Yesterday, I wrote a post about the fundamentals of leadership fiduciary responsibility. I addressed that post mostly towards business and corporate leaders and what fiduciary responsibility they have. As a leader, it is very important to take your fiduciary responsibility seriously because your organization will flourish or perish based on how you handle the money. As a fiduciary leader in a corporate environment, you make major choices on how to spend money and where to make strategic investments. In many cases, however, the money you spend is money from investors.
Additional Reasons To Have Fiduciary Responsibility
In addition to the business and corporate environment, there are many leaders in government (many times politicians or political leaders) that have a great fiduciary responsibility. They regularly make major financial decisions that shape where their nations go in the future. Sometimes one decision or a series of decisions over a short time frame can change the course of a nation for many years.
Government Fiduciary Responsibility
Governmental leaders have a fiduciary responsibility is to everyone in the nation that pays taxes or is effected by where governments decide to spend their tax revenue. Governmental leaders make policies to determine how to collect taxes and where to spend the tax revenue earned. Those policies, frequently, dictate the financial stability of a nation in the future.
The Neglect of Government Fiduciary Responsibility
So what happens when governmental leaders don’t take their fiduciary responsibility seriously? Right now there are many nations in turmoil. They have reached the point of turmoil because they have overspent on programs or policies that have not brought about the anticipated results. In many cases, the governments have pumped more and more money into programs that didn’t bring out the desired results and led to increased debt.
Some of the governments that have gotten into this situation are Greece, Ireland, Spain, and the United States just to name a few. Some of these governments have gotten into this situation because the leaders didn’t take their fiduciary responsibility seriously. They spent and spent with the expectation that they would collect taxes to recover their costs. When it really came down to it, the government leaders spent more money than they could recover from their tax base. Because the leaders made decisions that caused the nations to overspend, the nations are now having severe financial struggles.
How Does This Apply?
You may be asking yourself, how does this relate to me as a leader? When I think about the fiduciary responsibility that I have as a business leader, it helps me to realize the great responsibility I have to spend money wisely. If I make poor decisions regarding where to spend money, it could lead to the downfall of my organization. Understanding that causes me to think each of my decisions through very thoroughly so that I don’t make poor decisions. It also causes me to plan for the future when I make decisions. I try to make decisions with a long-term view in mind.
How does a fiduciary responsibility apply to you as a leader? What do you do to keep yourself focused on your fiduciary responsibility? Please share your thoughts in the comments section below!
Hello Brandon,
If I understand your main points, you seem to making the argument that the fiduciary responsibility of a business leader is the same as that of a government leader. This is a old story that is not, in any way, borne out by the facts of history or the data from economic analysis. To equate the two, I think, is to make a big mistake.
While you might be able to argue that Greece, Ireland, and Spain have spent too much in the past, the United States didn’t spend it’s way into debt by overindulgence. Therefore, with respect to the US, is your argument that Bush should not have cut taxes or gone to war (where most of our debt came from)? Or that to go to war we must cut expenditures at the same time? Or that TARP should not have been implemented?
Leadership is not just about fiduciary responsibility. To use your analogy of the business leader, there are plenty of business leaders who use debt to get their businesses out of a dire situation, but if you look at their books at a point in time they may look like they have too much debt.
I know you wrote a short blog, and it is difficult to put everything you want to say in a few paragraphs so I respect your attempt to discuss the fiduciary aspect of leadership. I agree with you.. it are real. But I think it is risky to equate government and business, and leadership is a very complicated processes. From my perspective, leadership is not just about fiduciary responsibility, leadership is the ability to balance a variety of competing “interests or factors” to determine the successful path forward in the face of insufficient information.
Be well,
Steven
By the way… I agree with you… Great leaders change themselves first.