By Gordon Smith, Christine, Hurt, Vic Fleischer, Fred Tung, Lisa Fairfax, David Zaring
There are two primary reactions to involvement in a no confidence
vote (discussed
here) directed
against a leader. One is to never speak of it. The other is to speak of it too
much. A better approach might be to follow the adage, "Never let a crisis go to
waste," and undertake to raise the veil of mystery about an
underanalyzed phenomenon, without dwelling on local details. That would take a
long time, since gathering information about the general phenomenon requires
pulling a few people out of the sound-proofed structures they've built around
their knowledge of a given case.
Distaste for the
vote of no confidence is fairly common. In a university or nonprofit
organization, fans of the corporate form cite the pleasant and predictable
pattern of authority, said to prevail in the corporation, as a better
path. The view partly rests on the notion of role differentiation, with
a form near perfection in the corporation. Workers work, managers manage,
directors direct, and shareholders buy and sell shares. If workers try to run
the place by throwing out managers, they won't have time to work. Workers
should not interfere with managerial strategies developed to compete in the
market; hence, university faculties should not have much power at all to govern,
and certainly no credible say in dismissing a leader. Further, if you like
neatness, the corporate example is good at sweeping away ambiguity. Votes of no
confidence lack a clear basis in the positive law of organizations (they are not
in the bylaws) and they lack an assured result. They are forms of moral suasion
that partially mimic formal mechanics for constituting and dismissing a
structure of authority. Too messy for the corporate world, and thus too messy,
period.
Let's think about the neatness of market discipline. It seems easy enough
to say that there is no such thing in the corporation as the vote of no
confidence. Where employees are concerned, that's true enough. The only cousin
of the no confidence vote in corporate for-profit employment is the whistle
blower. Whistle blowing is not at all the same animal. The key difference
is that the whistle blower has nominal formal protection in statutes, but almost
always winds up as the victim of an organization-imposed social death. By
contrast, when votes of no confidence succeed, an internal group achieves
cohesion against a leader, who becomes a mirror image, at the top of the
hierarchy, of the forlorn whistle blower. Each--the whistle blower and the
rejected leader--defies group opinion too openly and eventually pays. So,
employees in corporations simply do not do votes of no confidence. Workers do
not banish the CEO. That part of the neatness story is true.
Until recently, that would seem to close the discussion about the neat
lines of authority in the corporation. But there are developments. The
development in the neat world of the corporation is the movement to require
majority votes in election of directors. A common form, which shows up in
Senator Dodd's financial reform
bill,
requires that, in uncontested elections, a director must receive a majority of
votes cast or else tender his/her resignation. The board may reject the
resignation but must disclose reasons for rejecting it. The vote, as is said of
votes of no confidence, does not create an automatic removal. Rather, it places
a burden on the board to act on the basis of supportable reasons, not merely
assertion of formal authority. A little messiness comes to the corporation.
The messiness is altered through the adoption by corporations of
procedures, but pressure on the board to dismiss directors who had run
uncontested emerged as "just vote no" campaigns. So the majority vote
movement arose from improvisation by shareholder groups with a limited role in
the formalistic organizational governance. Groups, amorphous and evolving in
composition over time, argued
they had a bigger stake in good corporate governance than market solutions could
advance. Activists speaking for inchoate potential disaffected groups defined
flawed leadership as a recurring concern. They questioned the capacity of boards
to act without open pressure from empowered voices outside the formal
structure. So, the corporate analogy, cited to move other institutions away
from group voice, is losing some of its value as a model for neatness. Majority voting for directors has the advantage of being
covered in professional
detail, open to observation and
advocacy, and
subject to
assessment
and empirical study that provide evidence of success. As such, despite real
differences in format and pattern, the corporate "vote of no confidence" may gain a vitality that can give heart to professional groups that resort to
votes of no confidence to protest bad leadership.
