May 13, 2009
Faith in the Boardroom
Posted by Sarah Duggin

Lyman Johnson’s analysis of the potential risk for directors who draw on personal faith in the corporate decision-making process is right on target. In seeking to defend directors’ reliance on nonmonetary factors, it is often wise to look to “long term” interests. Although there are times when this approach won’t work – e.g., when the company’s short term survival is at stake – it seems likely that most decisions, particularly those about business lines and product development, legitimately involve broader considerations over the longer run. While John Maynard Keynes once said that “in the long run we are all dead,” there is a sense that business decision makers have greater discretion to consider nonmonetary factors as time horizons stretch over periods of years or decades. When courts were struggling with corporate philanthropy, at least some of the early cases upholding corporate donations justified the practice on grounds that corporations legitimately could take steps to ensure the development of an educated work force or other social conditions conducive to business. Similarly, one way to justify a decision that may not maximize profits at present is to direct attention to the future benefits of the action.

This approach suggests that faith and morality enter the corporate decision-making process not as primary considerations – i.e., not as measures of what is the “right” thing to do – but as elements that may be considered so long as the ultimate goal is the best interest of the company. Cultural factors have a great deal to do with this reality. For good reason, even people of deep faith are often wary of agreeing that faith values offer legitimate bases for corporate decision-making. That’s not ideal for those of us for whom faith is important, but, as Lyman Johnson also observes, we need to take advantage of opportunities to start conversations. As Michael Naughton points out, corporations, like faith, arise out of particular cultures. Sadly, because religion has engendered so much conflict for so long, many people in our culture worry that introducing faith as a factor in the corporate decision-making process may allow people trying to pursue a particular agenda to divert the busines purpose of the enterprise. While this may be unlikely to happen very often for a variety of reasons, the perceived neutrality of the market often seems safer.

There is probably no way to turn this situation around quickly, but there are steps we we can continue to take to build a stronger foundation for establishing faith values as a legitimate consideration in corporate decisions. This forum is certainly one of them, and I am grateful to Lyman Johnson for initiating the conversation and to Gordon Smith and The Conglomerate for hosting it. A second step is to keep working on educating business people, business and law students, and shareholders on the relatively broad discretion available to directors to consider faith, morality and ethics -- under the business judgment rule and as reflected in standards such as section 2.01 of the ALI Principles. (Lawyers offering this counsel in advice work can refer to the reference to moral and social considerations in section 2.1 of the Model Rules of Professional Conduct.) A third approach is to model the kind of language Lyman suggests in the boardroom and in advising corporate decision makers. A fourth option -- one already adopted by a number of companies – is to include language in corporate charters designed to facilitate consideration of faith values and/or make faithful stewardship part of the corporate purpose. As Michael Naughton notes, advising entrepreneurs that this approach is at least an option could make a real difference to the culture of a new company.

Perhaps we also need to involve theologians in this conversation. Michael Naughton makes an excellent point that, at least for believers, faith should be an integral part of corporate life. But it is also true that business decisions are often complex and that what is “right and good” in many situations is far from clear. Unfortunately, I have found little on a “theology of the firm,” although books such as Tom Chappell’s “The Soul of a Business” are certainly helpful. It seems to me that there is much work to be done -- in theology as well as in business and law. It’s easy to say that we need to put faith at the center of business life, but what does that mean? The ways in which faith should affect business decisions and the behavior of business decision makers is a complex question that has yet to be adequately explored. Perhaps I have returned to David Skeel’s initial questions, but the point is that theologians need to weigh in on the issue as well. Faith discourse may be rare in the boardroom because of cultural factors and misperceptions about legal limitations, but the lack of accessible theology pertaining to business issues plays a role as well. While I am not suggesting that we should all change professions, as the conversation continues -- as I hope it will -- we can urge theologians, churches and other religious organizations to get involved and to join us in exploring the issue. What does it mean to do justice in the pursuit of economic value? If only St. Augustine had written about “just profit”!

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