New Imperatives for the Board: Communications and Corporate Reputation
COVID-19 has brought into sharp relief the expanded role that Boards of Directors can take to support management and add value to the organisation in difficult times. Communication with stakeholders is one way in which Boards can augment the work of management.
A McKinsey article in their series looking at the role of Boards during and beyond the pandemic, notes: “A board can ease the pressure on the management team by reviewing communication plans and reputation management challenges and engaging with select external stakeholders.” More extensive communication to investors, governments and regulators are areas where an effective Board can add value.
Helping management with operational communications is not a traditional function of the Board, though Board members’ regular interaction with stakeholders to understand the business better is important. Strategic planning, oversight of major transactions, and CEO succession planning are often regarded as the value-creating activities of Boards, while financial statement review, compliance and audit-related activities are critical but less strategic.
However, these are not normal times and COVID-19 is creating new normals for companies every day even as they emerge from lockdowns. If Boards can help relieve some of the pressures for management, bring relevant experience from their own backgrounds to bear on the problems, and help develop strategic thinking beyond the crisis and in readiness for business resumption as well as the next crisis then there shouldn’t be any concern of potential Board overreach.
As Russell Reynolds Associates notes in a paper on Board Leadership and Performance in a Crisis, “Boards that act fast to reinforce a strong, compassionate, and positive culture with both internal and external stakeholders stand to benefit the most post-crisis.”
From a communications perspective I would offer the following advice to Board members taking on this expanded role of communicating with stakeholders:
Ensure messaging is consistent. In this instance the Board is working alongside management so a strong alignment on messaging will be important, while ensuring the Board is not perceived to be functioning as management.
Think how the message will be received or heard. Consider how you would feel if you were on the receiving side. Are there ways of saying it better in order to connect more effectively with stakeholders?
Bad news deserves to be told straight, I am a strong believer in not sugar-coating bad news, however, your stakeholders will also want to be shown a way forward. Future-focused messaging is increasingly important as businesses move into the recovery phase of the crisis.
Demonstrate empathy not just facts. Particularly in times of crisis, emotional leadership is more important than intellectual leadership.
Make use of your network. You are probably on the Board because of the skills and connections you have as well as your ability to work closely as part of a team. Now is the time to use those connections to help the company as it navigates the crisis.
Corporate reputation matters as much as profits. Research shows that the reputation of the company and how it manages the crisis impacts its ability to recover well.
Will the Board’s involvement in communications and corporate reputation disappear along with COVID-19? Regardless of the continuing risk of ‘Black Swan’ crises I don’t think the Board’s involvement in these areas will decline or that it should.
Boards have evolved over the past decade either as a result of new stock exchange rules, changing company needs, or changing societal expectations.
A Heidrick & Struggles survey published in March looked at the European Board of the Future and notes how the role of the Board is changing, with new areas of involvement including, “issues that once might have been the purview of management alone, such as reputation and sustainability, and others that are emerging as central to performance, such as establishing and maintaining purpose.”
Boards could rely on a company’s Chief Communications Officer to bring this expertise or turn to external consultants for advice. But to fully integrate this learning into Board thinking and practice companies will need INEDs on their Boards with those skills in depth.
Asian companies should also take note, particularly with geopolitical frictions threatening to undermine their licence to operate in some overseas markets. Now is the time to be enhancing communication and corporate reputation skills at a Board level.
As Heidrick & Struggles notes in its Board Monitor Hong Kong 2019, nominating committees “might consider executives in traditionally untapped functional areas,” and they point to PR and communications amongst others.
The expanded roles that Boards have taken on globally with communications and corporate reputation reinforce that this should happen sooner rather than later, as the Board of the future is being defined today.