There is Much More to Fiduciary Responsibility Than You Think

Fiduciary Responsibility to Customers?

Let’s continue with a constituent group, whom without, the organization wouldn’t exist: Customers. You might argue that there’s no room in your role as a Director on the Board to influence the realm of “customer” for the organization. Think again! Board members provide guidance, advice and governance to the leadership team on their strategies and long-range plan – if you don’t see the customer and customer service success metrics powerfully reflected in this plan, then perhaps some dialogue at the Board level is appropriate. Proactively directing the leadership team to consider taking care of the customer may not be a traditional role, but it’s needed. Corporate leaders’ priorities are influenced by the Board – leaders will make serving customers a priority if the Board insists.

Rather than view customers as those “pesky people” who drain your customer service resources and demand low prices, it is a Board Member’s responsibility to connect with what makes customers tick and Directors should insist that innovative solutions be offered to help them solve problems they may not even know they have – and to help customers better serve their customers. As customer driven revenue pays the bills, and actually determines an organization’s viability, isn’t it critical to safeguard customer opportunities to grow and extend their relationship with your organization? Thus, fiduciary responsibility to clients and customers!

Would you rather face the flip-side of proactive customer focus? It may be easier to imagine your Board Member role in Governance when sales are down, market share is down, net income is down, customer ratings are declining – quoting your fiduciary responsibility in crafting your punitive response to these reports. What’s the traditional Board going to do? Point your finger and lay blame on leadership or management? Change leadership “horses,” incentivize differently? React in disappointment, disdain or even anger (when in danger or in doubt, run in circles, scream and shout)?

Consider an alternative scenario when the Board is more in-touch and understands the real business dynamics of the marketplace and the associates who serve it. Good news or bad news on the customer front, Board Directors are also responsible.

Fiduciary Responsibility to Employees?

Let’s move on to another constituency: Employees. What responsibility does a board member have to the organization’s associates? From the warehouse worker all the way to the C-Suite, the organization is comprised of real people who deliver value to the company – they perform in a way that causes customers to come back, pay more, influence others to buy (or in contrast, do the opposite and customers buy somewhere else). While there is no place for over-involved, interfering and overcontrolling Board participation in the day to day business matters of the organization, Boards do need to contribute to a “Fiduciary Partnership” with an organization and its leadership.

Board Members naturally fear crossing over the line – away from “directing” and closer to “managing.” That fear may drive members to a point of detachment, rather than working for the right balance. Further exacerbating this issue is the literal separation between Board Members and employees. In some organizations employees are even instructed to be “seen but not heard” when a Board meeting occurs. In the name of segregation of duties, Board Members are sequestered and not encouraged to walk the halls and meet the heart and soul of the organization. When Leadership addresses the Board about their employee base, they use reports, numbers, charts and statistics. Aside from the Compensation Plans they approve, and the presentations they receive from Leadership on specific strategies, risks and accomplishments – interaction with anyone outside of the C-Suite is limited.

This can lead to isolated, “overly-managed communications” to the Board. It’s a tradition that is well rooted in our corporate culture. However, is there a lost opportunity in this tradition? What if leaders spent energy creating interaction opportunities with their Board rather than actively isolating members from rank and file staff members – going beyond inviting board members to employee town halls to sit in the front row and applaud. If the Board, either as a group or at an individual level, felt that they were more connected with staff, linking faces to a few names, seeing the people behind the numbers – wouldn’t that lead to higher engagement for both groups?

Here’s a good test. If a Board Member can walk through the halls of your organization, and employees don’t recognize them (outside of the fact that they are wearing a suit), it may be time to rethink how engaged they are. Or, if a Board Member is given the opportunity to meet a group of employees in the lunch room, but politely declines, you are seeing the tradition work against you. How can a Board Member feel a responsibility to the entire organization if that relationship is limited to the select, and very few individuals they hear from at their meetings? Are you more afraid of what a Board Member might learn by interacting with line level employees, or that they might dig deep into the day to day operations? Trusting board members to engage with, but not manage staff is key. Help them, prepare them, go with them at first, make connections part of the culture. See what happens, both in the organization and with Board Members.

Again, this does not mean operational interference or over-controlling activities, but it does mean the Board needs to contribute to a “Fiduciary Partnership” with an organization’s leadership.