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James Thomson, the Editor of SmartCompany made some interesting observations following the appearances of Rupert and James Murdoch before a British Parliamentary inquiry into phone hacking by News Corporation’s publications.

The Murdochs and the CEO Rebekah Books all claimed “to have been kept in the dark over key elements on of this hacking scandal over the last three-to-five years.” If this is accepted Mr Thomson asserts that questions must be asked “about News Corp’s governance procedures and particularly the way it detects, investigates and deals with unethical behaviour.”

“He contends that “it’s not just News Corp that should answer these questions – SME company owners and managers would do well to sit down and figure out how problems are dealt with in their company.

These governance questions would include:

•What processes are in place for detecting unethical behaviour? Is there an anonymous phone line or an established process for staff to make reports?

•How are complaints acted on? Is there an established complaints-handling process?

•Which managers are given the responsibility for deciding the seriousness of complaints and therefore the level of manager that needs to be informed?

•How is the CEO and board kept informed of serious complaints?

•How are the outcomes of serious complaints made known to the organisation?

Being able to answer these questions is as important in a small company as it is in a large business like News Corp.

Most SME entrepreneurs I know understand that the buck always stops at the top – problems are always the CEOs responsibility, regardless of who actually created the problem.

And when the buck stops at the top, leaders better have a way of ensuring that problems can be quickly and appropriately dealt with.

Because when things go wrong and directors and investors start asking questions, you’d better have some clearer answers than Rupert did.”