New Rules of Etiquette for Board Communication
BY Ralph Ward
In the good old days (and they' re still not so " old" at a lot of companies), all communication between the board members and company staff was funneled through the CEO' s office. The board saw only company reports and projections that had been processed by "the boss," and any questions or comments for those down the line were relayed through the CEO' s office. This was usually benign censorship, but it still ensured that the board would see the company largely though the CEO' s eyes.
Times are changing, though, and more boards are insisting that they have direct access to such offices as the chief financial officer, corporate counsel, investor relations, auditors, and whoever else they please. But change brings uncertainty -- just what are the new rules of etiquette for contacts between directors and managers?
" We' re seeing more written policies on boards communicating with staff," says Carter McNamara, head of Authenticity Consulting. Laying out a formal policy, discussed by both directors and the CEO, makes clear that the board' s ability to reach out for information is important -- but also compels thought on the logistics involved.
Most boards today will want to contact staff members directly without going through the CEO, but the next stage of discussion involves what role the CEO' s office will maintain in the process. Sometimes a policy will " suggest that the board notify the CEO that they want to contact a staff member," says McNamara. But if directors need to ask permission before proceeding, how much power do they really have? A compromise might be a general notification to the CEO' s office concurrent with the contact. Or, as part of its policy setting on the issue, the board and CEO might outline a list of titles and offices that directors can contact whenever they wish, with people deeper down in the company reserved for a " notification" basis.
A problem with some board contacts is that directors don' t know with whom to get in touch for what bit of information, leading to frustration all around. At Agilent Corp., Corporate Secretary Craig Nordlund tells me that " each board committee has a staff contact, so if anyone on the committee wants information, they can go right to that staffer." The audit committee, for example, uses the internal audit or controller' s office, and the compensation committee uses the head of human resources or executive comp. Directors can also use the corporate secretary' s office as a liaison if " they want to arrange a site visit or go to a research lab," Nordlund says.
Setting a good policy on board/staff contact can pay off by demanding good faith on both sides. The CEO must accept that directors today can talk to everyone on their own. Directors, meanwhile, must realize that they can gum up the works by being indiscreet, clumsy, or misdirected. Talking about what a reasonable policy would be is the first step in making it work.