the right things means you're gonna do better. You do better by doing good. Isn't that the old adage?

Indeed it is. But, uh, you know, the other part of me is, you know what? You, you wanna screw up, that's fine. I look forward to reading the latest, you know, bad blood novel, uh, related to that.

Is it wrong, Meghan, that I crave news that isn't dire?

Uh, I understand.

I mean, this is why I was so happy to read this report because for once it's not like, here's all the things that people are doing terribly wrong. For once, it was like, hey, look, here's some stuff they're doing right, and they're actually succeeding because they're doing things right. I'm like, come on.

It's just a f- it's a nice palate cleanser.

Ever the Pollyanna.

Kira Ciccarelli: Always. For sure. And I know, um, Erika and, uh, the rest of her team are always very careful to say that it's not causational necessarily, but it certainly doesn't look like there's any downside to- Right. ... having any of these practices in place.

That much we can say for pretty much certain. Well, that wraps up

Dottie Schindlinger: another episode of the Corporate Director Podcast, the voice of modern governance. I'd like to say a few special thank yous, first to my two co-hosts, Meghan Day and Kira Ciccarelli. Our two guests on the show, our ethical leaders, Neda Maedav and Erika Salmon-Burne.

Podcast producers Kira Ciccarelli, Steve Clayton, and Terry Tiery. The sponsors of our show, including KPMG, Wilson Sonsini, and Meridian Compensation Partners. And most especially, thank you to Diligent for continuing to sponsor this show. If you like our show, please be sure to give us a rating on your podcast player of choice.

You can also listen to our episodes and see more from Diligent Institute by going to diligent.com/resources. Also, if you happen to serve on a nonprofit or public sector board, then tune into our sister podcast, Leading with Purpose, for expert conversations on governance, risk, and compliance that make an impact for mission-driven organizations.

Thank you so much for listening.

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Thank you so much for listening. Until next time.