Sir Rod Drury’s independent review, commissioned by Xero, has taken everyone by surprise.
Or has it? Who knew what and when?
New Zealanders are not good at speaking up. Silence is favoured. Suspicions, concerns, and partial evidence are routinely coupled with misunderstanding about when to speak up and fear of retaliation. When a CEO is involved, that fear is real.
Encouraging a speak up culture will not be solved by policy documents. Committing to a well-designed speak up programme and a procedurally fair investigatory process will achieve what inaction and complacency cannot.
Inseparable from the preference to remain silent is employee doubt around what to speak up about. Integrity is a core value of many companies, spread liberally across codes of ethics — yet it is rarely defined.
The question “what do we mean by integrity when it comes to the moral decisions and actions of senior leaders” is not explored. Everyone has their own idea of what integrity means, but codes of ethics and conduct typically fail to examine the specifics. Without definition, integrity is left to assumption. It appears in almost every code and is applied to almost every scenario requiring trust and confidence.
Xero’s Code of Conduct mentions integrity once — in the opening line.
“At Xero we act honestly, fairly, with integrity, and in line with the law.”
That’s it. Integrity is invoked but never defined. There is no section headed integrity. No behavioural indicators. No examples of what integrity requires or what violates it.
What the Code does do is get specific in other areas. Conflicts of interest — detailed. Gifts and entertainment — threshold amounts specified. Intimate relationships — disclosure required, a whole policy referenced. Insider trading — explicit prohibition with legal consequences named.
When Xero wants to define a standard behaviourally, it does so. Integrity, however — the value they lead with, the word that does the most reputational work — gets one mention and no definition.
A majority of CEOs also elect to remain absent from any personal championing of their company code of ethics. Across three assessments undertaken by The Ethics Conversation between 2021 and 2024, over 70% of NZX50 CEOs failed to endorse or lead their company code of ethics with a personal statement. Sir Rod is amongst these — acknowledging that Xero is currently listed solely on the ASX.
‘Across three assessments undertaken by The Ethics Conversation between 2021 and 2024, over 70% of NZX50 CEOs failed to endorse or lead their company code of ethics with a personal statement.’
It is a questionable practice and undermines the significance of tone from the top. I have long argued that this is more than unfortunate — it is a leadership risk. Tone from the top is not established through anonymity. It is driven home when a leader stamps their mark and identifies the ethical values that will define their leadership.
That another CEO has fallen foul of their code of ethics is, in this context, predictable. Simon Henry’s comments about Nadia Lim cost DGL dearly and contributed to its delisting from the NZX. The market made a values judgment faster than the board did.
While employment lawyers provide commentary from a legal perspective and Maria Dew KC is now tasked with a review, the potential breach of Xero’s own behavioural guidelines has attracted almost no commentary.
The Code requires disclosure of intimate relationships. It does not specify to whom, at what point, or what happens if the person who should receive that disclosure is the CEO. The provision was probably never written with the CEO in mind — especially given that integrity is expected but not defined.
CEOs exert unique power and often operate in rarified circles. The actions they undertake have widespread implications. When we examine the linkages between integrity, power imbalance, and relationships at work, we move quickly toward abuse of power and conflict of interest. Intimate relationships in particular can lead to bias, favouritism, and compromised decision-making. Judgement is clouded.
This is not conjecture. In February 2022, Kristy P McDonald ONZM QC undertook a review of the process for the appointment of KiwiSaver default providers. Her findings are directly relevant here. She identified that oversight and management of conflicts must naturally fall to the Chair when the Chief Executive has a conflict.
She stated in clause 6.25: “A key risk that this process is intended to address is the risk that staff may be perceived as tailoring their views or work on a matter in which their Chief Executive’s personal interests are engaged in order to please the Chief Executive.”
There it is. For any employee — and specifically for those in a relationship with their CEO — the landscape is fraught. Power does not pause because a relationship is described as consensual.
Boards commission codes. They approve values statements. They rarely ask whether integrity — the word doing the most moral work in those documents — has any shared meaning among the people expected to live by it. That question is not comfortable. It is also not optional. Define it. Model it. And create the conditions where people can speak when it fails.
