Helping their companies respond to a slew of new corporate governance rules is one of the biggest challenges facing PR pros these days. "Listing Standards" recently mandated by
the New York Stock Exchange and the Sarbanes-Oxley Act -- not to mention the media maw waiting for another juicy corporate scandal to gnaw on (read: Tyco International) -- are
dramatically changing the ways companies need to communicate. "It's a new world, with new rules," says Kurt Stocker, past president of the Arthur Page Society, who is also a
member of the Corporate Accountability and Listing Standards Committee of the New York Stock Exchange. "Transparency is communicating not just financial information but
information about boards of directors and how they're evaluated."
The PR executive's challenge is to increase their own credibility by finding new ways to deliver information to shareholders," adds Stocker. To be sure, it's a fine line that
PR pros must walk between pleasing the C-suite and pleasing the Board. But it's a line that PR execs will have to learn how to navigate in what is still uncharted territory. For a
road map, PR NEWS asked several PR executives for their advice on some of the best practices for dealing with board members - and how not to get caught in the crosshairs.
Reed Bolton Byrum
President-CEO, PRSA; 512.619.0472; [email protected]
A Board scenario like that of American Airlines finding out too little, too late has been repeated too often. Silent collusion by a CEO with a company's CFO will continue to
bring down huge corporations, and the Boards will still be feeling like plucked porcupines -- unless the traditional Board structure undergoes change.
No PR officers have been indicted in the corporate scandals, and I believe they could fill several governance gaps. Public relations officers can prove they are more than just
sounding boards - rather, they can be proactive counselors who keep alive the flame of a company's most valuable asset: its reputation.
A Board-designated communications counsel could help the directors navigate difficult waters by interpreting needs of the many internal and external audiences. The results
could be a Board that not only is aware of activities beyond the boardroom, but also can place its actions in the proper ethical context.
Dan Collins
Division VP, Corporate Communications, Corning Inc.; 607.974.4197; [email protected]
At Corning, we experienced no angst in implementing the new corporate governance regulations because we were already doing much of that voluntarily. However, we did realize
there was an opportunity to enhance our communications efforts, in light of the uncertainty that stakeholders were experiencing in the wake of crises at Enron, Worldcom and
elsewhere.
We added a corporate governance presentation to our annual investor meeting well before Sarbanes-Oxley was implemented so that investors would have the information they needed
up front. We boosted our internal communications with Q&As and online glossaries, knowing that employees might be having trouble making sense of the evolving regulations and
associated vocabulary. We meet regularly with the Corporate Relations Committee of the Board of Directors to update and inform. We had members of the Board address our
leadership team on issues of social responsibility and financial integrity.
Michael Claes
Managing Director, Corporate Practice, Burson-Marsteller; 360.546.3180; [email protected]
With respect to the day-in, day-out relationship with the Board, the professionalism used in advising any corporate executive applies. But when it comes to difficult situations
-- change of control, accounting issues, etc. -- the nuance of "who is the client", especially for internal staff, adds a complexity because in many respects management is the
client and the Board can be an adversary. So someone (internal or outside PR counsel) going to the Board on a difficult issue has to weigh whether they are -- or are perceived as
-- speaking for (i.e., defending) management, or are they giving the Board impartial advice even if it runs counter to management's interests. This is not conveniently resolved by
the idea that ultimately all are employed by the corporation and accountable to shareholders, and a skeptical independent committee of Directors is going to view the in-house
staff, and even outside counsel, as advocates for management.
A seasoned in-house professional who has the esteem of the Board may get past this, but with the pressure for independent thinking many Boards are retaining their own advisors,
including legal, accounting and public relations, for the impartial advice they think they need.
Julie Freeman, ABC, APR
President, IABC; 415.544.4706; [email protected]
In an ideal world, public relations professionals should impact a Board's decision-making at two points in their process: before a decision has been made and afterwards. As
Board members decide on a course of action, PR practitioners should help them see the impact that choice would have on all of the organization's publics.
If they anticipate an unfavorable reaction, they can suggest strategies to help those publics understand and accept the Board's decision. Once the Board has a made a decision,
the public relations practitioner can develop a communication plan that is timely, honest and clear. If Boards and organizations wish to rebuild employee, customer and public
trust, their decisions must be transparent, and they must be communicated openly. Public relations professionals have an important role to play in that process.
Margery Kraus
President and CEO, APCO Worldwide; 202.778.1010; [email protected]
Relationships between boards of directors and their companies are changing. As they seek to regain trust and credibility with key constituencies, they may well begin to
communicate on their own behalf rather than leaving it to the CEO. At times, they will have to represent their own and key shareholder interests publicly and separately from
management.
This will likely cause terror in the hearts of CEOs and some PR directors. They will fear confusion and contradiction. But the situation is not very different from that of any
stakeholder - labor, shareholder group, activist. The process will be the same. Maintain open, two-way communications with them. Understand their needs, expectations, pressures -
especially within key committees, such as audit and compensation. As with others, this will take close coordination with CEOs, but the advantage is that there are few groups more
important to them than the board. You should have their full attention.
Katie Paine
President -KDPaine & Partners and PR NEWS Image Patrol Columnist; 603.431.6967; [email protected]
I sit on a board of directors for a health concern. The talented and charming PR person made a presentation to the Board about a major new initiative. It has all the "right"
ingredients, good strategy, catchy logo, good implementation, but it lacked the single most important component: clear measures of success.
I pushed her to find out how she would be telling the board if the program was working. Her response was "the number of people who participate." My response was "fine, and
how does that help the bottom line of the organization?" She did not know the answer. To me it was simple: the program was designed to improve community relationships and make
employees feel more engaged. That can be measured in lower employee turnover (four employees retained @ $50,000 to replace a single employee would have paid for the program) and
increased membership from the communities affected. But the PR person didn't know how to speak "boardroom" - i.e. numbers, charts and graphs. As a result her program was
perceived to be somewhat frivolous.
In contrast, the government affairs person followed her, making a thorough presentation of pending legislation and for each piece of legislation outlined the possible costs and
benefits to the organization.
Helene Solomon
President & CEO, Solomon McCown & Co.; 617.695.9555 http://www.solomonmccown.com
PR professionals who work with mission-focused organizations must walk a fine line with boards of directors. Many strong executive directors want exclusive control of the
critical relationships with their boards. But if PR professionals fail to educate board members about their efforts -- particularly how communications helps achieve development
goals -- future programs may not be funded.
One way to connect with board members early on in a relationship is to seek their input during a communications audit. This provides an opportunity to establish a rapport and
gain a sense of a board's point of view. Sometimes a crisis is what engenders respect for the PR firm.
A board member seeking crisis counsel who sees that a firm is seasoned, able to absorb information and react quickly, and is in sync with the organizational mission, can become
a cheerleader for PR in the future.
Louis M. Thompson, Jr.
President & CEO, National Investor Relations Institute and PR NEWS' Investor Relations columnist; 703.506.3572; [email protected]
While there is plenty of room for finger pointing when it comes to who failed in their respective roles resulting in the tremendous loss of investor confidence in the equities
markets, the failure of boards of directors to provide adequate oversight is a major one.
The New York Stock Exchange and Nasdaq corporate governance listing requirements are an effort to address some of the problems growing out of the Enron debacle. While new
rules may raise the bar in making boards more independent, financially literate and so on, the one factor that will distinguish good boards from bad or mediocre ones is behavior
and the culture in which the boards operate.
The culture and the behavioral aspects are most often established by the CEO. The PR officer must emphasize this when counseling the CEO. Board members must operate in a
culture built on trust - trust that they can challenge each other and the CEO. And, a key piece of advice is that we live in a world of few secrets. Just ask the board of
American Airlines.