Playing Board Games: Maximizing External Insight To Avoid Checkmate


Corporate-boardroom news usually hits the media pipeline as 'it' hits the fan. Enron's dramatic fall from grace catapulted its powers-that-be from the boardroom to the courtroom; Hewlett-Packard's boardroom scandal sent the company's reputation through a ritualistic slaughter; Worldcom's board was widely criticized as being too passive and overlooking the blatant accounting fraud taking place. These instances mar the positive impact a board of directors can have on an organization; however, a board doesn't have to be an ominous shadow of power that hangs over a corporation, only to emerge when times are tough. At their roots, boards function to provide objective advice, mentoring and counseling that serves in the organization's (and not their personal bank accounts') best interests. The fact that the biggest boards are often embroiled in one corporate scandal or another is further evidence that communicators - especially those within smaller companies, nonprofits or agencies - should pull up a chair, sit down and join the game: Building a Better Board. How To Play Your Cards For communicators, the initial challenge is to convince a skeptical CEO of the imperative of the communications function's involvement in the decision making process. Here's how to do it, according to communications executive who has counseled many a corporate board: "Communicators are in the best position to anticipate the reputational risks brought on by being associated with an outside person," says Paul Argenti, a consultant and professor at the Tuck School of Business. "They are involved with intangibles on a daily basis. That's a skill that should be a part of any board selection process." Complementary to that skill is the tangible knowledge communicators inherently possess. "If one thinks about a truly anticipatory issues management dynamic, it's a combination of background, education and insight," says Matt Gonring, a consultant with Gagen MacDonald. "When it comes to emerging, substantive and tangible issues that are a threat to the enterprise, communicators are most attuned to this." Making these skills and attributes clear to the C-suite takes time, of course, but Gonring emphasizes communications executives' recognition and understanding of various stakeholder views and impact. This knowledge is incredibly powerful when looking at board-of-directors candidates. If this approach isn't high-impact enough, one can always rely on the fear factor. Ketchum SVP, Global Director of Research, Mark Weiner, throws these tips into the mix: "Highlight the risk of not being involved. Billions of dollars in market capital were lost [in boardroom scandals], and some companies disappeared as a result. Its not so much about the upside, though some CEOs will respond to that, but it really hits home when the risk is clear." Once the risk has been made clear and communicators are brought into the loop of board member selections, there are a number of recommendations they should bring to the table, as many C-suite executives may be inclined to overlook useful characteristics in favor of friends or fame: Look not for big names, but for relevant experience and a penchant for innovation. An entrepreneurial spirit doesn't hurt either. Ideas are a dime a dozen, but those who can come to the table with ideas and execution plans are rare. Don't play inside baseball. The majority of board members should be outsiders - at least 75-80%. In most cases, the only board seat saved internally should be for the organization's chief executive. Having all insiders presents the risk of decisions being made for personal, not professional, gain. Also, Gonring says, "The board make-up should relate to the issues faced by the enterprise." For many companies, it's wise to consider candidates with an understanding of labor communications and organizational alignment. When vetting candidates with the C-suite, don't duplicate qualities the company already has internally. Communications executives should know the corporate goals and messaging very clearly, and they should have a good picture of the organization's strengths and weaknesses. Bring people in who can fill a gap, whether it be in their business background, their leadership style or their outside-the-box thinking. "Communicators must talk about balance of views and backgrounds," Gonring says. Consider the candidates' ability to handle public scrutiny. "In the current business environment, board members are more accountable than ever before," Weiner says. "The ability to communicate openly, authentically and transparently is a necessary asset. As communications experts, PR executives can determine the expertise of board members in interacting with the media and other external audiences." Because the board is the liaison between the company and its shareholders, it must speak in a strong voice that doesn't buckle under the pressures of reputational risks. PR executives are the go-to people in times of crises, and they last thing they should have to worry about is what their board members are saying to the press. Weighing The Odds Convening with the C-suite prior to any appointments is necessary for agreeing on one thing: control. Boards can be as hands-on or hands-off as required, but the executives' preference must be decided up front. For example, a board comprised of corporate powerhouses offers industry connections, but it may be inclined to run the show - or to at least be a backseat driver. Fortunately, though, Gonring notes that CEOs are increasingly inclined to give top-level executives exposure to the board of directors. This is an opportunity for communications professionals to understand the dynamic of the group, and to identify the best ways to interact with them. Showing Your Hand Once the board members are chosen, communications executives should put together a package of the following information as an orientation for your organization (Source: Ralph Ward's Boardroom Insider): Copy of the corporate bylaws Directory of current board members Board committees and their members (if relevant) Directory of company officers and top executives The board's meeting schedule for the next year Corporate code of ethics Director membership criteria Director compensation and benefits information Staying In The Game Given the nature of advisory boards, communications executives likely won't be privy to everything that happens during a meeting. However, it behooves the communications department to establish a means of taking boardroom decisions and delivering the necessary and appropriate messages to the proper stakeholders. Then, PR executives' responsibility of media training key spokespeople for their organizations shouldn't stop short of board members. After all, many wars are won and lost behind closed doors, and the bloodiest battles inevitably appear in the news. Board members were front and center in the HP debacle, and that's only one example. Communicators must fight for the opportunity to hone board members' public speaking skills, and they also must have their ear to the door to be aware of strategy and anticipate times when public statements will be necessary. It may seem like a game with all the politics and egos at stake, not to mention the occasional rogue player who pulls unexpected cards out of his sleeve, but PR managers' arsenal of communications strategies can make the board member selection process a guaranteed win. CONTACTS: Mark Weiner, mark.weiner@ketchum.com; Paul Argenti, paul.argenti@dartmouth.edu, Matt Gonring, m.gonring@gagenmac.com Playing With A Short Stack Building a high profile, high-caliber board of advisors doesn't only require deep pockets and a bottom-line that rings of "Wall Street darling." For businesses and nonprofits that don't have the public presence or the bankroll to attract notable board members, there are organizations out there to help fill in the blanks and provide oversight without breaking the bank (or resorting to bribery). The Alternative Board (TAB), for example, is a peer-advisory group comprised of small- and mid-sized business owners (in non-competing industries) that comes together monthly and acts as a professional think tank of sorts. It's a place for executives and communicators to come together and discuss business challenges, and to offer each other guidance. Plus, it's a "safe space," as all members sign a confidentiality agreement, and peer groups are created based on similar industries. It's an affordable option when an advisory board comprised of flashy resumes isn't in the cards. With 140 franchises across the country, companies can join peer groups (for a fee) that match their own professional knowledge and needs, and use the forum of professionals as a sounding board. SCORE: Counselors to America's Small Business: SCORE defines itself as a "source for free and confidential small business advice for entrepreneurs." It's a free alternative when the ideal offerings of a board - objective advice and oversight - are needed but unavailable. These are just two examples of the many executive forums that exist to serve similar purposes as corporate advisory boards. Communications executives can bring this information to the table when their organization is looking for oversight on a shoestring budget. Board Effectiveness Checklist 1. Do Directors understand what their role is? 2. How does management describe the Board's role? 3. Is the Board Chair a leader? 4. Is there open communication between the Board Chair and the CEO? 5. Do Directors have time to fulfill their roles? 6. Do Board members have compimentary skills? 7. Are Board processes well defined and adhered to? 8. Does the Board lead the strategic planning process? 9. Does the Board have good sources of information for decision making? 10. Does the Board have standards of performance for itself and does it ensure they are being met? Source: boardroommetrics.com

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