1. Extract from article published in Bestyrelseshåndbogen
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2. 7.4.
The communicative
responsibilities of the Board
Steffen Lüders | Board Chairman | Mannov A/S | sl@mannov.dk
How visible should a Board of Directors be in public?
When should a Board Chairman speak out publicly?
And where should we draw the limit between the com-
municative responsibilities of the Board and manage-
ment? The Board and management need to be aligned
on these issues to secure that they serve the interests of
the corporation in the best possible way. There should
not be a shade of doubt or confusion as to the capabili-
ties and roles of the Board and management.
As executive management in a corporation or organi-
zation, there will be times when the Board must step in
and assume a communicative role. Similarly, there will
be times when it is vital that the Board does not inter-
fere in external communication. When and how this is
the case was reviewed on Netværk Danmark’s Board
member training by the Public Relations agency Man-
nov A/S for a number of experienced business leaders
on 18 November 2010. The thoughts presented here
as well as the subsequent debate are the foundation of
this article on the communicative responsibilities of the
Board as well as the distribution of roles between the
Board and management.
Mannov A/S has vast experience in counseling Boards
and executives on how they can best meet the commu-
nication challenges of their companies, and how to de-
fine the assignments of the Board and management in
the strategic and practical communication execution.
1. The Board must define its communicative role
For Board members, there is no doubt that the overriding as-
signment for a Board is to assist the executive management of
a corporation or an organization and ensure the recruitment of
qualified day-to-day management. But what is the responsibility
and role of the Board in terms of communication? Should the
Board of a company be visible at all? And if yes, where are the
3. borderlines toward the CEO?
The answers to these questions are not set in stone. The inter-
pretation of how to practice this may vary significantly among
different companies and Board chairmen.
Confidence or doubt When a Board steps up in a communicative role in public, this
is oftentimes based on careful considerations. For instance,
if a company is serious financial trouble and the situation at-
tracts overwhelming media attention, speculations may arise on
whether the strategic direction of the company is the right one,
and whether the day-to-day management is up for the task. In
this case the Board needs to clarify the situation and share what
is being done. Additionally, the Board must consider the gravity
of the situation and assess the confidence of stakeholders as well
as themselves in management’s ability to manage the issue. On
a related note, the Board must decide whether the gravity of the
situation renders it necessary to communicate a vote of confi-
dence in the selected strategic direction and/or management’s
ability to manage the challenges. The vote of confidence can help
restore calm but may also be counterproductive for the company
if any doubt arises on management’s competence and on wheth-
er management should be released from its duties.
Differing opinions Potential consequences like the ones mentioned above need to
be carefully considered by the Board before it communicates in
public. There are differing opinions on this topic even among
high-ranking Board chairmen and experts:
Need for more than one “It’s not because I want to get in the media – actually it’s the
person in the public do- other way around. But the CEO may be fired, get in a car acci-
main dent or quit. Is it prudent to hand the reins of an entire company
to one person in the public domain?” asks Fritz Schur, who him-
self doesn’t shy away from public statements.
According to Fritz Schur, the most obvious downside of the cri-
sis is that chairmen seem to have all but disappeared from the
public limelight.
“We have become a bit scared. The legislation was changed for
publicly listed companies to prohibit working chairmen. But
this is foolish. From my perspective, chairmen who are too pas-
sive are a greater problem than chairmen who are too active,”
he says.
Berlingske Nyhedsmagasin, no. 23, 2009
At the time of writing, Fritz Schur was chairman of the Board in
DONG Energy, Post Danmark and SAS.
Michael Pram Rasmussen finds it difficult to understand Fritz
Schur’s argumentation. He does not endorse any other spokes-
people. If a relevant issue arises, you should respond on a case-
by-case basis.
4. Divided system with “The tasks solved by a CEO and a Board chairman are complete-
clear roles ly different. I greatly appreciate the fact that the Danish execu-
tive model is based on a divided system in which the day-to-day
management handles daily management and related tasks, while
the Board chairman manages general guidelines, strategy and
control. That’s checks and balances. If you get too involved as a
chairman, you will ruin the inherent division of the system.”
He believes it should only be necessary to support a CEO in cas-
es where the strategic direction or the CEO’s support is cast into
doubt.
Berlingske Nyhedsmagasin, no. 37, 2009
At the time of writing, Michael Pram Rasmussen is Board chair-
man in A. P. Møller – Maersk and Coloplast, among others.
Secretiveness can “It’s easy to give rise to role confusion, which is why this should
backfire be firmly established for the sake of the company,” explains
Steen Thomsen, perhaps the most active observer of Board ser-
vices in Denmark in his capacity of Manager of the Center for
Corporate Governance at Copenhagen Business School.
“The chairmen typically become more visible when the CEO
is under pressure. They step in to ensure continuity. Danske
Bank’s chairman Alf Duch-Pedersen supported Peter Straarup
when he felt this was necessary. And that was fine. There is a
need to establish authority because it is fatal for a company if
doubts arise around it,” Steen Thomsen adds.
Openness will – and must – increase in the long term, Steen
Thomsen points out. However, global corporations will devote
their focus to international media. Secretiveness can backfire,
Steen Thomsen believes.
Berlingske Nyhedsmagasin, no. 37, 2009
At face value, the statements from these two high-ranking Board
chairmen may seem like polar opposites. However, it is likely
that the rationale for their differing views can be attributed to
the different company types they serve as chairmen for.
Different company types Whereas SAS, Post Danmark and DONG Energy are public com-
panies and operate within the intersection of vital social tasks
and market-driven business management, A. P. Møller – Maersk
and Coloplast are listed companies owned by trusts without pub-
lic ownership and any particular social obligations as providers
of infrastructure or public service. The two types of businesses
have radically different political agendas and responsibilities,
which bears significance for the chairman’s role.
However, this is not in itself enough to explain the differing
Responsibilities are not
views on the role of the chairman and the Board in relation to
self-evident
management. A more comprehensive explanation is that the
most appropriate division of the communicative responsibil-
ities and the issue of public visibility not only comes down to
the ownership structure of the company (public, private, trust,
stock, etc.). It depends on a wide range of factors such as com-
5. pany exposure and size, company history, the people who serve
as executive managers and on the Board – but above all, on the
realities faced by the company in terms of internal and external
challenges and events.
In other words, the role of the chairman and the Board in rela-
tion to management is not self-evident. That is why it is crucial
for the Board to perform a thorough analysis and assessment
in order to develop a firm description of the Board’s communi-
cative responsibilities and the right division of work between
Board and management for current situation faced by the com-
pany.
When talking about communication, it is important to point out
that we don’t mean communication in a narrow context relat-
ed to media as Fritz Schur mentioned specifically in the quote
above. It could also mean communication related to collabora-
tion partners, large clients, banks, other financial partners, etc.
Discussed by the Board With this in mind, our recommendation is that the Board should
discuss its communicative responsibilities at least once a year –
and more frequently if the company faces or is preparing for a
major transformation process.
This article elaborates on a number of principles that can inspire
Boards to define the right communication policy. However, let’s
start out by taking a closer look at the different communication
paradigms that various companies let their Boards deploy.
2. Five different Board scenarios
There are significant differences in how Boards act in different
companies. This is reflected in their needs to communicate. The
following section includes some relevant examples, though this
should not be seen to comprehend all types of businesses in
Denmark…
About the author
This is an extract of Steffen Lüders
the article brought in
Ledelseshåndbogen. Steffen has been CEO of the PR agency Mannov since 1 January
1995, serving as working chairman as of 1 January 2013. He has
Try a free Ledelseshåndbog
online counseled a wide range of Danish and international companies
on strategic communication as well as issues and crisis man-
Please order on boss. agement. He is on the Board and the Business Committee of the
blh.dk, send an email to Danish Chamber of Commerce, where he also serves as chair-
kundeservice@borsen.dk or man of the Counseling and Professional Services Committee.
call (+45) 70 127 129. Additionally, he is a Board member of the International Cham-
ber of Commerce Denmark and the Danish Corporate Gover-
nance Network.