Board (er) Line Decision Making
Given the economic circumstances of today, companies are increasingly under pressure. This pressure is being firmly applied at the top of organisations.
CEO’s, once loved, trusted and adored are now constantly in the firing line. Whether it be over executive pay, company performance, false CV’s, the list goes on.
This pressure on CEO’s is coming from many angles. Shareholder activists are no longer dudes in long socks and an anorak who have a specific random bugbear. They are organised and are institutional investors with a very clear view on what they want to happen in the companies they have invested in. They are looking for change.
That’s not to say the silly has gone away. A recent New York Times article (a paper I had the pleasure of reading properly in hard copy for the first time last week) looked at this issue. There was a great story about a Japanese firm who had shareholder activists asking for all staff members of the company to stand up when going to the toilet. The idea being to increase their internal fortitude to get the company through the tough times. A peculiar, but important piece of Japanese corporate governance requires the Chairman of the Board to read out all resolutions at an AGM.
Never before has the Board been held so publicly accountable for the way it communicates major corporate decisions. In fact, respondents to our 2011 Trust Barometer indicate that transparency and trust are the two most important contributors to a company’s reputation. Broader mainstream media discussions around boardroom activities have led to heightened regulatory attention as to how businesses are run at their highest level. Further, employees have amplified their voices through the use of social media, shedding light on dissention or other workplace issues in public forums with global reach.
With poor communications, media, analysts and other stakeholders may surmise on your relative silence, opening the company to more public scrutiny and criticism. Middle Eastern Board’s too often communicate with a very narrow stakeholder group in mind. They need to think beyond the traditional. With clear and effective communications, much of that public scrutiny can be transformed to greater public trust.