Mea culpa, mea culpa. I’m not proud of it, but I have to confess that I have fibbed during my business career. And it’s been not just once or twice. Actually, I don’t like thinking about how many times I’ve been forced to tell little white lies.

It can happen like this: I’m walking down the street when I run into a business acquaintance. We make small talk about golfing or the weather, like good Minnesotans, then start chit-chatting about business when he drops the bomb. “So, anything new happening at XYZ Corporation?” he asks, knowing that I’m on their board of directors.

Being a board member or officer, I’m privy to confidential information that, if disclosed improperly, could do irreparable harm to a company. What if the company is negotiating to buy a competitor, or is about to release financial results that are out of line with Wall Street’s expectations? Certainly these events would be considered “anything new”. Yet I have a fiduciary duty not to disclose material events. However, I also have a conscience that makes me uncomfortable with lying.

When confronted with such questions, I used to say, “You know that I’m on the board of directors and can’t comment on anything specific. I hope you can respect that.” But I found that that answer leads people to believe there really is something going on, creating more angst and speculation than if I simply give my now-standard answer –  “Oh, nothing new” – and switch the subject as quickly as I can.

While I’m not proud of the fact that I have to occasionally tell a white lie, to violate my duty of confidentiality will result in greater harm to the organization than the harm of being dishonest with one person.

Officers and directors have duties, including the duty of loyalty, which encompasses a commitment to maximizing shareholder value and not having personal conflicts of interest. So they must treat inside information confidentially; illegally disclosing it is a one-way ticket to the crowbar hotel. But they also have a duty to disclose when there is a conflict of interest, and to disclose all material information to shareholders when the board is asking them to vote on something. Put simply, if a shareholder sues a board for negligence, the court will examine whether the directors acted in good faith, with due care, and with loyalty to the company.

Catch that? Loyalty to the company, not loyalty to one’s personal values. Companies make decisions based on the best way to maximize their shareholder value or economic gain. It’s a real-world fact that business leaders, then, are forced to tell white lies to protect the greater good of an organization, even though it’s a gut-wrenching experience to do so. Consider these examples:

You walk out of a board meeting where you discussed the closing of a troubled division. A group of managers was given the task of drawing up the implementation plan, but until final details are worked out, it is confidential. In the hallway, you meet an employee who works in that division who asks you how the meeting went. What do you say?

You are in the beginning stages of negotiations to merge with a competitor when a product manager presents an idea for increasing the sales and profits of her aging product line. It’s a good idea with great potential, but it doesn’t compare to the increased sales and profits the company will have after the merger, which will make her product line obsolete. Yet the impending merger is a “material event” that cannot be disclosed. What do you do?

Your company is in financial trouble and is developing a turnaround plan that includes a layoff of 30 percent of employees. Final details are not yet confirmed, but you are confronted by an employee who says he has heard there will be layoffs. He asks whether it’s true. How do you answer?

Ethics professors say it’s best to tell the absolute truth all the time. That’s fine for the classroom, but it’s not reality. A business leader’s job is to find the balance between what’s best for a wide variety of stakeholders, including shareholders, employees, customers, and community. As much as it hurts, sometimes you are forced to violate your internal code of conduct and tell little white lies. That’s why guys like me have gray hair.

However, if little white lies turn into black lies, that’s another matter. I’m talking about big stuff, like denying you have traded on inside information, intentionally misleading shareholders, filing false financial information to boost the company’s stock price, or improperly accounting for assets – the stuff of Enron, WorldCom, Adelphia. The difference here is that black lies are told for the personal gain of the person who was trusted to properly handle confidential information.

People make excuses for unethical behavior, saying that it’s just what to expect in today’s world – there’s constant pressure to outperform last quarter’s results, do better than the competition, et cetera. But that’s the sign of a sick mind.

Besides, telling fibs, white lies, and even some gray matter has been around for a long time. In fact, Cicero (circa 106-43 B.C.) wrote about it in De Officiis, or On Duties, in the form of a letter to his son Marcus. On Duties presents cases of dishonesty in business as examples of what to do when the honorable and the convenient conflict.

One case supposes there is a food shortage at Rhodes, and the price of corn is extremely high. An honest man has brought the Rhodians a large stock of corn from Alexandria. He is aware that a number of other traders are on their way from Alexandria with substantial cargoes of grain. Should he to tell the Rhodians this? Or should he to say nothing and sell his corn for the best price he can get?

Cicero says it could be argued that the merchant should reveal all of the facts, but it could also be argued that so long as the seller is not breaking the law – not concealing defects in his goods or telling falsehoods – he is not required to reveal all that he knows. As you can see, even Cicero doesn’t have an easy answer, and his famous musings have guided the world for 2,000 years!

There are often shades of gray between white and black lies. The gray is a necessary part of business life that makes being in a position of leadership difficult.