Ten Practical Guidelines to Improving Board Communication Contents Introduction 3 Board Communication: A Director’s Perspective 3 Guidelines 4 1. Become a gatherer of broad-based information. 2. Be an honest broker of information and communication between the board and the executive/senior management team and avoid playing politics. 3. Engage with your directors to ensure you understand the type and quantity of information they would prefer. 4. Ideally all information to the board should always be processed and distributed through the office of the corporate secretary. 5. Always remember what the purpose of specific information is, when determining its appropriateness, as well as the required format and process. 6. Develop a standard template to be used by management for all board submissions. 7. You are not just a post box. 8. Consider the most appropriate means of communication. 9. Ensure you have a proper records management process and all communicated documents are properly filed. 10. Communicate more rather than less. What Is Meant by Board Communication? 8 Improving Board Communication Case Study 10 Ten Practical Guidelines to Improving Board Communication 2 Introduction Mark Twain once said: “I didn’t have time to write you a short letter, so I wrote a long one instead.” As corporate secretaries, we regularly face this challenge in relation to board communication: management prefers bombarding directors with as much information as possible to avoid being accused of opacity, while directors often complain that they are receiving too much information and it is being presented to them in ways that don’t highlight the key issues in order to stimulate the requisite discussion and debate, leading to less transparency and neither party’s objectives really being achieved. Ensuring effective board communication has always been a critical aspect of the role of the corporate secretary, but even more so in the face of ever-increasing liability for directors. The business judgement rule has been incorporated into legislation in many jurisdictions. The ability to depend on this rule is impacted by the actual information shared with directors, as well as the quality of their discussions and debate (based on such information provided) in reaching a decision in the best interests of the company. In addition, the increased usage of electronic communication has introduced many opportunities for better and instant communication, but at the same has increased the risk of overload. The corporate secretary, as the custodian of governance and the conduit between management and the board, can play a critical role in balancing the imperatives of management and the board, in the quality and detail of the information reaching the board and thus the quality of their ultimate discussions and debates, as well as board communication in general. A proactive, forward-thinking and commercially minded corporate secretary, especially one that is part of the organisation’s executive team and thus well versed in the detail and intricacies of the organisation’s mission, vision and strategy, should also be informed enough to themselves determine and assess the kind of information that is critical to be communicated to the board, in addition to the information generally filtered through management. This paper is intended to challenge corporate secretaries on the manner in which they approach their accountability for sourcing information to communicate to the board to assist the board in future-proofing the organisation and to provide practical tips to enable them to ensure the materials presented to the board for decision-making are timely, accurate and effective to inform and facilitate discussion, and balance the sometimes different objectives of management and the board. BOARD COMMUNICATION: A DIRECTOR’S PERSPECTIVE “Today, no industry is immune from disruption, which can be both a tremendous risk and a huge opportunity, and is something that boards need to pay close attention to. A good corporate secretary can greatly assist the board in this arena by supplying them with relevant and pertinent information that will enable them to debate these matters. Corporate secretaries need to be proactive in sourcing information for their boards.” ©2016 Corporate Secretaries International Association Dr. D. Konar Chairman of, inter alia, Steinhoff International Holdings Limited, Exxaro Resources Limited and Old Mutual Investment Group. Director of a number of other large listed international organisations. 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Contents Introduction 3 Board Communication: A Director’s Perspective 3 Guidelines 4 1. Become a gatherer of broad-based information. 2. Be an honest broker of information and communication between the board and the executive/senior management team and avoid playing politics. 3. Engage with your directors to ensure you understand the type and quantity of information they would prefer. 4. Ideally all information to the board should always be processed and distributed through the office of the corporate secretary. 5. Always remember what the purpose of specific information is, when determining its appropriateness, as well as the required format and process. 6. Develop a standard template to be used by management for all board submissions. 7. You are not just a post box. 8. Consider the most appropriate means of communication. 9. Ensure you have a proper records management process and all communicated documents are properly filed. 10. Communicate more rather than less. What Is Meant by Board Communication? 8 Improving Board Communication Case Study 10 Ten Practical Guidelines to Improving Board Communication 2 Introduction Mark Twain once said: “I didn’t have time to write you a short letter, so I wrote a long one instead.” As corporate secretaries, we regularly face this challenge in relation to board communication: management prefers bombarding directors with as much information as possible to avoid being accused of opacity, while directors often complain that they are receiving too much information and it is being presented to them in ways that don’t highlight the key issues in order to stimulate the requisite discussion and debate, leading to less transparency and neither party’s objectives really being achieved. Ensuring effective board communication has always been a critical aspect of the role of the corporate secretary, but even more so in the face of ever-increasing liability for directors. The business judgement rule has been incorporated into legislation in many jurisdictions. The ability to depend on this rule is impacted by the actual information shared with directors, as well as the quality of their discussions and debate (based on such information provided) in reaching a decision in the best interests of the company. In addition, the increased usage of electronic communication has introduced many opportunities for better and instant communication, but at the same has increased the risk of overload. The corporate secretary, as the custodian of governance and the conduit between management and the board, can play a critical role in balancing the imperatives of management and the board, in the quality and detail of the information reaching the board and thus the quality of their ultimate discussions and debates, as well as board communication in general. A proactive, forward-thinking and commercially minded corporate secretary, especially one that is part of the organisation’s executive team and thus well versed in the detail and intricacies of the organisation’s mission, vision and strategy, should also be informed enough to themselves determine and assess the kind of information that is critical to be communicated to the board, in addition to the information generally filtered through management. This paper is intended to challenge corporate secretaries on the manner in which they approach their accountability for sourcing information to communicate to the board to assist the board in future-proofing the organisation and to provide practical tips to enable them to ensure the materials presented to the board for decision-making are timely, accurate and effective to inform and facilitate discussion, and balance the sometimes different objectives of management and the board. BOARD COMMUNICATION: A DIRECTOR’S PERSPECTIVE “Today, no industry is immune from disruption, which can be both a tremendous risk and a huge opportunity, and is something that boards need to pay close attention to. A good corporate secretary can greatly assist the board in this arena by supplying them with relevant and pertinent information that will enable them to debate these matters. Corporate secretaries need to be proactive in sourcing information for their boards.” ©2016 Corporate Secretaries International Association Dr. D. Konar Chairman of, inter alia, Steinhoff International Holdings Limited, Exxaro Resources Limited and Old Mutual Investment Group. Director of a number of other large listed international organisations. Member of the King Committee on Corporate Governance. 3
