210. What do we even mean when we talk about "duty?" (Question #8)

This season, every episode of OMG focuses on a question that directors really need to answer. OMG is written, produced, narrated and scored by Matt Fullbrook.   TRANSCRIPT: Question #8: What do we even mean when we talk about “duty?” As in how the word “duty” applies to the work of the board and directors. In the previous episode, I suggested in passing that you might want to ask this question, and now I’m making it a bit more explicit. I can say with reasonable confidence – from my experience, at least – that directors and executives refer frequently to a board’s duties without taking a moment to make sure everyone knows what they’re talking about. Fiduciary duty? Moral duty? Ethical duty? Regulatory compliance? And even once you get that part clear, there’s no guarantee that you agree on what your duties are, or even that your own understanding is rooted in fact. Let me give an example. Here in Canada, if you ask “to whom do you owe your primary fiduciary duty?” most directors will confidently answer “to the corporation.” This is a technically correct, but altogether incomplete answer. Many of the directors who provide this answer are unable to confidently answer the simple follow-up question: “OK, what does it mean to have a duty to the corporation?” The legal answer to this question is simultaneously specific and complex. I won’t give away the punchline, because in addition to being specific and complex, it’s also boring and not useful outside of Canada. In any case, I hope my point is clear. If you’re going to bring up board and director duties, take a second to make sure that everyone knows what you’re talking about, and try to make sure that you, yourself, can explain exactly what discharging those duties might entail. Duty is a loaded word. Let’s make sure we’re walking the walk.