When you should say no to your banking boss

In investment banking, there's a clear hierarchy and juniors are expected to follow the orders of their superiors unquestionably. The orders may be brilliant, good, indifferent, lacklustre or poor. Implementing them may produce fabulous results, moderately good outcomes or not much benefit at all.

Some orders, however, would almost certainly prove harmful or potentially lead to a scandal. Madoff's accountant is an extreme example, but more commonplace instances of bank employees who were just "doing what everyone else was doing" or "just following orders" were Libor manipulators.

Well-known cases include the sorry, sad story of Tom Hayes, the former Citi and UBS trader who went from earning $7.4m in four years to 14 years in prison, and Michael Curtler, a former Deutsche Bank trader, barred from the UK financial services industry after he plead guilty in the U.S. last year to conspiracy to commit wire fraud and bank fraud. The defense lawyer of Jonathan Mathew, one of the ex-Barclays employees accused of manipulating Libor, claimed that his client was on trial "merely for following the orders of a bullying boss," and while that very well may have been the case, it remains to be seen how much weight such arguments will carry in court.

Why would an executive issue risky, thoughtless or just plain bad orders? There are any number of reasons: poor information, faulty analysis, pressure from key shareholders or constituents and feeling their job is on the line. More serious reasons include ego inflation or greed resulting in excessive risk-taking and incentive schemes that distort values and bend or break regulations.

How do you avoid these career-stoppers without alienating the issuer of the order? This requires a professional competency that is almost never taught: intelligent disobedience.

Intelligent disobedience is the name of a crucial skill in guide-dog training. The individual who is blind and uses a dog to get safely to and from their destinations depends on the dog not to obey commands that would put the canine-human team at risk. The human trusts the dog to find a safer route around construction, for example. But this doesn’t just occur spontaneously. Both the dog and the human prepare for this eventuality with training.

This same type of training saves lives and its application extends to human relations. Airline crews are trained to speak up and even take the controls if the captain is failing to see and avoid serious risks. They practice overcoming exaggerated deference that is ineffective in preventing tragedies.

How to show intelligent disobedience

Here are a few of the ways to prepare for those rare but critical times when intelligent disobedience may be needed. Create hypothetical situations specific to your own job and practice these steps:

• Let the shock of receiving a dangerous order register. Find a polite way to defer agreeing or refusing to follow it definitively, such as "I'm absolutely slammed now, but I'll look into it, and we should schedule a follow-up meeting to discuss it".
• Slow the action down to think it through. Don't be pressured into rushing to complete a task that your gut is telling you may be the wrong move, so stalling tactics are needed here.
• Check your understanding of the order with the issuer. It's vital to collect as much information as possible before speaking with your boss or manager about it in more detail.
• Explain the risks in the order and offer alternatives. Don't just say, "No, I'm not doing it" – spell out your reasoning and suggest a more appropriate course of action.
• If the person ignores you and simply repeats the order, try again expressing your knowledge and convictions related to the subject more assertively. Don't allow yourself to be intimidated by threats.
• If the order is repeated again, state the reasons you will not implement it – that will usually make them reconsider before implementing it themselves. Even if they lose their temper, be sure to remain cool.
• Offer to take responsibility for the alternate course of action. Reiterate one of your suggestions for moving forward or express your willingness to come up with another solution both of you can live with.
• If you temporarily assume the lead on the project or initiative, turn it back to the leader when the danger is passed. You want to avoid having ongoing responsibility for a hot potato dumped in your lap out of frustration, exasperation or spite, and you want to make it clear that, despite the difference of opinion, you still respect the issuer of the bad order.

While it may be difficult to stand up to your boss or manager, especially if he or she has a short fuse, circumstances may arise when doing so is vital to preserving your professional reputation – and your career in finance.

Ira Chaleff is a board member and the founder of the International Leadership Association’s Followership Learning Community, the author of several books, the founder and president of Executive Coaching & Consulting Associates, and adjunct faculty at Georgetown University.