Does a Project Manager Have a Fiduciary Duty?

At Musings on Project Management, John Goodpasture recently posted his reflections on whether the project manager is a fiduciary. He asks the rhetorical questions, “At some point, some ox is going to get gored. And then who blames the fiduciary? And to what risk is the fiduciary held?”

It’s an interesting question, and it seems the answer, like most questions rooted in law, depends on jurisdiction. Note that this is not legal advice and I am not an attorney—I’m just some guy with a little knowledge of employment practices in a few countries. An actual labor attorney could fill at least ten pages with critical comments on the next few paragraphs before pausing to refill her coffee cup. That caveat aside here is my response.

USA

In the US, every state but Montana has adopted the doctrine of employment at will. In other words: an employee can be terminated at any time, for any reason—with a few exceptions spelled out by law. That uniquely American principle aside, all employees, including at-will employees, are subject to the law of agency—they are agents of their employers. As such, they are subject to the general fiduciary principle, which centers on loyalty: the employee will not compete with their employer, solicit the employer’s customers, clients or employees prior to the leaving the company, use work time to further the employee’s own interests, or misappropriate confidential information or trade secrets of the employer by sharing that information with the new employers. There is also a duty to account for profits and to deal fairly with his or her employer in all transactions between them. Finally, there is usually a duty to disclose the existence of conflicts or adverse information to the employer, even if the employer is not harmed by the undisclosed adverse interest or information.

Donald TrumpNote that this fiduciary relationship is between employer and employee, rather than between subordinate and manager. Also, note that the duties constrain the actions of the fiduciary; they do not contemplate outcomes. While you can certainly be terminated in the general outrage over the impact a project might have on some power center of your company, that possibility arises from at-will employment, rather than the fiduciary duty. In other words: they can fire you, but they can’t sue you to recover damages.

UK

In the UK, the terms of employment are governed by contract, whether explicit or implicit. In the event of a dispute where no contract document exists, the courts will decide what the terms of the contract are by reviewing the Employment Statement and other supporting relevant material. While you can be dismissed at any time, the employer must show that they have a justifiable, valid reason and that they acted reasonably, given the circumstances.

Under UK common law, the officers and directors of a company have a fiduciary duty to the corporation, while the employees generally do not. In the recent UK case of Ransom v Customer Systems Plc, the Court of Appeal found that the employee’s contract did not create duties equivalent to the loyalty required of a fiduciary.  In an ordinary employment contract, the employee and employer must have regard to each other’s interests, whereas employees are not required to subjugate their own interests, as is required of a director. Bottom line: you’re not a fiduciary and they can’t collect damages, and although you can be fired for a lot of reasons, most HR departments will overrule firing a PM simply because some senior person is pissed off.

Other Jurisdictions

The situation in Canada is similar to the UK, in that there is no employment at will and employment agreements prevail. While courts have found both employers and employee in violation of agency fiduciary obligations, in practice this has mostly been limited to self-dealing, soliciting former clients, and misusing proprietary information. While you can be terminated for misconduct, termination without cause generally requires notice and severance pay. So while you might be fired for pissing off some senior person, you’ll get a lovely parting gift. Australia and New Zealand are a bit more complex in terms of terminations, agency fiduciary obligations, and possible recovery of damages, but are generally similar to Canada, even though your parting gift will likely be capped.

In most non-English speaking jurisdictions, contracts are mandatory and employment is generally based on paternalistic principles. It would be shocking for someone to be fired for pissing off some senior person in the course of doing their job—no court would look kindly on the “because he pissed me off, that’s why” defense.

In closing: while you might be summarily fired in The Land of Trump, as you get further away, the risk diminishes considerably.

New Article on AITS: Redundancy in the Data Center

AITSBloggingAllianceMy latest article for AITS was published today: Redundancy: You Can Say That Again!

This past summer, there were two very high-profile system outages at Delta Airlines and Southwest Airlines that underscored the need to design for survivability and availability at the enterprise level. This article starts with the “punch lines” from each incident and then explains the role of redundant components and services in the modern data center. I then go on to review best practices in testing and close by bringing up the Cloud as an alternative to the one-size-fits-all corporate data center, especially now that different availability service levels can be acquired as needed for each application.

As always, thanks for taking the time to read my stuff.

Everything as a Service

Service StationI spend a lot of my time as a contract project manager mediating disputes between users of technology, such as the HR and finance departments, and the information technology folks. Now, you might think that these disputes have their roots in the different terminology and buzz words each group uses, but generally, they understand each other well enough. The problems arise from a difference in values: the functional experts want capabilities, and the IT folks want control. Functional leaders are focused on their business goals, while IT management wants to talk about process, tools, methods, and a lot of other non-revenue generating stuff.

Note that this misunderstanding is not because either group is at fault. They simply have different values. A lot of us IT geeks subscribe to the values in the Agile Manifesto, and we think they are so self-evident that everyone should embrace them, too. But the people responsible for repeating business-critical activities on a calendar schedule, like paying employees and creditors and reporting to governmental agencies, while absorbing the most recent acquisition or expansion, have other values.

Individuals and interactions over processes and tools

I work with a lot of global firms, constructed from mergers and acquisitions, and they all have a maze of solutions, cobbled together with a range of tools and technologies. And while the IT folks want to buy better tools, the business folks just want to be able to get back to work. Integrate the merged workforce, share information, pursue opportunities, manage risks, and comply with all of those governmental and contractual requirements. Usually in just about that order of importance.

Working software over comprehensive documentation

Business users don’t want tools, or even software – they want services. They want to consume functionality the same way they do electricity, paying a monthly invoice based on utilization. They want it to work every time, although it’s certainly nice if the service improves over time, and even better if they have a voice in how it evolves. But they generally don’t want to participate in the hard work of design, development, and testing. They don’t want to buy a wood shop; they want furniture delivered to their door. Meanwhile, the IT geeks want to talk about product owners and features and delivering in increments.

Customer collaboration over contract negotiation

As I write this, Workday is upgrading everyone – all 900 or so corporate customers – to release 25. All the users logged out on Friday, and on Monday morning, they will log back in again. No IT departments will have to work all weekend. It will all just work, because it’s not software; it’s a service. And while the IT folks might have to make some tweaks to their integrations with other systems, or adjust a few custom reports with complex calculated fields, they’ve had at least six weeks to regression test and sort it out. And they’ll have six months to plan for the next non-event.

Responding to change over following a plan

Software-as-a-service, platforms-as-a-service, EMail-as-a-service, even identity management and single-sign-on-as-a-service. I’m not going to tell you that premises-based ERP is dead, or even in danger, but unless the IT department can figure out how to deliver services, rather than features, it will be difficult to get the funds to do the next major upgrade. The business folks will likely push for replacing that highly-customized, out of date software with a service. Before you try to argue with them, try to understand their values. To do anything less would be to do them a disservice.