A tough lesson on governance

I knew I should have spoken up. I had a gut feeling something wasn't right.

But I didn't. And because of my silence and that of my fellow classmates, more than a dozen people died.

Theoretically, at least. For it was a class exercise. But because none of us raised the niggling concerns we had about the canoe trip excursion we were planning and insisted it be cancelled, we had to take responsibility for the tragedy that ensued.

It might have been a case study but the lesson learned was an important one: Always keep probing, asking questions and challenging leadership. After all, peoples' lives could be at stake.

The exercise took place during the final lecture of the core management class of my MBA program, a survey course that touches on roughly a dozen different management-related concepts.

This week's topic was governance -- an issue that has made headlines ever since energy trader Enron Corp. imploded a few years back.

Governance, we were taught, is no longer a buzzword reserved for the brass of large, publicly traded companies. Today, effective governance is critical for every organization, from the giant multinational down to the smallest, not-for-profit group.

According to my professor, the key to effective governance is "loyal opposition."

As with governments, companies need loyal opposition to scrutinize strategic plans, prevent wasteful spending and poor uses of corporate resources, and give a voice to minority groups or those with less decision-making power than management. In other words, keep challenging norms.

Without that loyal opposition, leaders may become blinded by their own vision and risk failing to see the operating environment around them changing.

While most of that loyal opposition occurs during board of directors' meetings, it is important for all members of an organization, no matter their rank, to speak up when they spot or sense problems, our professor added.

Students' hands immediately shot up as we began to perform a governance function on her lecture.

"Let's say I'm just hired on at a company and I see someone much more senior than me doing something that I think is unethical: Am I supposed to tell them to stop it or tell someone else?" one asked.

"Yes," because an MBA comes with certain public responsibilities, just like other professional degrees, the professor answered.

Students' hands continued to rise as we debated different workplace scenarios that could sit in a so-called grey area between insubordination and whistle-blowing, such as the sharing of stock-related information.

The end lesson: It is in the organization's best interest and, in turn, the best interests of all employees and shareholders, to speak up if a potential problem is noticed. The same goes for unethical behaviour, inappropriate behaviour or poor safety guidelines.

That point hit home during the in-class role-playing exercise, which involved the organization of a canoe trip for teenagers.

We role-played the canoe-trip leader, the leader's assistant, a participant's parent, the executive director of the organization putting together the excursion and a representative of a company that agreed to provide financial support for the trip. I was the company representative.

The parent raised concerns about safety and supervision. The trip leader offered calming words, noting he'd taken the trip years ago as a child and now, as a leader, assured us the kids were in good hands.

My character was interested in getting media exposure but wanted assurances that his company wasn't affiliating with a careless group.

We continued to play our roles, expressing our concerns and allowing the trip leader to tackle each issue.

It was at that moment that something didn't seem right. The canoes seemed a little too big. The safety measures didn't appear adequate. The organization seemed poor. I didn't really know the group leader's credentials, simply assuming the company organizing the excursion would have done its due diligence in hiring the leader.

But I didn't speak up because I felt my character wasn't in a position to raise such concerns. Instead, I sat back and listened to others debate the trip.

Back in class, the professor was quick to ask if anyone had suggested the trip not go ahead as planned. Nobody put up a hand.

"Nobody?" she asked again.

Silence.

"Just so you know," she said, "this case was based on a real trip in the 1970s. On that trip, two boats capsized, killing 13 people -- 12 of them teenagers."

There was silence again, followed by awkward glances around the room.

She went on to explain that, for as long as she has been using this case study in her management class, nobody had demanded the trip not venture out.

Those deaths were now on our heads because we didn't sense something was wrong -- or, if we did feel reservations, didn't speak up, the professor said. We put our full trust in the organization's leadership without ensuring their vision and actions were correct.

Sure, the canoe trip case was an extreme example of what can happen when people set governance on the back burner.

But it taught a key lesson: Often, business decisions are about listening to your gut to tell you what's right and wrong -- and knowing when to not just listen, but speak up.

Richard Bloom is a former Report on Business writer who has enrolled in York University's Schulich School of Business to obtain an MBA. He will write regularly on the career lessons he is taking away from the classroom.