IF YOU’RE really quiet, you might hear the wringing of hands of corporate secretaries and general counsel everywhere. The idea that boards might blog or use some similar web technology to communicate directly with shareholders may sound frightening, but it’s a development whose time has come.
Here are some of the thoughts, debates, myths and issues boards might discuss in the hope they won’t need to blog:
1. There is no law saying the board has to blog, so why would we open ourselves up to potential additional risk?
Our View: A board blog is simply a website under the direct control of the board. It allows for direct, informal communication between the board and shareholders, unfiltered by management of the company. It would help boards make better decisions with the benefit of understanding the perspectives of the people they represent. If anything, this would reduce the risk of directors making bad decisions that will get them sued.
2. Our culture has always dictated that we are never early adopters, but followers. So let’s wait until all our industry board peers are blogging and then we’ll follow.
Our View: The leaders will reap the benefits sooner and given how quickly some companies are already adapting to blogging, there is little relative lag time for followers, without them being seen as completely unresponsive to shareholders. Indeed, there is more risk in not blogging. Like a “no comment”, the perception is that you want to hide or have something to hide.
3. This is something new, a big change, and the technology is complicated, we need time to figure it out.
Our View: Once you are shown what blogging is all about and how easy it is and what it means to your stakeholders, you’ll want to blog. It’s quick, simple and easy to use technology — and no, you don’t need to fear the oddballs, you’ll only be blogging with shareholders — the people you are accountable to.
4. More processes would be needed. Who’d run the program and manage it internally/externally? Approval processes? Whose budget would it come out of?
Our View: Again it’s simple, cheap technology. If you have someone on your board who can type and has an Internet connection, you can post information to a blog. Yes, you need to establish some protocols, but that will be second-nature to boards. The costs to customize an off-the-shelf blogging software platform to accommodate shareholder IDs will be small. In some cases where boards adopt a completely open approach, it would be free. Preferably, the blog should be managed by the board directly, but it can be outsourced to an outside firm or run through existing corporate structures — most likely corporate secretaries along with input from IR, PR and new media/web departments.
5. Who on the board would be “authorized” to blog on behalf of the board? What if there were diverse board member opinions on topics? How would this be fairly represented? And what would protect the brand reputation of the board/firm from the odd rogue director?
Our View: All directors should have the right to express their opinions. However, the non-executive board chair or lead independent director should speak on behalf of the whole board. Committee chairs should be able to write on behalf of their committees, with the approval of the full board. If there is dissent on an issue, the dissenting directors should have the right to put forward their views alongside those of the board majority. If you have a loose-cannon on the board, let them expose themselves and allow the shareholders to make up their own minds about them.
6. How much time will this consume? How practical will it be to get back to investors within 48 hours or less?
Our View: A little more time in the beginning as the blogging set-up gets established, but less time than existing shareholder correspondence and meetings over the longer term. And, you can set the policy as to how soon you will respond. Although some in the blogging community will tell you you need to blog every day, that doesn’t apply in the case of board blogs. Your site should be updated when you have something to report or when you want to ask shareholders for input on a specific issue or topic.
7. Egos are big on boards. Consider, “Well, if Joe Director can blog, I want to blog too. We are all equal board members.”
Our View: Each board member is accountable to shareholders. Each board member should have a say and blog if they want to, either through comments or through official posts.
8. If the board communicates more and uses blogs to do so, what will the corporate policy implications be for the rest of the organization? Under what circumstances will all employees be allowed to blog?
Our View: There has to be a coordinated roll-out and update of employee conduct manuals/codes and compliance procedures to include the world of blogging. We believe every employee has the right to blog on their own time at home, provided such blogging does not contravene their current employment contracts for protecting confidential, proprietary and material information. Special allowances can be made for marketing/sales and PR/investor relations folk who should blog on company time through company owned blogs.
9. What’s wrong with how we do things now? We already are meeting with shareholders to discuss issues. I don’t see why we need to bring these discussions out into the open?
Our View: A board blog is more inclusive. Currently, only the biggest, most poweful investors get to meet with directors. You can still have private meetings with those who choose that route. However, we believe shareholders will prefer to use the blog so that their views can be seen by all of the shareholders. The board wins by taking this major step and being accessible and at the cutting edge of shareholder communication.
10. Why on earth would we provide a forum for people to criticize us?
Our View: Open communication leads to less criticism. Shareholders with illegitimate or poorly thought out points of view will show themselves, while the Board can demonstrate its accountability to all shareholders by dealing with criticisms constructively and decisively, showing respect for differing opinions and providing the context for why the board has taken a particular position on an issue. The choice is simple, boards can either own the debates or be the subject of them.