Rationalizations for Boards to Consider

Sometimes it’s difficult to talk about our values and immediately change the behaviors of ourselves or others because, typically, our inner thoughts and emotions present us with a rather sophisticated set of rationalizations for either acting or not.

There are a number of ways others can push back on your ideas – common rationalizations – especially in the board of directors’ context. For example, we might face the (1) standard practice/status quo (2) materiality (3) locus of responsibility and (4) locus of loyalty rationalizations. These are by no means the full set of rationalizations you might encounter in your company or board of directors – yet it’s helpful to understand the types of push back you’ll encounter and be better prepared to work on your action plan.

The standard practice argument is best captured by the statement, “Everyone does it.” This argument assumes that an action is acceptable simply because the majority of the people engage in it or because it’s been done for a long time. This rationalization is powerful and many of us use it to avoid taking responsibility. Such a rationalization might apply, for example, to a board’s use of pay consultants to determine CEO pay and subsequently ratcheting it up.

Second, the rationalization of materiality refers to making the argument, to yourself or others, that an action is not material – that is, it doesn’t matter or is insubstantial. Framing the question in terms of materiality shifts the focus from the action to its consequences. People tend to believe that if they can live with the consequences of an act, then it is acceptable. But consequences tend to multiple and are often not known fully at the time. Using this rationalization, you might hear people saying: “It’s no big deal” or “It’s not that important to the overall picture.” For example, such a rationalization might apply to hiring a new board member who is personally connected to the firm in some way.

A third customary rationalization involves one’s locus of responsibility. Responsibility refers to our sense of who we think should act in a given situation or who is requiring us to act in a situation. We tell ourselves either, “It is not my problem” or “I’m just following orders.” This rationalization usually reduces your personal accountability because you think your actions result from some authority figure who has the control. Perhaps you’ve heard a board member say they are just following the direction of the committee, of the CEO, etc? Sometimes we hear people claim they are not the appropriate person to handle the situation, or do not possess the requisite authority to remedy the issue. Sometimes we extend this rationalization to blaming the victim of harm for a variety of reasons – “It’s their own fault”.

Fourth, we justify actions that concern the locus of loyalty. Needless to say, our loyalties can conflict. We can, at the same time, want to be fair to one person but also not want to harm another. This rationalization assumes that loyalty to one group necessarily means disloyalty to another group. For example, a fellow director might ask you not to reveal his devotion to the CEO when making board decisions. He is loyal to the CEO, but not as loyal to the process of objective decision-making incumbent upon the board, another form of loyalty. Sometimes, people express this rationalization something like: “I don’t want to harm [person x] but I know this isn’t fair to [person y]”. It is important to note this rationalization is not the same as a director’s duty of loyalty.