The Veil of Ignorance

American philosopher John Rawls in his “original position” political philosophy developed a method of determining the morality of political issues now known as ‘The Veil of Ignorance’.


The theory is based upon the following thought experiment: people making political decisions imagine that they know nothing about the particular talents, abilities, tastes, social class, and positions they will have within a social order.  When such parties are selecting the principles for distribution of rights, positions, and resources in the society in which they will live, this “veil of ignorance” prevents them from knowing who will receive a given distribution of rights, positions, and resources in that society.


So how does the Veil of Ignorance work? Let say for a proposed society in which 50% of the population is kept are below poverty line poor, it follows that on entering the new society there is a 50% likelihood that the participant would be below poverty line poor too.  The idea is that parties subject to the veil of ignorance will make choices based upon moral considerations, since they will not be able to make choices based on their own self- or class-interest.  The veil serves to render obsolete those personal considerations that are morally irrelevant to the justice or injustice of principles meant to allocate the benefits of social cooperation.


“no one knows his place in society, his class position or social status; nor does he know his fortune in the distribution of natural assets and abilities, his intelligence and strength, and the like”

                                John Rawls


Now while this is kind of interesting what implications might the Veil of Ignorance have on governance?  Quite often individual on Boards and in decision making functions rightfully bring with them a background and are there to represent a particular segment of the community.  However, Boards have a range of legal and fiduciary duties including the duty to act bona fide in the best interests of the company or organisation and the duty to exercise powers for proper purpose.


Sitting on a Board is hard as it is only natural that you have your personal views on a topic, or your views may be influenced by a group that you may also be part of.  But in a Board meeting you must act in the best interest of the company and with proper purpose.  This is where the method of the ‘Veil of Ignorance’ might be useful.


A topical issue now in Australia is around marriage equality.  There have been several companies coming out (excuse the pun) in support of marriage equality, as well as several high-profile people and organisations publicly opposing marriage equality.  So, the question I wondered was how did the Boards or the individuals determine their position and did they use the ‘Veil of Ignorance’ method?  If they did the question might be something like this – if I did not know if my child was going to be straight or gay, removed my own sexuality from the decision-making process and therefore removed all my self-interest or group interest and removed my personal consideration, how would I vote on marriage equality?  Then we would need to consider the Board talks with one voice, so we would need to ask this question as a collective Board. 


Easy to say but hard to implement the Veil of Ignorance but it is a concept worth considering especially in situations where the matter at hand and the decision are highly emotive and which has personal ramifications.  So, at your next Board meeting when there is a highly emotive issue explain the Veil of Ignorance to your fellow Board members and have a go – you might just find it reduces the tension as individuals can internally rationalise or justify their decision better and feel more comfortable with their decision and the decision of the collective, unified Board.


Stephen Barnes is the Principal Consultant at Byronvale Advisors.


Why the Government is a bad example of good governance

I have been watching the goings-on in politics both here in Australia and internationally recently and, while I don’t usually voice my opinions on politics publicly, there have been some great examples of why the government is a bad example of good governance for the business community.  Over the coming weeks I’ll give my thoughts on some examples.


Let’s start with the s44(i.) of the Australian Constitution debacle which lists the grounds for disqualification on who may become a candidate for election to the Parliament of Australia.


Section 44 of the Constitution states:


  1. 44. Any person who –

(i.) Is under any acknowledgement of allegiance, obedience, or adherence to a foreign power, or is a subject or a citizen or entitled to the rights or privileges of a subject or citizen of a foreign power:


shall be incapable of being chosen or of sitting as a senator or a member of the House of Representatives.



Personally, being a dual citizen and thinking, rightly or wrongly, that Australia is the most multicultural country in the world, that this clause is a little silly.  Why is it still a part the Constitution that governs today’s Australia?  In addition, every parliamentary candidate receives a Candidate Handbook which reproduces this section of the Constitution.  The US Congress and the British parliament which were used as a model for the Australian parliament, as well as countries like New Zealand and Canada do not prohibit members of parliament from holding dual citizenship.


But here’s the governance lessons: –


Why hasn’t there been regular reviews of the Constitution and if there has been, why wasn’t this clause reviewed and clarified? In 1981, 1988 and 1997 the Constitutional Commission reviewed this section and made recommendations to delete and/or amend this clause of the Constitution.  They also suggested a tweak to s34 on Qualifications of Member to begin with “Until the Parliament otherwise provides…” which would have let the Parliament decide if one’s allegiance status.



The Australian Constitution was written 100 odd years ago, and this clause has gained a lot airplay recently with regards to allegiances – has none of the 1,000s of parliamentary candidates not read the Handbook, and if they had, had they not comprehended what this clause meant?  There have actually been several cases whereby candidate’s eligibility has been challenged because of s44.  The instances I like the best are in 1946 and 1950 where eligibility was questioned due to the candidate’s Catholic faith.  The claim was being a Catholic the candidates were under an allegiance to a foreign power.


So, what would good governance look like with regards to this clause of the Australian Constitution.


  • Constitutions outline the objects of the organisation and the rules on how the organisation should be managed. Constitutions should be reviewed regularly, and one may say that the Australian Constitution is reviewed regularly by the Constitutional Commission, but it also needs to reflect the community’s views and values.  It would seem that political advantage and not the views of the community has been why the Australian Constitution has not been amended per the recommendations.
  • Culture is a key part of good governance. s44 reflects the culture and values of the community as it was 100 odd years ago but does not seem (at least to me) that it reflects the culture and values of the Australian community today which is very multicultural.
  • In a corporate or not-for-profit board situation, the board act as a link between the organisation and the community it serves. Representation means ensuring your organisation knows how the community sees it and what the community expects from it.  With regards to the Australian Constitution, the members of parliament are the body that is supposed to represent the people, however, politics seem to be the driver behind decisions and not necessarily the views of the people they represent.
  • Board members are servants of the board and the organisation. Under various legislation e.g. Corporations Act or ACNC Act, board members have various governance principles which they must abide from, including a duty of care.  The government has questioned various corporate board members and c-level officers over their duty of care shown, however at least from my perspective they do not exhibit the same duty of care themselves.
  • Corporate and not-for-profit constitutions usually have provisions around qualifications of directors. This may include necessary skill sets, and what I usually advise boards is it should also include the necessary commitment of time and presence.  Making sure you attend meetings, attend to the work you commit to and be present at meetings and when acting as a board member.  I’m not sure that members of parliament, past and present, have necessarily given due care when reading and interpreting the Candidate Handbook else they would have self-questioned their eligibility status like they are all scurrying to do now.  There has been the odd case where eligibility has been contested but not for s44(i) – they have been for s44(ii) on criminal convictions, s44(iii) on being bankrupt or insolvent, s44(iv) on office of profit under the crown, and s44(v) pecuniary interest in an agreement with the Commonwealth.  These other clauses all seem very similar to various clauses in both the Corporations Act and the ACNC Act.



These are just a few topical lessons from the current Australian Constitution debacle.  The next blog in the series will be on the ‘Veil of Ignorance’ theory and the lessons why the government is a bad example of good governance.


Stephen Barnes is the Principal Consultant at Byronvale Advisors.

Lessons from The West Wing #3

Andrew Jackson, in the main foyer of his White House had a big block of cheese…. I am making a mental list of those who are snickering, and even as I speak I am preparing appropriate retribution.”- Leo McGarry, Chief of Staff, The West Wing


In the episode, The Crackpots and These Women, the character of Chief of Staff, Leo McGarry, introduces us to the origins of the Big Block of Cheese.  In 1837, President Jackson had a 1,400 lb. wheel of cheddar brought into the main foyer of the White House, and the public was invited to partake of the cheese and discuss the events of the time.  In the TV program Big Block of Cheese Day was a colloquial reference to a tradition of granting access to interest groups which would not ordinarily get the attention of White House staff.  In this episode, the Press Secretary, C.J. Cregg, had to meet with environmentalists who were interested in obtaining funding for a highway strictly for wolves’ use.  Deputy Communications Director Sam Seabourn met with UFO conspiracy theorists.  There were also groups such as the Organization of Cartographers for Social Equality and Citizens for DC Statehood.  The staffers somewhat begrudgingly enter into these meetings but come away having gained new perspective from passionate members of the public.


One of the reasons I like The West Wing is that actual events often follow the story line of this 15-year-old program.  President Obama actually implemented Big Block of Cheese Day following the State of the Unions, though the discussions were on social media (which didn’t exist when the TV show was made).  The public shared questions via the (curiously casein-free) hashtag #AskTheWH, and various officials responded throughout the day to questions on policy issues such as education, immigration, climate and energy, economic opportunity, foreign policy, and healthcare.


The Big Block of Cheese Day is actually an interesting idea for engaging a wide range of voices around important issues.  In business and in the not-for-profit, clubs and associations, it is often difficult to gauge a wide range of views but it is vitally important.   There is a paradigm shift in marketing from seller-centric marketing to buyer-centric selling.  Part of buyer-centric selling and inbound marketing is understanding who your market is and where they are on the buyer journey.  A key concept used to do this is by building personas.  This goes far beyond understanding and identifying who you market is but who they are as a person, and what is important to them at that particular time.  Look no further than the Youi insurance TV advertisements for great, quick examples of personas and how Youi have tailored their policies to each person.


There is also a case whereby the Big Block of Cheese Day could be used internally to gain a better understanding of the issues and insights of the staff.  Another TV program, (and not one of my favourites), that explores this idea is Undercover Boss, where a senior executive put on a disguise and spent a day with various parts of the operations of the company.   I’m not advocating deception but I do think it is important that there is an avenue whereby all voices can be heard within the organisation.  As part of ANZ Bank’s Breakout cultural transformation program all staff were given the permission to voice their opinion, views and ideas with anyone in the organisation – right to the then CEO Andrew McFarlane.  Not everyone did avail themselves of this opportunity but feeling empowered to do so gave the staff a sense that they were being heard.


I cover both inbound marketing and sales, and the impact of business decisions on others in my new book “Run Your Business Better – Essential information every business owner should know” which will be available in print and eBook towards the end of June 2017.

Stephen Barnes, Managing Director, Byronvale Advisors

Reconciliations – the right way

Reconciliations – the right way. Often we find that reconciliations aren’t being done, and when they are being done not always the right way

Ten-step end of financial year checklist for small businesses

Directors of small businesses are advised to ensure their businesses bite the bullet today and start taking tiny steps to get their houses in order for 1 July.

Indeed, MYOB CEO Tim Reed cautions them to avoid the long hours and late nights of cramming months or an entire year of paperwork into a last-minute dash ahead of the end of financial year (EOFY). They should also ensure they are up to date with changes   in the laws and regulations that apply to their   businesses.

MYOB provides this EOFY 10-step checklist for directors:

  1. Do not wait for 30 June. Record transactions regularly as you go and before 30 June, including all sales, purchases, payment and receipts. It may sound obvious, but logging your transactions can be very time-consuming if left until June or July. If you’re not quite there yet, perhaps block out time in your diary for recording each week or fortnight.
  2. Whether you’re working on your accounts in the cloud or on your desktop, you need to make a point-in-time backup outside your accounting system that creates a data file for the 2016-17 financial year only. Carefully save and store your 2016-17 financial year file elsewhere in the cloud or This will help streamline the transition from June to July and ensure the file is easily accessible in future.
  3. Get ready to stocktake.  A stocktake will allow you to write-off any obsolete stock and investigate any theft or shrinkage.
  4. Reconcile your bank
  5. Reconcile your accounts receivable and accounts payable.
  6. Take advantage of deductions, write-offs and rebates before June 30. Contact your accountant to discuss the deductions, write-offs and rebates available to your Take action to scrap worthless stock, plant and equipment before June 30 by reviewing your asset register (which keeps track of your company equipment including items purchased, sold or disposed of). Remember, the small business instant asset write-off has increased to $20,000 to help you equip yourself with what you need.
  7. Review accounts and reports.  This should be one of the last steps you complete before handing everything over to your accountant or book keeper. If the previous steps have been completed correctly, then reviewing your accounts and reports should be a simple matter of ensuring everything matches up and you have the required supporting documentation. Ensure your business activity statement and superannuation guarantee charge statements are lodged and paid by 28 July, and be sure to pay your super guarantee contributions for the fourth quarter of 2017 by 28 July 2017. If you miss this deadline, you must submit a superannuation guarantee charge statement to the Australian Taxation  Office.
  8. Provide all necessary financial information to your accountant or bookkeeper.  There are several options – for example, have them make a point-in-time copy from your data file in the cloud or provide them with a secure copy of your backed-up files. Check what best suits them.
  9. Your accountant or bookkeeper may want to make a number of adjustments to your reports or statements. Once changes have been updated, lock all accounts relating to that year so that data remains accurate. This will help ensure an easy transition into the new financial year.
  10. Prepare for the new financial year.

“The end of financial year shouldn’t be all reports and numbers,” says Reed. “It’s also a good time to reassess and tweak your business plan and ensure you’re on the right path for next financial year. Familiarise yourself with regulation and law changes and implement these business changes before the start of the new financial   year.”