By Guy Higgins
I recently read an article on corporate preparedness that contained the following assertion:
“In today’s corporate governance climate, there exists an increased emphasis on corporate boards and directors as well as senior management to fulfill their fiduciary responsibilities to guarantee that their corporations have in place the required corporate policies and operating protocols that would be adequate when it comes to managing the affairs of the corporation.”
For this discussion, I’ve emphasized three words/phrases. Finding the dictionary definition of those words is easy – even I can do it. However, the meanings of words in the U.S. today seem to be enormously malleable. I’m reminded of the wry observation, “I’m not sure that what you heard is what I intended to say.” So let’s look at them from that perspective:
- Fiduciary responsibility – does this mean that company leadership is liable if they fail to make a profit every day? Every week? Every quarter? Every year? Does it mean that they are responsible for making a profit that is greater than X? Does it mean that they are responsible for keeping the company in business? What does responsible mean in this context? Is senior leadership legally or civilly liable if they fail to achieve some asserted minimum level of performance?
- Guarantee – does this mean that there must be, without fail, a result delivered or a process implemented? What limits can be established on this “guarantee” or is it without limit? Must the result be delivered without regard to any issues, problems or disruptions? Must the implemented processes be 100% effective under all conditions? What are the implications in the case of failure to meet the guarantee?
- Adequate – Does this mean good enough to not fail? Better than average? Better than all the competition? Jack Welch famously got rid of the bottom ten percent of his managers every year (by the way, Jack, there will always be a bottom ten percent, no matter how many people you get rid of. When I was on active duty, I would observe that if you put the Joints Chiefs of Staff in a room, one of those five people would be the worst four-star officer in the room. Think about it). Does “adequate” mean under any circumstances?
When I was serving in the Pentagon (1994 – 1996), Honorable Gil Decker was the Assistant Secretary of the Army (Research, Development and Acquisition). Gil is an exceptionally smart man and a fine leader. One of his responsibilities was the destruction of the Army’s chemical weapon stockpile in accordance with Congressional direction, “… in as safe a manner as possible.” (emphasis added by me). In one of the meetings of the senior DoD acquisition leadership, Gil lamented a serious problem – there is always something more that can be done to make the destruction safer. His point was that, since there was no financial limit placed on incremental improvements, there was no way to reach the goal – he could always do more. In order to avoid the dangers of transporting chemical weapons, the Army built redundant disposal facilities at each storage location and a test location on (as I recall) Johnston atoll in the Pacific. The Army bought ambulances and emergency vehicles for nearby towns and cities. They conducted extensive testing of the “demilitarized” material to ensure that it was no longer toxic. I’m using this as an example because the news media just recently reported that the chemical weapons stored here in Colorado would begin to be destroyed this year (let’s see – Gil worked on the problem of “as possible” in 1995 and we’re getting started on the chemical weapon destruction in 2016. In the intervening twenty-one years, the residents of southern Colorado have been at risk of an accidental chemical release as a result of the failure of a chemical warhead [chemical weapons are not only toxic but often corrosive]).
I’m certain that Congress did not intend for the destruction of chemical weapons to take twenty-one years or that it experience cost growth without limit. Nonetheless, because of the words that they used in the enabling legislation, such was the result.
Getting back to my introductory observation on company preparedness, what should senior leadership do? Anyone with a thesaurus can replace inflexible words with more flexible words to eliminate or reduce the “as possible” problem. By itself, that is likely to simply create a different problem – one in which it will appear to (or perhaps actually) create an complete lack of accountability at the senior leadership level. If I amend the quote at the beginning of this post to eliminate the words I emphasized, I could create the following:
“… there exists an increased emphasis on corporate boards and directors as well as senior management to <keep the company in operation,> to <usually> have in place the required corporate policies and operating protocols that would <most likely be effective> when it comes to managing the affairs of the corporation.
I doubt that this kind of statement would engender great confidence among investors – or with the company workforce.
I think that it goes back to the question of thinking through what it is that we want that senior leadership (Board of Directors and “C” suite) to actually do. The same thinking should apply to any policies and directions from leadership – make sure you know exactly what you mean, express it clearly and get immediate feedback from the listener(s).
One more story: I once accepted a job challenge to do X from two senior executives, one of whom was my boss. I thought the direction was pretty clear. I did not have separate one-on-one discussions with the two of them. After six months and an enormous amount of tension and ill feelings, I figured out that my boss wanted “sort of X” and the other executive wanted Y. Words have meanings and they matter. I will also assert (something else to think about) that once you say them, they lose all malleability – their meaning is as immutable as iron. You can’t decide to change what you meant in the past.