The communicating Supervisory Board member: Introduction to the ‘Corporate Governance Story’

Published as Insight on 29 April 2011 - Members of Supervisory Boards are coming under fire more and more frequently of late, with the salary and bonus debate just one very clear example. Not only does this damage the reputation of the board, but also that of the company itself. Supervisory Board members are therefore increasingly recognising the need to speak out in public.

So far, Supervisory Board members have generally used the tried and tested avenues, such as the AGM and the Supervisory Board report, to report on their supervisory activities each year. However, the call for Supervisory Directors to communicate more frequently in the broader public domain is increasing, which clearly indicates that the above-mentioned methods no longer suffice in many cases. Shareholders, too, are calling for more openness and more insight into the activities of the Supervisory Board.

Supervisory Directors should embrace the opportunities available to them and see this as a chance to help build their own individual reputation, as well as the reputation of the company they represent. This is also very much in line with concepts such as shareholder engagement.

But what is the best way to achieve this? Well, for one, this should always start with a well thought-out plan and a clearly defined structure for more proactive and consistent communications from the Supervisory Board to stakeholders. First and foremost, this requires clear consultations with the Executive Board and synchronisation of their communications activities. They must draw up clear lines of communication, which in this case primarily means that the communications from the Supervisory Board must reflect their supervisory responsibilities. The two bodies must also define clear roles and determine who communicates what messages and how. And of course, their main priority should always be the company’s reputation.

The ultimate objective is to increase trust, improve mutual understanding and enhance the credibility of the company. This can only be achieved on the basis of a true dialogue. This will require the creation of a new storyline, in addition to the existing corporate and/or equity story: the Citigate corporate governance story.

The corporate governance story focuses primarily on how the Supervisory Directors carry out their task. These storylines must include both the key messages and their validation: how does the Supervisory Board develop the planned dialogue? What are the key considerations behind certain decisions? What is their execution strength? Walk the Talk! Provide evidence. Actions speak louder than words and create credibility.

Communication is and remains largely based on emotion and influences perception. It is not just the CEO or the Executive Board that builds a company’s reputation; this is also to a large degree determined by a collaboration between the Executive Board and the Supervisory Board. This means that Supervisory Directors need to be visible and need to communicate more. It is increasingly important that they make the execution of their supervision visible to the public, for instance through interviews in the media, corporate governance road shows, and internal or public presentations. This can make all the difference. Well thought-out and consistent communications, creating and maintaining a reputation for reliability and integrity.