|Wednesday, 23 March 2011 16:25|
Each month, we ask two communications practitioners to debate an issue via an exchange of emails: In this month’s digital discussion, the question is: “Although
few large companies do it, should there be a place on the board of directors for corporate communications?”
Arguing that there should is Gordon Tempest-Hay, CEO of communications consultancy Blue Rubicon. In the opposing camp is Kit Bingham, a principal on the board practice of executive headhunting firm Odgers Berndtson.
I’ve been wondering why more companies don’t put communication directors on the board? I think everyone is pretty much agreed that reputation and share price are inextricably linked, and we know that there is an ever-growing body of academic evidence that communications inputs can materially impact on share price.
A recent study I saw showed that effective communications could add 8% to a company’s value. That means that, if you’re the communications director of a FTSE worth £2 billion, you could be in charge of decisions that will add, or remove, £160 million of value. And do so pretty swiftly, especially at times of crisis. In some respects, therefore, what the communications director does every day in successfully managing a company’s reputation could have at least as much impact on share price and value as the day to day work of others that currently sit on boards. Yet we still seem to be operating in a time where the monetary value of reputation – and thus the need to manage it as an asset at the board – is not fully recognised. Isn’t it time for a change?
Yes and, well, no. Good communication does indeed enhance and protect reputation, and has a material impact on share price and value. I speak as a former journalist and PR consultant (from hack to flack!) so I agree without reservation. But it does not necessarily follow that communications directors belong on the board.
Boards of directors are not representative democracies, where each of the company’s individual interests (sales and marketing, the overseas subsidiary, the comms department) has a seat. All directors must represent all of the business on behalf of all of the shareholders.
Executive directors must have a full understanding of the strategy, markets, opportunities and risks facing every part of the business, ideally gained the hard way, through experience. The best companies ensure star managers, as part of their career development, are exposed to operations across the business to ensure they have a sufficiently broad view when they reach board level.
I know from experience that many communications directors are wise, clever and highly commercial people. But their careers do not tend to involve large-scale, hands-on management roles across different parts of the business. The furrow they plough may be important, but it remains narrow.
Until that changes, comms directors are likely to be called upon to advise the board, but not invited to take a permanent seat.
I take your point and I agree that a board shouldn’t merely be an amalgam of the sectional interests of the company – even if that is how they are drawn up on occasions.
My worry is that while many destined for the board will spend time preparing for it in general and financial management, a spell in communications learning to manage that most precious of assets – the company’s reputation and goodwill – is rarely part of that process. I’m sure there are exceptions, but it’s not the norm. In fact, in some places a spell in communications would almost be seen as a diversion away from the path to senior management. The result is that some people can arrive at the board without the experience you suggest. Yes, they can take advice but their lack of personal experience can explain some of the more infamous communication decisions: decisions which have wiped millions off a company’s market value, and occasionally been the end of the company itself.
Perhaps that is the big issue then; it’s time for those destined for the board to have experience in communications? And not just a cursory few months promoting products, but time spent developing the instincts in reputation that all good comms directors have?
I heartily endorse your suggestion. Exposure to communications as part of a manager’s career development and education would be an excellent step forward and would help to lend authority to the principle that you describe, namely that reputation and value are inextricably linked. I would indeed like to see boards have more first-hand experience of communications, rather than simply relying on outside advisers.
Will it happen? Sadly, it’s doubtful. There are certainly examples of operational people who sidestep into a communications role – the trouble is, they seldom come back. And there is a danger that experience in communications will, as you say, become viewed as a six-month period of marking time before getting on with a “real” line management role.
I suspect another trend may be at play. Executives who happen to be natural communicators are more likely to reach the top. Despite the good offices of media trainers, presentation coaches and all that, there are simply some business people who are better at getting their messages across both internally and to
a wide range of external audiences. These executives are the ones to back to reach the CEO’s suite. Equally, where a CEO is appointed who is not a first class communicator, that skill needs to be present in the chair. As with all things that are board-related, it’s about balance.
Perhaps we are addressing the wrong question. Not, should boards include more communications professionals. But, can you reach the board without being a consummate communicator?
“A study showed that effective communications could add 8% to a company’s value. That means the communications director of a FTSE worth £2 billion, could be in charge of decisions that will add, or remove, £160 million of value”
Certainly the historical answer to your final question was, yes you can. Not to name names, but it’s widely acknowledged that there have been CEOs with great careers who’ve risen rapidly to the top, while being dreadful communicators both externally and with their own teams.
That was feasible in a world where there was less transparency, where your every move was not crawled over, captured and analysed by the media or every consumer with both a smartphone and access to a raft of social media outlets. Now, every move of a company can be reported on immediately; everyone can break news; everyone has the technological capability to critique and broadcast at a moment’s notice. Now, stakeholders are ever more important. As such, the ability to understand this new world and its potential impact on an organisation’s reputation, and the ability to communicate so as to navigate successfully are, you would hope, must-have skills for all board directors.
Is that widely recognised yet? Maybe. But it will only come to the fore when there is a widely held belief that reputation is an asset to be managed and an asset whose value can be influenced by good, or bad, communications. That is an argument that has still to be won.
“I know communications directors are wise, clever and highly commercial. But their careers do not tend to involve large-scale, hands-on management roles across different parts of the business. The furrow they plough remains narrow”
So, how best to win the argument? To return to the question that kicked off this debate, I am sure that it is not simply by elevating communications professionals to the board. The challenge of managing the company’s reputation, and protecting and augmenting its value, runs through every aspect of a company’s operations – its people, its products, the way it does business every day. Simply adding a person to the board whose role is to repeat the mantra that the company’s reputation is an asset to be managed does not address the problem. The board as a whole must adhere to the principle.
I would draw a distinction here between establishing the strategy on the one hand, and execution on the other. It is the board’s job powerfully to assert that the company’s reputation is an asset that must be protected to the last. How that principle is put into practice – drawing on the expertise of communications professionals for example – is a management issue.
As with all things at board level, the wisdom of the chairman, and his or her receptiveness to new ideas, is a critical factor.