Earlier this month, the preeminent observer of corporate responsibility, James B. Stewart, in his Common Sense column in the New York Times about the failures of the corporate Board at CBS in the "Leslie Moonves matter" wrote:
"Members of corporate boards, senior executives and even rank-and-file employees have a duty of loyalty -- to the company, not its chief executive. They're required by corporate law, company policy and in many cases their employment contracts to report misconduct to the board."CBS Report on Moonves Shows Epic Failure of Corporate Governancehttps://www.nytimes.com/2018/12/04/business/leslie-moonves-cbs-board.htmlI'm sure that all of us recognize that Stewart's maxim applies not just to the corporate world but our non-profits in equal measure. And this duty to the entity not to the person is not a rule that may be compromised; it is absolute...it has always been absolute.
Chevre, I have breached this rule; I have no doubt. There have been times when confronted with serving the CEO at some organizations or the entity itself, I have chosen the easy road. I'd like to think that in doing so, I had the best interests of the entity in mind. But, that's not the point is it? In choosing the easy path, I did damage to the basic rule: I was serving as the Board Chair (or whatever position in the organization); but I acted to benefit the person. And, in so doing, I damaged the non-profit. It may have been on something minor, but organizations can die as the result of a series of small cuts, small wounds...and they have.
And, it's not just the "leaders" whom are charged with this duty: this fiduciary responsibility to the entity is imposed on all Board members, and on the CEO him/herself. Those who stand aside, ignoring, e.g., incidents of sexual harassment as in "the Moonves matter," or a CEO who engages in public self-dealing, acting in his/her self-interest without regard to the negative impacts on the entity -- it makes no difference whom it is. It reminds me of the challenge: if you see something do something.
Each time this duty of loyalty to the entity is ignored or overlooked, the entity is weakened. And each time the duty of loyalty is ignored or overlooked ("nothing to see here"), the basic trust in the entity on which successful organizations survive and prosper is damaged. And, ultimately, this breakdown of trust kills.
How many of us have sat in silence as Boards of our non-profits are stacked with those who have demonstrated that they will look away while the CEO acts without accountability? How many of us have voted in the affirmative to seat a new Board Chair who makes it clear that he believes that the Board Chair and the Board itself should delegate all to the CEO and "get out of the way?"
Yes, I know full well that in many of our organizations the role of lay leaders has been relegated to the sidelines. We are admonished to "make no waves." We have become nothing more than institutional cheerleaders.We see that those who "move up" in our organizations are those who make no demands upon it. We have forgotten that we are charged with demanding accountability to the organization. Examples abound, they are happening around us every day.
Every day. And those organizations wither and die.