Somewhere along the way as our society has evolved into a series of ecosystems governed by “political correctness” and “not wanting to offend anyone’s feelings,” the principle of fairness moved up to the top of the decision-making priority list as a best practice. To get our economy and government back on track, principles of fairness need to move back down the list to the middle of the pack where it belongs.
Board members and executives must re-establish “actions which are in the best interests of our shareholders” as the principle that sits atop the priority list.
Don’t get me wrong, fairness is a wonderful tool in governance and leaders who embrace principles of fairness often win the respect of their co-workers, but if and when fairness is put at the top of the priority list, effective governance is likely to break down. There is a fundamental difference between a voice and a vote. Keeping your workforce informed and offering them channels to provide input is admirable, but at the end of the day, leaders must lead and make tough decisions, whether or not they will be perceived as “fair” by those affected by them.
The moral and ethical paradox of fairness is that which is right isn’t always fair and that which is fair isn’t always right.
Assume you have 100 employees and that 10 need to be terminated as soon as possible for the company to move forward and remain viable to protect the best interest of the shareholders. Should you select the 10 most recently hired? The 10 with the lowest performance reviews? The 10 from your lowest performance division? The 10 who don’t have families to support? The 10 most costly relative to productivity? Pick 10 names randomly from a hat? The 10 you like the least? The 10 you perceive as least loyal to the company? In all likelihood, no matter what you decide, the consequences of your decision will be perceived as unfair by at least 10 people, maybe many more. As the old adage goes, “you can please some of the people all of the time and all of the people some of the time, but you’ll never be able to please all of the people all of the time.”
Companies who allow all decisions to be guided primarily or exclusively by fairness will be perceived as vulnerable by their competitors, direction by their customers, weak and powerless by their employees and rudderless by their shareholders. Tough times require tough decisions – there is no path that avoids crossing the sometimes unpopular bridge of unfairness and disparate treatment.
The communication of the consequences of tough and unfair decisions can still be guided by principles of transparency, empathy, sincerity and by treating people with dignity and respect at all times, a commitment to a set of shared values especially during times where difficult decisions will need to be made is a key pillar of good governance. But that is not the same as putting fairness at the top of a decision-making priority list that will unnecessarily skew or delay the difficult decisions that need to be made in volatile and challenging times.
Even if I don’t agree with their views, I have always respected those who act with passion and conviction. Those whose actions speak louder than their words. Those who make promises and keep them. There are people guided by deep-seated beliefs and a strong set of moral values. They understand and embrace the fact that there will always be those who will perceive their decisions as unfair, no matter how much time and deliberation went into them. But governance is not a popularity contest and executives are not cheerleaders. Governance is hard and challenging work – nobody said it was going to be fun!
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ABOUT THE AUTHOR
Andrew J. Sherman is a Partner in the Washington, D.C. office of Jones Day, with over 2,500 attorneys worldwide. Mr. Sherman is a recognized international authority on the legal and strategic issues affecting small and growing companies. Mr. Sherman is an Adjunct Professor in the Masters of Business Administration (MBA) program at the University of Maryland and Georgetown University where he has taught courses on business growth, capital formation and entrepreneurship for over twenty-three (23) years. Mr. Sherman is the author of twenty-three (23) books on the legal and strategic aspects of business growth and capital formation. His twenty-third (23rd) book, Harvesting Intangible Assets, Uncover Hidden Revenue in Your Company’s Intellectual Property, (AMACOM) was published in early October of 2011 and is now available on amazon.com. Mr. Sherman can be reached at 202-879-3686 or e-mail ajsherman@jonesday.com.