Many leading companies encourage their employees to dissent, believing that it can enhance organizational learning. When employees disagree with management, they can identify blind spots, counteract groupthink, and generally overcome gaps in understanding. These qualities help spur the innovation and fresh thinking that are critical to success in today’s knowledge economy.

Yet, despite dissent’s potential upside, there are several challenges that make it a difficult resource to manage. For one, dissent courts disruption. As an inherently defiant act, it can cause others to question management in ways that lower morale or decrease commitment. Another, more common problem is silence. Even when employees are urged to challenge the status quo, many elect to censor themselves. They may believe, for example, that dissent carries a high risk of retaliation — regardless of any assurances to the contrary — or that their views will be ignored. When these perceptions impede the open flow of information, the ensuing lack of knowledge can cause considerable harm. In extreme cases, fear and futility have grown so strong as to dissuade employees from dissenting in matters of literal life and death.

How, then, can companies capture the benefits of dissent while mitigating the risk of disruption? Moreover, is it possible for companies to better cultivate dissenters’ sense of safety and value so they will feel eager to voice critical feedback?

In a recent article, I answer these questions by viewing dissent through a fiduciary lens. Rather than thinking about dissent as an aspirational goal or a best practice to be addressed through training or policy, I argue that the default fiduciary duties owed by corporate and other organizational agents already compel them to dissent in many situations. That is, for much of the modern workforce, dissent is not an option; it is a legal requirement.

This obligation to dissent stems from the often overlooked and misunderstood fiduciary duty of candor, which my article explains should be understood as encompassing a pro-dissent norm.

The duty of candor is a feature of agency law that compels agents to disclose information they believe their principal would want to have when making decisions. It is a duty of performance that elaborates how the core fiduciary duty of loyalty should manifest when agents develop knowledge in the course of their fiduciary service. For example, although the fiduciary duty of loyalty is most often characterized as barring self-interested behavior, it also contains a prescriptive component that compels agents to act in ways not so easily categorized. In other words, not only does the duty of loyalty demand that fiduciaries refrain from self-dealing, but it also binds them to protect and defend the interests of the principal.

Given this affirmative dimension of the duty of loyalty, the notion that candor would play a role in putting the principles of loyalty into effect becomes self-evident. The key is the fiduciary agent’s power to exercise discretion while working on behalf of another. Every time agents face a choice among a range of options, their obligation to loyally serve the principal’s best interests must guide their decisions about how to behave. Fiduciaries cannot do whatever they want; they must exercise their judgment in the manner they believe is in the best interests of the principal.

This requirement extends to any information the fiduciary encounters. It must be filtered through the same loyalty-driven decision matrix as all other matters. Thus, if fiduciaries acquire information reasonably germane to the beneficiary’s interests, they must disclose it — just as they must pass along any profits generated by their management of the beneficiary’s property.

The clear demands of loyalty to communicate reveal the pro-dissent norm within the duty of candor. Imagine, for instance, that a principal instructs its agent to inspect a house for potential purchase. The agent’s duty of candor requires her to tell the principal whether she believes the structure is up to code or shows signs of severe water damage. The agent’s role here is to be a conduit for material information relating to downside risk that will help the beneficiary decide whether to buy the house.

A more complicated picture emerges when the content of candor strays from objective to subjective information, beliefs, or opinions. Do the fiduciary obligations of  agents compel them to dissent when they reasonably believe, but may not know, that a manager’s proposed decision will harm the firm?

Knowledge involves more than just scientific or objective fact. Many fiduciary relationships are established because a beneficiary desires the fiduciary’s subjective input. This is true in most fiduciary relationships built around an agent’s advisory role. A hallmark of advisory relationships is the beneficiary’s partial transfer of autonomy to another whose judgment the beneficiary relies on when making decisions (e.g., whether to settle a lawsuit, where to invest, or what medical treatment to seek). When fiduciaries in these roles provide the advice they feel is warranted, they might reasonably have to dissent. Indeed, it would be hard to say that fiduciary advisers could ever fulfill their loyalty obligations by failing to push back when their subjective judgment leads them to believe a beneficiary is headed toward a bad decision.

Once we recognize the fiduciary link between candor and dissent, several important implications follow. The first is that firms are less able to retaliate against dissenters than is frequently thought, even in a legal regime that otherwise prizes the flexibility of at-will employment. This conclusion stems from the reciprocal obligations that principal-beneficiaries owe to all agents who act as fiduciaries. If agents dissent in a manner consistent with their duty of candor, then the organization’s reciprocal duties to deal fairly and in good faith with them mean they ought not be punished for doing what they are supposed to do.

A further consequence of thinking of  dissent along fiduciary lines is expressive. A key function of fiduciary duties is to express and reinforce the values and ideals that society thinks should govern how people in fiduciary relationships interact. Drawing greater attention to dissent’s fiduciary contours should thus help signify to members of an organization the importance of candor and honesty, including when news might seem unpleasant. Indeed, as dissent is increasingly understood to be a feature of loyal fiduciary performance, additional norms ought to develop such that firms and employees come to see dissent more as an organic and collectively valued part of corporate culture than as something personally or institutionally threatening.

This latter point is the article’s most important contribution. A fiduciary understanding of dissent empowers employees at all levels of an organization to speak up and challenge orthodox views. But what is more, it can also be used in future work to shed more light on many of the most pressing debates in corporate governance, including those about how best to promote compliance, manage risk, and diversify corporate boards.

This post comes to us from Joseph W. Yockey, the Associate Dean for Research and Professional Development and David H. Vernon Professor of Law at the University of Iowa College of Law. It is based on his recent article, “The Fiduciary Duty of Dissent,” available here.