Fiduciary Responsibility
The purpose of this article is to articulate why fiduciary responsibility is a needed corporate characteristic that permeates the entire being of the organization.
Fiduciary Responsibility is one of those phrases that initially conjures up thoughts of managing money and rightfully so. The definition of fiduciary has, for the most part, been used to refer to the management of assets for the benefit of another party. In business, we often use this term to explain what the responsibility of the Board of Directors might be and/or the executive team, especially the CFO as the go-to person.
In the words of Lord Millett, the well-known British judge and barrister from the mid 1900's, "A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence"
In stating the obvious, we get that ultimately, our fiduciary responsibility in our company is about helping to protect and manage our assets in a way that benefits the business and those involved but if we take this overarching definition at face value then the idea behind fiduciary is one of trust. It's the trust to do the right thing for the business which encapsulates its employees, it's customers, it's assets and ultimately it's reputation and brand. Most people in an organization, irrespective of their title or role, would agree that they are indeed fiduciaries given this definition. The excuse "it's not my job to do this" doesn't bode well.
Given that simple truth, there are some specific behavioral characteristics that we need to be aware of to help us meet the fiduciary responsibilities we are entrusted with because we are part of an organization. The relationship between fiduciary and behavior takes some of its similarities from the topic of behavioral economics; an area that studies the economic impact of decisions driven by social, cognitive and emotional factors. While behavioral economics is mainly focused on how market decisions are made and the mechanics behind them, the idea that our social, cognitive and emotional drivers impact our fiduciary behavior is not too dissimilar.
Who we are, what we believe and why we believe it plays a big part in how we work and live out our duties in our respective roles. It's open for debate but in effect, everything we do in our corporate roles is directly tied to how we instill integrity, trust, and benefit in our business. Let's look at some examples where fiduciary responsibility is often overlooked or rather how we might not think of such things as being linked to fiduciary responsibility.
These are simple examples and you might think that they are too simple and that you or your team would never behave this way, to begin with. Hopefully, that is completely true but for those that might have behaved this way in the past, it is a reminder of how "everything we do" must be seen through the fiduciary lens.
Example #1 - Business idea to expand market is socialized amongst the management team for review, input and acceptance or rejection. Due date is provided.
What should have happened - each team member reviews the idea, develops their thoughts and offers their respective insight to the team; team meets to discuss the economic impact/benefit/risk; the strategic value of such a decision, etc.
What actually happened - some team members offer partial input; others assume it's someone else's responsibility or their lack of knowledge on the topic disqualifies them from offering any input; decision making is limited to part of the team; team decides to move forward without everyone's input; the team members that didn't input the first time come back later with objections; process stalled even though expectations are now set - everyone looks foolish
Example #2 - Senior manager/employee delivers exceptional service to customers but seeds indifference and uncertainty internally with employees/colleagues.
What should have happened - senior person is a role model for the business and his/her co-workers; they work diligently to establish good working practices, desired behavior inside the company and customer-facing; they take a constructive view to how the business can improve not a critical approach that quenches the efforts and spirit of the people
What actually happened - senior person is loved by customers; quality of the work is exceptional and has helped the business differentiate in the market; senior person now has a superiority complex; challenges every major decision as initially being flawed; shares their disagreement with other employees and has mastered the art of character assassination; distrust builds amongst the management team; difficult to manage now since they serve customers well but the company poorly; ultimately impacts management and financial behavior; sacred cow syndrome tested
In both of these examples, there was a fiduciary responsibility of those involved to respond with the ownership mentality often missing amongst teams because people either aren't interested enough to bother or they believe their roles prohibit them from taking a certain action. I'm not here to judge people's motives because there are other factors that often play into why someone does or does not get engaged or involved differently. The point is to say what Lord Millett stated so well (paraphrasing his quote) - do my actions and behavior give rise to the improvement of the people I work with and the business I am a part of.
Separate the wheat from the chaff
What do we do next? Talk as a team, as a group, as a company. Keep talking and be candid in discussing this topic and what it means to everyone involved. Think about practical ways that you can increase awareness of how everyone takes on a little more ownership mentality.
Those that care enough will change and look to be part of the solution. Those who don't care enough will eventually disqualify themselves. Wheat and chaff.