Do you get a feeling sometimes or even overall generally that you really aren’t sure whether you can trust what someone is telling you? I’m actually past that point – except for good friends that I have known for some time and who I trust and respect, I either don’t believe what I am hearing or I certainly question its basis. This makes decision making more difficult and time intensive.

Some people simply without any discomfort lie as a matter of course – these people are missing a personality gene or trait – you may have seen survey results that seek to quantify how many times a person on average is lied to each day. The numbers are stunning. But I’m not even talking about that. At a different lower level you have things like the speaker’s spin, overstatement or exaggeration, intent to persuade, the speakers omission to state other important information, alternative or contrary information, preconceived belief or prejudice, lack of reliable factual support, and false, contrived or erroneously limited possible choices or explanations, et al. Defending on the severity these might be considered intentional fraud, constructive fraud, deceit, negligent or innocent misstatement or misrepresentation, or some other form of dishonesty.

Your only option or defense is to critically think about, consider, and evaluate what you are hearing. Alternatively, you might say that you need to actively question what you are hearing or being told. But it takes time, effort and interest – it isn’t the easy approach.

Can you critically think about something if you have little background or personal experience with that issue or topic? Sometimes I hear people say that you cannot comment about something because you haven’t experienced it. I specifically disagree, although the point has some relevance. Lack of information or personal experience makes critical thinking and evaluation more difficult. But you certainly can still use your own good judgment, consider possible alternatives to what you are being told, gather additional information including alternative or contrary information, and question the speaker about his or her position, alternatives, and basis for statement or opinion.

Frankly, I have to say that listening to the news, or salespeople, or politicians, just as examples, tends to drive me crazy sometimes as their information and statements can almost always be rebutted or at least questioned. Who has the time for that? And maybe that’s their point – you don’t have the time.

From my audit committee guide, the following is a summary of the business judgement rule for board directors – you will note that it’s significantly based on informed, critical thinking:

In summary, as a general principle the business judgment rule provides that a director should undertake his or her duties:

-In good faith, with honesty and without self-dealing, conflict or improper personal benefit;

-In a manner that the committee member believes to be in the best interests of the corporation and its shareholders; and

-With the care, including reasonable inquiry, that an ordinarily prudent person in a like position would use under similar circumstances.

Reliance Upon Other People Under the Business Judgment Rule

In the course and scope of performing his or her duties, a director must necessarily obtain information from and rely upon other people. The director is not involved in the day-to-day operations of the business. The director provides an oversight function. Pursuant to the business judgment rule, a director is entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, prepared or presented by any of the following:

-Officers or employees of the corporation whom the director believes to be reliable and competent in the relevant matters;

-Legal counsel, independent accountants or other persons as to matters that the director believes are within the person’s professional or expert competence; or

-A committee of the board on which the director does not serve, as to matters within that committee’s designated authority, so long as the director acts in good faith, after reasonable inquiry as warranted by the circumstances, and without knowledge that would cause reliance to be unwarranted.

You can find more information including Tate’s Excellent Audit Committee Guide on my blog at http://directorofficernews.com, and also on my trust, estate, conservatorship and elder abuse litigation blog at http://californiaestatetrust.com.