Executives’ Dilemma and the Problem of Voice
Rex C. Mitchell, California State University, Northridge
Don Rossmoore, Rossmoore & Associates
Published in The Business Renaissance Quarterly 2:1, Spring 2007
ABSTRACT
Executives and board directors face a dilemma. Most wish to be accountable, ethical, and effective, which requires
voicing concerns and objections about decisions or actions that would harm interests of the organization and/or
society. However, since doing so may put an individual’s position and other interests at risk, important concerns and
objections are often not voiced, causing harm to the organization and other stakeholders. The expectations of risk are
often overestimated and the potential benefits of voicing important concerns are under-recognized.
Recommendations are given for managing this dilemma, including ways to assess risks and prepare to voice a
concern effectively.
THE DILEMMA, AND OPTIONS
We all are impacted by the continuing saga of corporate and organizational scandals, and have immediate
reactions to names such as Enron, WorldCom, Aldelphia, Tyco, and H-P or Lay, Skilling, and Grasso. Statements
of surprise at such scandals by some directors and executives are reminiscent of the Three Monkeys, who hear no
evil, see no evil, and speak no evil. Some stakeholders may be overly confident that Sarbanes-Oxley and other
regulatory acts will prevent future scandals. These acts attempt to prevent problems by financial and structural
controls; however, “the instances of corporate abuse at Enron and elsewhere did not arise from lack of controls”
(Crook, 2006). Rather, they occurred because executives overrode controls and attempted to conceal their actions,
and other individuals with knowledge of the actions did not voice their concerns. Studies have found that the boards
of Enron, WorldCom, and Tyco exhibited excellent governance practices in terms of structural and procedural
issues, codes of ethics, and conflict of interest policies; however, the uncomfortable fact is that even if these newer
governance checks had been in place, “Enron, in particular, would have passed with flying colors” (Goffee and
Jones, 2005).
A frequent theme in recent discussions with executives and directors is that these roles are much more
difficult than they were in the past. Directors and executives struggle with how to be effective, how to make good
decisions on limited information, and how to do this without risking their interests or violating their individual
values. The difficulty of this struggle can be understood by considering the basic options an executive or director
can choose from when concerned about an issue or decision affecting the organization and its stakeholders.
Directors and executives can choose to voice their concern explicitly in an appropriate corporate forum or not, and
they can choose to remain in place or exit (resign), using Hirschman's (1970) framework. These choices combine to
provide four options, with some variations within each:
1. Remain in position while voicing concerns.
2. Remain in position without voicing concerns.
3. Resign while voicing concerns.
4. Resign without voicing concerns.
The conclusions in this paper about the use of exit, voice, and loyalty by directors, executives, and
managers are based on case studies and audio tapes generated in our consulting projects and training sessions during
the last 25 years, involving over 1000 individuals. Our sample includes 98 board directors, 17 CEOs, 106 vicepresidents, and 285 managers, supplemented by over 500 scientists and engineers. The sample of executives came
from over 30 corporations and other organizations; the sample of directors came from eight for-profit corporate
boards and four not-for profit organizations. When a conclusion is stated in a general form in this paper, this is not
meant to imply that no exceptions can or do exist – merely that we have not encountered exceptions in our
organizational and consulting experiences or in the literature.
All directors, executives, and managers in our studies reported exercising the first option extensively, i.e.,
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voicing concerns while remaining in their positions. Yet, these same individuals, when we had a chance to observe
them in meetings, were found to exercise the second option most of the time, i.e., remaining in place without voicing
concerns. When interviewed privately, most individuals admitted that they were inhibited to voice their concerns
because they believed that doing this would violate the norms of what was appropriate or acceptable behavior in
those meetings. A majority also believed that voicing concerns would place their position, influence, or other
interests at risk. We have yet to run across an individual who voices all issues and concerns in a timely manner, and
systematically balances advocacy and inquiry, without years of training.
Our findings and conclusions are consistent with those reported by Argyris and Schön (1978, 1996, 2004),
whose research was based on thousands of individuals in many organizations in the United States, Europe, South
America, the Near East, and the Far East (please see Table 1 for a brief summary). However, our conclusions are
offered in terms of what is typical rather than universal. We, as Argyris & Schön (1978), do not argue that there
may not be an exception, "only that we have not run across it" (p.309).
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Table 1: Related Research That Is Consistent With Our Observations
Argyris and Schön (1978, 1996, 2004) believe their model of traditional interpersonal behavior and their model of
traditional organizational learning are typical of all individuals and organizations. They conclude that these models
are used by every individual who was studied, in every situation studied. The implicit rules in these traditional
models are:
• Let buried failures lie
• Keep your views of sensitive issues private; enforce the taboo against their public discussion.
• Do not surface and test differences in views of organizational problems.
• Avoid seeing the whole picture; allow maps of the problem to be remain scattered, vague, and
ambiguous.
These strategies reflect deeper and more fundamental norms, strategies, and assumptions:
• Protect yourself unilaterally – by avoiding both direct interpersonal confrontation and public discussion
of sensitive issues that expose you to blame.
• Protect others unilaterally – by avoiding the testing of assumptions where that testing might evoke
negative feelings, and by keeping others from exposure to blame.
• Control the situation and the task – by making up your own mind about the problem and acting on your
view, by keeping your view private, and by avoiding public inquiry that might refute your view.
They elaborate on the organizational handicaps these implicit rules and norms create:
• Traditional learning systems make good dialectic impossible by preventing organizational double-loop
learning and learning how to learn, which can remedy problems with the system.
• “If we are right in asserting that most organizations contain traditional learning systems and that these
deter any learning processes incompatible with their basic structure, then we are unlikely to find the new
learning system we seek by looking at the world as it presently exists” (Argyris & Schön, 1996, p.111).
_____________________________________________________________________________________________
It will be useful to consider each of the four options for responding to a recognized issue and their
consequences for individuals and the organization, before discussing ways to assess the risk of voicing a concern
and preparing to voice an important concern effectively.
WHAT OPTIONS DO INDIVIDUALS CHOOSE WHEN A RELEVANT CONCERN SURFACES
An executive, director, or other individual has four available options once he or she becomes aware of a
concern, as previously outlined. On the surface, it may appear that the consequences of each option are obvious and,
therefore, that choices are clear. This does not seem to be the case. Each option is discussed below:
Voiceless loyalty: the most often exercised, and paradoxical, option. Voiceless loyalty is the most widely
exercised option among board directors and executives (and also managers and others). In our sample, over 90% of
the time individuals chose voiceless loyalty over voicing their concerns. In an article in the Wall Street Journal,
Hymowitz (2003) voiced similar conclusions:
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Directors at many companies disrupted by scandals... had stellar credentials and were well respected in
their businesses and professions. They also followed most of the accepted standards for boards, such as
attending meetings regularly and establishing a code of ethics. But they didn't question enough and
failed to see inquiry and dissent as one of their obligations.
Voiceless loyalty, it appears, produces the most consistent and aggravating paradox of all the options. In
our cases, from interviews and observations, this response choice had substantial negative effects, but still was by
far the prevalent choice. At the level of personal experience, voiceless loyalty produced significant increases in
anxiety, depression, fear, and anger. At the interpersonal level, trust, morale, communication, cooperation, and
coordination declined. At the corporate level, voiceless loyalty produced at best a failure to improve decision
making, planning, problem solving, operating, controlling, and learning. The longer voiceless loyalty remains the
primary option in use, the more likely it is that performance of all executive tasks will decline significantly, leading
to a decline in a corporation's operating and financial performance.
Voice: The option seldom chosen. If voiceless loyalty leads to such negative consequences, why is voice so
seldom chosen? Voice is so seldom chosen because most individuals – whether board director, executive, manager,
employee, or shareholder – believe that voicing their concerns, even the concerns they are institutionally responsible
for managing, violates the most fundamental rules of conduct. All are concerned that voice will be seen as rude,
inappropriate, or out of place. More seriously, most are concerned this would harm their personal standing or
threaten their position.
Based on our observations, these fears are exaggerated, fears that voicing relevant issues will be seen as
inappropriate or worse and that doing so may threaten the person's standing or position. Although there are some
adverse effects in some situations, they are often counterbalanced by positive effects. In almost every case we have
studied in which an individual exercised voice to raise issues and/or improve matters such as decision making,
planning, problem solving, and learning, the net effect was that good things happened both to the corporation and to
the individual who exercised voice. In almost every such case, that individual's standing in the organization
improved, the individual reported experiencing a significant increase in personal gratification, and the individual
agreed that the result was worth the effort required to voice the concern successfully. In almost every case in which
a board or executive team's collective use of voice was improved, improvements in the execution of tasks were
observed. In every case with such improvements, they were also followed by improvements in operating or financial
performance.
When use of voice results in improvement of performance, there are some typical characteristics that
accompany the expression of a concern and enable the individuals to deal effectively with the issue identified: facts
and opinions are separated clearly; facts and opinions are sufficiently specific, relevant, timely and verifiable; and
all relevant facts and opinions are accounted for in planning and action.
Exit: A rarely used option. Exit, with or without voicing the concern, is an option rarely chosen by board
directors, executives, or managers. In our sample of over 1000 individuals, we have observed only seven
resignations based on principle by directors, executives, managers, scientists, and engineers during the last 25 years.
Not one of these seven resignations influenced the corporate discussion of issues relevant to the
resignation. Neither corporate performance nor learning was influenced. However, all seven of the individuals, two
to three years after their resignations, said it was the best decision they could have made from a personal point of
view. All described a grieving process, lasting for months. All reported experiencing, right after the resignation, a
profound sense of loss, worrisome doubts, and painful remorse. All described the experience of grieving the
profundity of the loss, doubt and remorse, and having the pain diminish to acceptable levels by the end of the
process. The four voiceless resignations appeared to produce more emotional pain than the three resignations
exercised with voice. In all these cases, loss, doubt, and remorse were replaced eventually with acceptable
experiences of sadness for what was lost, and gratitude for what was gained personally.
TWO CORPORATE EXAMPLES: THE INFLUENCE OF VOICE
The first case is an example of the absence of voice and the decline of corporate performance. The second
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is an example of the positive effect of voice on corporate performance.
Case 1: The absence of voice, resulting in corporate decline
An interview survey of directors and executives in a developing biotech company revealed: (a) every
executive and all but one director said that the Chairman of the Board micro-managed the executive team, including
the CEO; (b) all executives and all but one director said that the Chairman did not take the time necessary to make
good decisions on those things he was micro-managing; and (c) all directors and all executives except the CEO and
VP in charge of human trials said that no one in the company had either the knowledge or experience to run a
successful human trial.
How did the directors and executives respond to these concerns? Not one of these concerns was voiced in
an appropriate corporate forum and none of the concerns about the Chairman's micro-management were ever voiced
to him. All three issues then were raised by an outside consultant, discussed and modified for accuracy by the
executives and senior managers, and then presented to the CEO. After the presentation, the CEO said, with anger,
that none of these issues would ever be brought to the board. Shortly later, the CEO fired the consultant.
The motivation of directors and executives to remain voiceless on these issues was explored by asking
them, privately, "what would happen if you voiced your concern?" Typical responses were: (a) "I would appear to
be raising doubts about the Chairman's judgment;" (b) "I would appear to be attacking the competence and integrity
of the CEO and the VP in charge of human trials;" (c) "I would be seen as rude and out of place;" (d) "when
someone is seen as rude and out of place, one's standing and credibility is at least jeopardized, and one's position is
at risk;" and (e) “the CEO would destroy me.”
Subsequent corporate events included: (a) the Chairman continued to micro-manage from a distance; (b)
difficulties in operating a human trial resulted in suspension of the only treatment in their human trials; (c) venture
funding dried up just when it was most needed; (d) staff was cut from 200 to 35; (e) all but one treatment was
abandoned entirely; and (f) the stock price dropped from $5 to less than $1 and the stock was delisted. Although
other factors undoubtedly played a part in this decay, we believe the voicelessness of the executives and directors
was pivotal in the company’s failure to identify and deal with problems.
Case 2: Corporate turnaround after using voice to stop unethical behaviors
The following occurred in a struggling, mid-size, high-tech company. Control of the board and the
corporation was exercised by a director ("X"), with no titular position other than director. The Board Chairman
followed X's lead. At times, the Chair acted as the corporation's lawyer. When he acted as lawyer, the Chair billed
the corporation his top fee, with X's consent and knowledge. The Chair even billed the corporation for time as
lawyer while doing tasks he was responsible for as Chair. X used his insider information to profit significantly from
illegal insider trades.
Finally, the CEO, in his role as an inside director, said to the Chair during a board meeting, "We received a
bill from you for your participation in the Hong Kong meetings. This, I believe, is incorrect. You were there as
Chair, not as our lawyer. You are not supposed to be compensated with attorney fees in your work as Chair." After
a brief discussion, the Chair withdrew his bill and apologized for the misunderstanding.
The CEO/director, during a subsequent board meeting, said to X, "I must put you on notice that we are
obligated, legally and ethically, to our shareholders and to the SEC to report all insider transactions to the SEC." X
stopped his insider trading. Somewhat later, the CEO, with the support of all other board members, asked the Chair
to resign from the board.
By the second quarter after the board meeting in which the Chair was removed, the company had its best
financial quarter ever, its smallest quarterly deficit in history. Five quarters after the board meeting, the corporation
had its first break-even quarter. Eight quarters later, the corporation had its first profitable quarter and has remained
profitable since. The stock was trading at $3 when the Chair left. Now, three years later, it is at $25 per share.
ASSESSING THE RISK OF VOICE
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When an important concern surfaces, and a director or executive is concerned about voicing that concern,
the appropriate first step is to assess the risk of voicing the concern. Once the assessment has been completed, the
question, "to voice my concern, or not to voice my concern," should be answered. If the answer is "voice," then
adequate preparation should be done. If the answer is to leave the concern unvoiced, then the question, "to resign, or
remain in place," should be answered. If the decision is to remain in place, then one should be aware of and realistic
about the effects.
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The following three steps are recommended, in clarifying and analyzing important concerns and potentially
difficult issues. After these steps, a realistic assessment can be made of the risk of voicing a concern, informed by
the clarification and inquiry. The individual might be able to do the first two steps alone, although it will be more
effective with assistance from one or more competent, trusted individuals. Examples from discussions with
directors and executives are given to make the steps clearer.
1. The concern to be voiced should be written verbatim, privately, as it might be spoken to others. For example, "I
am concerned that we have not adequately assessed the risks inherent in this plan" or "The CEO is not investing
enough time and attention in the corporation, and the Chairman is not holding him accountable."
2. The following inquiry should be pursued:
a. What would happen if you voiced your concern in the way that you just did? A typical response
example: "If I raised this, the VP of Engineering would take offense because I am questioning his
judgments or competence on this." Another example, "If I said that in a board meeting, people would think
I was raising doubts about the judgment, motivation, and integrity of the Chairman and the CEO. Such
doubts should only be raised in private. If I did this I would be seen as rude and out of place. I might lose
influence and stature with the CEO, the Chairman, and the rest of the board."
b. How do you know that would happen; have you ever observed someone voicing and similar concern and
seen the response you predict? Examples of responses: "I have seen the VP of Engineering take offense
before, yet I have never seen him hold a grudge." "Several times other directors have raised similar issues. I
have seen executives get defensive, but I have not seen anyone get hurt for raising issues." From another
director, "I have seen the Chairman shut out individuals who questioned him. Take our most senior board
member. He questioned keeping on the CEO last year. He stood up to the Chairman in a most appropriate
and respectful way, yet the Chairman has not talked to him since. I have found out myself that when the
Chairman is unhappy with you, he is much harder to reach and talk with. It does feel like being taken out to
the woodshed."
3. If not already done as part of the two inquiry steps above, identify one or more individuals who can help verify
your thinking, individuals who you trust in their judgment and ability to understand similar complex events plus
their willingness to tell you the truth and their commitment to your well-being. Then, share your responses to the
questions above with these individuals and encourage their questions, doubts, concerns, assumptions, suggestions
regarding the situation at hand and the shared data.
PREPARING TO VOICE AN IMPORTANT CONCERN
A useful way to prepare is to use the two-column case format developed by Argyris and Schön (1974,
1996); see Table 2 for an example. In brief, this involves:
1. Writing a two-column "case" in which you imagine the conversation in which you will voice your concerns. In
the left column you write the verbatim words you anticipate saying. In the right column you write thoughts and
feelings you are likely to have, but not express publicly.
2. Analyzing what you wrote, preferably with the assistance of others who you trust and who will be candid.
Questions to consider include:
a. Do your proposed public statements clearly represent your point of view, doubts and concerns, questions,
and recommendations?
b. How do others assisting you summarize your point of view when they read or hear you utter your
statements?
c. What differences are there between their summaries and your intent, leading to an identification of what
needs further clarification in your proposed statements?
d. Are there points in your right (private) column that should be moved to your left (public) column?
e. Is there any phrase you utter publicly that might be unnecessarily offensive, cause someone to respond
defensively, or cause others to experience you as unilateral? (This does not mean you should not express it,
although you might search for more effective, yet direct, ways of expressing it.)
f. What judgments and emotions are expressed in the private column of your case that might
unintentionally undermine your communication and the influence you hope to have?
g. How might such emotions be expressed in what you say publicly, e.g., expressed by your posture, facial
expression, tone of voice, and gestures?
3. Rewriting, then role-playing the case, after improving it through your analysis in step 2
_____________________________________________________________________________________________
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Table 2. Two-Column Case Example
Context:
All outside directors agreed with the following statements, which were made, privately, in various ways by one or
more of the directors interviewed:
* Given our track record and the gaps in our leadership team, there is no way the corporation can “make its
numbers.”
* Wall Street will like us better if we actually make our numbers, even if our projections are much more modest.
* Presently, our executive team does not get its big bonuses unless it hits two grand slam home runs in one game.
* We are a joke on Wall Street. Raising money will be very tough.
Actual first draft of a two-column role play by a director preparing for a potential discussion at an upcoming board
meeting:
Public Dialogue
Private Thoughts and Feelings
Here goes. This could be my last day on this board, if I
am not careful.
We have an important funding round coming up.
Careful. Don't insult anyone.
It would serve us well to put our best foot forward on
Wall Street.
Everyone should agree with this.
Watch it. Now comes the tricky part.
Let's all pull together and improve our corporate
governance.
Surely, they will know what this really means.
Analysis of this draft with third-party help:
C: What could happen to make this your last day on this board?
Dir: If I am not extremely careful in the way I present my thinking, I could insult someone. If I seem to insult the
Chair/CEO, he might throw me off the board.
C: Have you seen the Chair/CEO throw anyone off the board, or anyone off the executive team for speaking up?
Dir: No. In fact I fault him for being too slow in pulling the trigger.
C: I am puzzled. On the one hand you predict that if you insult the Chair he might throw you off the board. On the
other hand, you have evidence that suggests he should move faster on moving people and you fault him for this. It
seems that your two observations contradict each other.
Dir: You’re right. I think the real risk is that the Chair is likely to leave someone in place, but give him or her the
cold shoulder.
C: What would you say to me are the most important messages to communicate to the Chair and the rest of his
executive team?
Dir: We must improve our forecasting to have a decent chance of raising the funds we want to raise. We must
change the executive compensation system to reinforce good forecasting. No one on the current team really seems to
know how to forecast reliably; we need this.
C: When you compare the statements you just made with the public statements in the case you wrote, do both sets of
statements say the same thing?
Dir: Not close.
C: Is the risk of being shut out by the Chair worth the opportunity to communicate your key messages clearly?
Dir: Yes it is.
C: What leads you to say this?
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Dir: Well if these statements are not communicated clearly, things are likely to continue on our current course and
we will fail. If these statements are communicated well, we have a better chance to succeed. If I say these clearly
and the Chair shuts me out, that will reflect badly on him, not me.
Second draft by the director of two-column role play of planned discussion at an upcoming board meeting:
Public Dialogue
Private Thoughts and Feelings
Here goes. At the end of this meeting I could be
still on the board, but in the wilderness.
We have an important funding round coming up. I am
concerned that we may have a very rough time raising
sufficient funds.
I am exposed.
I've checked. We have not made a forecast in 25 quarters.
Get mad if you want. These are the facts.
Everyone has been too polite to say it in public, but my
Wall Street sources say that we are considered a joke on
Wall Street.
This feels much too strong, but it is true.
For Wall Street to start looking positively on us, we must
improve our forecasting, as well as our financial controls.
I am sorry to say this, but our financial controls have no
credibility on Wall Street.
I am probably insulting half of the room. Again,
these are facts. Under these conditions it is just not
possible to be truthful and polite. It is scary and
exhilarating choosing truth.
We must adjust the executive compensation package to
reflect that improving performance in financial forecasting
and controls is a top priority for the corporation.
Why didn't we focus on this sooner?
SOME CONCLUSIONS
When faced with an important but problematic concern, the option chosen overwhelmingly by individuals
at every level of an organization – board directors, executives, managers, employees, and shareholders – is to remain
voiceless and in position, contributing to group-think. The voicelessness of executives and directors creates a
general voicelessness, which is characteristic of many organizations in decline.
There appears to be significantly more opportunity to use voice (raise issues) productively than is assumed,
because there appears to be significantly less risk than is assumed intuitively; fears that voicing relevant issues will
be seen as inappropriate or worse and that doing so may threaten the person's standing or position about adverse
effects are exaggerated. Although there are adverse effects in some situations, they are often counterbalanced by
positive effects. Based on our observations, even in those cases in which voice was assessed as an unacceptable risk,
but the individual exercised voice anyway, only a very few suffered loss in credibility, standing, or position. In
almost every case we have studied, in which an individual exercised voice to raise issues, the net effect was that
good things happened both to the organization and to the individual who exercised voice. Having skill and preparing
to voice a difficult issue were important in producing positive results. Competence at assessing the risk inherent in
exercising voice and, especially, skill in voicing an issue productively are essential for executives and board
directors.
Competent due diligence requires voicing all relevant issues, in ways that have an effect. We agree with
the implicit recommendation of Hymowitz (2003) that "most experts agree that being willing to challenge company
management may be the most crucial qualification for a board seat." We believe that enlightened, courageous
directors and executives can make a difference, through more frequent and effective voicing of important issues and
concerns.
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REFERENCES
Argyris, C. (2004). Reasons and rationalizations: The limits to organizational knowledge. Oxford University Press.
Argyris, C. (1999). On organizational learning (2 nd ed.). Malden, MA: Blackwell.
Argyris, C., and Schön, D. A. (1978). Organizational learning: A theory of action perspective. Reading, MA:
Addison-Wesley.
Argyris, C., and Schön, D. A. (1996). Organizational learning: Theory, method, and practice. Reading, MA:
Addison-Wesley.
Crook, C (2006, Jan/Feb.). Executive privilege. Atlantic, 297(1), 150-153.
Goffee, R, and Jones, G. (2005, Sep/ Oct.). Individual and collective leadership in the boardroom: Why feedback is
vital even at the top. Ivey Business Journal Online. Retrieved Jan. 17, 2007 from ProQuest, document
916701841
Hirschman, A. O. (1970). Exit, voice, and loyalty: Responses to decline in firms, organizations, and states.
Cambridge, MA: Harvard University Press.
Hymowitz, C. (2003, Oct. 27). Corporate Governance (A Special Report); How To Be A Good Director. Wall
Street Journal, p. R1.
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