> Duty is the sublimest word in the language; you can never do more than your duty; you shall never wish to do less. > >Robert E. Lee _Disclaimer: This is a practical approach to issues of fiduciary duty as seen by management. I am not a lawyer, and this article is not legal advice. However, as I'm pretty sure it is not illegal advice, let's carry on!_ ## So you want to be an officer? Over the years, I've noticed an accelerating trend of organizations handing out more and more Chief "X" Officer ("CXO") titles. In addition to the familiar Chief Executive Officer, Chief Operating Officer, and Chief Financial Officer, and the now well-established Chief Information Officer and Chief Marketing Officer, we now see Chief Customer Experience Officer, Chief Diversity Officer, Chief Sustainability Officer, and many others. There are interesting reasons for this proliferation of CXO titles, which I may comment on at some point in the future.  The business journal Knowledge at Wharton shares this insightful analysis: [Chief Receptionist Officer? Title Inflation Hits the C-Suite](https://knowledge.wharton.upenn.edu/articlhttps:/knowledge.wharton.upenn.edu/article/chief-receptionist-officer-title-inflation-hits-the-c-suite/e/chief-receptionist-officer-title-inflation-hits-the-c-suite/). Instead of focusing on the "X", I'd like to focus on the "O", the role of corporate officers. Having the "officer" in your title does not make you a corporate officer. Corporate officers are appointed, through a formal resolution, by a corporation's board of directors. Being a corporate officer brings heavy responsibilities. The law places a **fiduciary duty** on officers to put the interests of the corporation ahead of their own. If one has a fiduciary duty, it would be good to understand it, so let's explore. ## What is a fiduciary duty and why does it matter? Under corporate law, for example, Alberta’s [Business Corporations Act](https://www.qp.alberta.ca/documents/Acts/B09.pdf), **fiduciaries** include members of a corporation's **board of directors** and those appointed by the board as **officers** of the corporation. Although a corporation is considered as a "legal person", corporations have no capacity to act on their own. The corporation appoints officers to see to the corporation's interests, because, lacking executive capacity, the corporation cannot take care of itself. Fiduciaries hold positions of trust. They are to put the interests of the corporation above their own and act honestly and in good faith, with care, diligence, and skill. [Fasken’s Doing Business in Canada 2022](https://www.fasken.com/en/knowledge/doing-business-canada/2021/10/10-directors-officers-liability) sets out these responsibilities, as they are outlined in the Canada Business Corporations Act (CBCA): >The duty of care imposed by CBCA requires that each director and officer of a corporation, in exercising their powers and discharging their duties, must exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. The duty of care requires that directors and officers make sufficient inquiries to inform themselves and consider all material information available to them prior to acting._ >The CBCA also imposes a fiduciary duty of loyalty that directors and officers act honestly and in good faith with a view to the best interests of the corporation. Under the fiduciary duty of loyalty, directors and officers are to act impartially and place the interests of the corporation first, not allowing their decisions to be tainted by self-interest or self-dealing. The duty requires directors and officers to avoid conflicts between the interests of the corporation and any opposing interests, including their own._ Fiduciary duty is not limited to taking care of shareholders. Other stakeholders, including employees, customers, suppliers, creditors, government, and the environment must be considered. ## Employee fiduciaries It should be broadly understood that the key role of members of a board of directors is to protect the interests of shareholders and other stakeholders. Fiduciary duty seems to naturally fit this responsibility. I believe the fiduciary duty of employees who have been appointed corporate officers is not as well understood. We tend to think of employees based on their specific job descriptions. Typically, employees are limited in both the scope of their particular roles and in the information to which they have access. However, an employee who has been appointed an officer of a corporation is a fiduciary, and therefore has a legal duty to consider the long-term best interests of the entire corporation and its stakeholders. An attitude of "not my department!" does not work where one has fiduciary responsibility. An officer's fiduciary duty supersedes an employee's functional or departmental responsibilities. A corporate officer cannot place their team, their career, or their personal interests ahead of the needs of the corporation. It is never a bad idea to "act honestly and in good faith with a view to the best interests of the corporation”, and... “exercise the care, diligence and skill [of] a reasonably prudent person", but if you have been appointed a corporate officer, it's not just a good idea, it's the law. ## When is an "Officer" not an "officer"? What if you have "Officer" in your job title, but the board has not formally appointed you as an officer? If an employee without a formal officer appointment is held out as an officer to the public, it is reasonable for the public to expect that employee to act as an officer, and that expectation may create legal obligations. Using the title "Officer" may have these implications. Consult legal advice to be sure. ## What now? **If you are a board member**: - Be careful and deliberate about making officer appointments. Make appointments based on the skills, experience, and character of the appointee, and not just based on executive position. - Ask management about how new and continuing officers are trained in their unique officer responsibilities. **If you have "Chief” and “Officer" in your title**: - Find out if you have been formally appointed as a corporate officer. If yes, see below. - If not, either ask to have your appointment formalized and step up to your role as an officer, or get advice to ensure you are not being held out as a corporate officer. **If you have been appointed as a corporate officer**: - Ensure you understand your fiduciary duties. - Ensure you have the information you need to discharge your fiduciary duties. - Learn how to place your fiduciary duty to the corporation above your specific job responsibilities. - Discharge your fiduciary duty. **If you are a CEO**: As a minimum: - Consider proposing that the key members of your executive team be formally appointed as corporate officers by the board of directors. - Ensure officers are trained in their fiduciary duties. - Give officers access to the financial and operational information they need to discharge their fiduciary responsibilities. But don't stop there. Consider unleashing the power of duty in your leadership team. Imagine an executive team where every member is selflessly focused on the heath of the entire company, where departmental silos, professional rivalries and personal ambition are put aside. When your team comprises duly appointed officers, each accepting a a solemn fiduciary duty, each acting as stewards for all stakeholders, everything changes. Start that change now. [Contact us](https://getunconstrained.com/apply) about holding an **Unconstrained Officers Workshop** in your organization. Thanks for reading. Derek May 17, 2022 --- ## Feedback We welcome your feedback. Please join [Essential Dynamics](https://www.linkedin.com/groups/14077119/) on LinkedIn to share your comments and questions. ## See also - More [[_Unconstrained Originals Index]] - [[Agency]] - [[Stewardship]] - [[Duty - Lee]] - [www.getunconstrained.com](https://getunconstrained.com/)