Charting the Industry: PR and Corporate Boards—A Critical Link

For PR pros, the following finding could be good news, bad news or both: A June 2011 EisnerAmper board of directors survey finds that reputational risk is most top of mind in today’s corporate boardroom (see chart for details).

This is bad news because reputational crises seem to be occurring daily in the corporate world, but good news for communicators, says Sherry Treco-Jones, head of Treco-Jones Public Relations. “This finding demonstrates the critical importance of the CCO/head of PR having that seat at the table,” says Treco-Jones. Taking it one step further, Treco-Jones says that it’s essential to have the board familiar with that executive in non-crisis times, as part of the CEO’s team. “Unfortunately, that relationship is often forged in the fire of a crisis,” she says.

According to David Kalson, CEO of Ricochet Public Relations, which specializes in reputation management, PR pros are unlikely to be surprised that reputational risk is robbing the sleep of board members. “When an organization’s reputation—that is its brand equity—is at risk, board members understand that the company’s finances are also at risk,” he says.

Kalson says there’s no question that PR pros must be involved in the C-suite and board-level issues, since a company’s reputation, its customer relations in the event of a product recall or service problem, business succession, regulatory compliance, etc.—all must include communications strategies aimed at advancing the company’s interests, which are almost always financial or financially related.

On that end, investor relations often has a more direct role with the board. Directors are much more aware of reputional risks thanks to increased shareholder activism and social media, says Lisa Rose, senior managing director of Dix & Eaton. “I’ve gone before boards to present survey findings on what investors are thinking about company management and reputation,” says Rose. In addition, Rose says boards are often curious as to what is being said about a company in the media.

In the face of a crisis, communicators must be ready with answers to board questions, which might be:

• What’s the current environment like in which we’ll be carrying out our action?

• Who’s saying negative things about us now?

• Who is supportive, and how influential are they?

• What impact might our actions have on our shareholders?

The bottom line, says Kalson, is companies without good communications pros involved in board-level decisions are companies that make huge PR missteps, and that thought, too, should keep a board member up at night. PRN

CONTACT:

David Kalson, dkalson@ricochetpr.com; Sherry Treco-Jones, stj@trecojonespr.com; Lisa Rose, lrose@dix-eaton.com.

June 6, 2011