{"id":16966,"date":"2014-05-14T04:44:57","date_gmt":"2014-05-14T02:44:57","guid":{"rendered":"http:\/\/www.w-t-w.org\/en\/?p=16966"},"modified":"2014-05-14T04:44:57","modified_gmt":"2014-05-14T02:44:57","slug":"boardroom-justice","status":"publish","type":"post","link":"https:\/\/www.w-t-w.org\/en\/boardroom-justice\/","title":{"rendered":"Boardroom Justice?"},"content":{"rendered":"

Lucy P. Marcus writes<\/a>: \u00a0There is a real danger that corporate leaders, making decisions that seem correct behind closed doors, end up being tone-deaf in a soundproof room. It is clear that board members are often deeply disconnected from the world\u2019s economic and social realities.
\nConsider executive pay packages. Board remuneration committees can explain them logically with complex formulas to justify them, and yet often they are completely out of line with common sense.
\nBoard members need to rethink what they are doing in those rooms, and here individual directors\u2019 guiding principle should be the \u201cveil of ignorance\u201d proposed by the political philosopher John Rawls in his 1971 treatise A Theory of Justice. Rawls proposed the veil of ignorance as a way to derive principles of social justice to which anyone who did not know in advance their identity and position in society would consent.
\nHow would the veil of ignorance work in a boardroom? Board directors\u2019 role is not simply to ensure return on investment; it is also to make decisions with due consideration for the community, employees, suppliers, consumers, and even the overall economy. The decisions made in that room have an impact beyond the company, so it is not just shareholders who hold board members accountable for their choices.
\nIn order for board directors and senior executives to make judicious decisions, they cannot think only about whether they will directly benefit. As in Rawls, if we imagined that we did not know who we are or where we stand in society \u2013 whether we are rich or poor, male or female, young or old, CEO or shop-floor worker \u2013 our decisions would be more ethically grounded. The veil of ignorance changes the nature of the discussion on almost every issue, from executive pay, wage discrepancies, and working conditions to long-term strategy, succession planning, and much more.
\nMany issues that should be viewed through the veil of ignorance fall into the categories of environmental sustainability, social equity, and corporate governance. For example, if we didn\u2019t know whether we would be working long days at a fast-food counter or overseeing the entire organization, we would think differently about compensation structures and the ever increasing gap between the most senior management and the most junior staff members. If we didn\u2019t know whether we would be working on a factory floor in Bangladesh or in a shiny head office in the United States, no one would disavow responsibility for the health and safety of Bangladeshi workers.
\nThe list goes on. If board members were making choices from behind the veil of ignorance \u2013not knowing their position in the company \u2013 they would want everyone to have opportunities to implement change or be entrepreneurial. Not knowing whether they were male or female, they would ensure pay equity and better policies concerning parental leave and child care.
\nLikewise, knowing that they might be the customer would make them look differently at cost-cutting measures that weaken product testing and consumer protection. If they believed that they might live in a community affected by an oil spill, they would want robust, not minimal, environmental safety standards, and they would not seek to circumvent the rules.
\nThere is a danger of taking this thought experiment too far. Getting caught up in factoring in all of the different perspectives would cause decision-making to gravitate toward the lowest common denominator, with outcomes that achieve very little for anyone. That is not the point. The point is to step outside of one\u2019s comfort zones, distance oneself from the voices around the table that sound just like one\u2019s own, and remember that board members are responsible for the direct and indirect impact of their decisions.
\nThere is no doubting corporate directors\u2019 responsibility for the growth and success of the company. But that responsibility also requires being thoughtful individuals who can see the bigger picture. Investors are more attuned than ever to companies\u2019 social and environmental impact, and they are increasingly concerned about whether the companies in their portfolios are good corporate citizens.
\nIf directors remind themselves each time they enter the boardroom why they are there, and pause for a moment to consider how their views would be affected if they did not know who they were, they would make better decisions for the company and for the entire system in which it operates. In this sense \u2013 and only this sense \u2013 ignorance in the boardroom is the right approach.<\/p>\n

\"Closeted<\/a><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Lucy P. Marcus writes: \u00a0There is a real danger that corporate leaders, making decisions that seem correct behind closed doors, end up being tone-deaf in a soundproof room. It is clear that board members are often deeply disconnected from the … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"footnotes":""},"categories":[22,13],"tags":[],"class_list":["post-16966","post","type-post","status-publish","format-standard","hentry","category-corruption","category-finance"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t