As often as it is with politics, so it may be with corporate governance. The recent chaos surrounding the election of the Speaker of the House of Representatives offers a colorful but useful tutorial for board and executive leadership on organizational discourse and decision-making.
Watching this week’s tortuous House fiasco should prompt business leaders to re-examine the delicate balance between the use of compromise and conciliation, and the risks associated with making too many concessions. The ultimate lesson is that while compromise and principle as negotiation tools have their virtues, they should not be leveraged for the benefit of personal interests or to the point where they threaten a government body or a business organization.
The current Speaker election process has been the most fractious in nearly 175 years. It has featured multiple unsuccessful ballots, hardened positions, failed negotiations, outsized leverage to a minority constituency and reputational harm not only to the participants, but to the House of Representatives itself. More importantly, it has brought the business of the legislative branch of government to a standstill, with broad collateral implications.
The chaos can be attributed in large part to the collision of extraordinary efforts at compromise by a hopeful majority with the near-belligerent insistence on principles by a leveraged minority. This proved to be a combustible combination, from which real corporate leadership lessons can be gained.
For in the course of resolving leadership level disagreements – whether within the board itself, or between the board and management – there is always a place for both compromise and insistence on principle. Good faith offers of compromise, and the practice of conciliation, can be highly effective ways to move disputes toward resolution while maintaining the collegiality and respect that is critical to the organization’s leadership culture. At the same time, it can be totally appropriate for members of leadership to aggressively resist proposals and positions that they feel in good faith are not in the best interests of the organization and its mission. In so many ways, that’s part of their job.
But, as the Speaker election controversy well demonstrates, there are – and should be – limits on both strategies. For there are circumstances in which the organizational mission can be harmed by decisions that are the byproduct of excessive compromise, or by selfish or unrestrained reliance on principle. The “red flag” for this is often the point in time when the strategy has become driven more by personal or minority constituent interests than by the broader benefit and mission of the organization.
For example, it is not uncommon for a majority coalition on a board to make certain limited concessions to minority board interests in order to obtain approval of a meaningful corporate initiative. Indeed, there is often an upside to approving significant initiatives with as large a plurality as possible-even if it is not required. And the need for meaningful concessions may increase if the minority is empowered with particular rights under the bylaws or other agreements that make their support critical to adopting the proposal.
Similarly, it may in certain circumstances be entirely appropriate for individual trustees or a minority bloc of trustees to remain resolutely opposed to a proposal, on the good faith belief that the initiative is fatally inconsistent with the mission of the organization and the interests of its constituents. To paraphrase a political slogan, ‘belligerence in defense of corporate mission is no vice’, especially when the minority bloc has both the power and authority to stop passage of the proposal.
But there are, and should be, limits on the exercise of both compromise, and of principled belligerence. For example, excessive concessions (for which Mr. McCarthy has been criticized) risk dilution of the proposal’s specific goals, often to the point of making its adoption meaningless-or actually harmful to the organization’s interests. Such concessions made for the personal benefit of individual leadership – such as to secure a more important position – carry little merit. Also, excessive compromises can have the harmful long-term effect of emboldening the belligerent minority to adopt similar disruptive behavior in the future. The threat to leadership collegiality and decorum would become endemic.
Similarly, blanket opposition based on hardened interpretations of corporate principles can be destabilizing to an organization when those interpretations are used to leverage the personal interests of the minority trustees, as may be related to position, title, authority, budget and influence. At that point, the belligerent minority’s ability to justify further organizational damage from the dispute becomes much harder to justify. Wherein lies the organizational interest?
So, whether it’s a matter of making concessions or of standing belligerently on principle, once it becomes personal, not business driven, it becomes an untenable way to run an organization.
Supporters of “belligerent but principled opposition” often cite in justification Churchill’s famous call to “never give in, never give in, never, never, never, never—in nothing, great or small, large or petty.” But even Churchill recognized the limitations of this strategy, for its last phrase contains the significant exception: “except to convictions of honour and good sense.”
And that’s perhaps the best leadership lesson from the farcical House Speaker election process. That while there’s certainly a place for concessions, and for principled belligerence, in the context of organizational discourse, there’s a much larger place for the honor and integrity of the organization and the pursuit of its best interests.