I’m going to be a bit controversial. Well, here I go.
I have been pondering ways in which meetings and their associated papers could be a bit more compelling, far more relevant for 21st century business needs and quite frankly, maybe just more enjoyable to read.
To my mind there are three primary reasons.
Firstly, the pandemic. It has brought hardship, pain, and disruption to all of us, but also opportunities to step back and look at where we work and how we work. It has required management teams to adopt agile decision-making models to put in place contingency plans for their workforce and their customers. Many boards have enjoyed the fast pace of tangible effective decisions and have questioned why this cannot be the same when things return to whatever normal will eventually become. It has led to a greater level of working from home, but the board meetings still need to be held and the papers circulated, however many company secretaries and directors feel that the traditional board meetings held over VC are often clunky, ineffective, and frustrating, so the need for compelling and focused papers is greater than ever.
Secondly, the rise of the importance of ESG through our deepening climate crisis, a growing movement for businesses to look and feel like their customers and businesses urged to elevate their qualitative objectives to the same importance as their quantitative ones. Management needs to think harder about how they will respond to calls for more sustainability and action on the environment, diversity/inclusion in all its forms, human rights, consumer protection, animal welfare, corporate culture and being seen to promote the success of the business through considering the needs of all stakeholders.
Thirdly, are the expectations of regulators; conduct risk, conduct rules, tone from the top, consumer protection, vulnerable customers, treating your customers fairly, client money regulations, I could go on, but it shows that the regulators consider the culture of a firm reflects the way the business treats its customers, so it naturally suggests that the core foundation of any board reporting should be its people and its customers.
A daunting agenda for any board, nevertheless critical if a board is to respond to all its stakeholder expectations in a proactive and agile manner, whilst remaining relevant to its people and customers as well as being seen in a positive light by its regulators. However, there is a way to see this huge manifesto as an opportunity to move beyond traditionally constructed reporting by looking at a process I call “stakeholder storytelling”.
What is stakeholder storytelling
In simplistic terms, it places decision making at the front of the meeting and shapes reporting around its stakeholders not around its functions.
You could call it pure Section 172 reporting or Wates Reporting, but I think it has the potential to go deeper and prove to be a useful tool for directors, particularly independent non-executive directors, to access and assess the business right at its heart, quickly identify systemic themes, shine a light into the darkest corners of the business and maybe uncover areas for enhancement or untapped innovation or talent, all of which would benefit the strategic objectives of the organisation.
What would the reporting look like
The agenda could be replaced with a strategic decision statement or recommendation dashboard showing all the recommendations and actions the board need to consider. Each recommendation is cross-referenced with the underlying reporting. This would be followed by a welcome statement from the chairman introducing the overall theme of the reporting period which contains highlights from the CEO and other senior management, essentially hotspot reporting, being the key issues and events facing the business and its stakeholders.
The underlying papers could be categorised under stakeholder groups, for example:
PEOPLE: For example, covering diversity and inclusion initiatives, conduct and disciplinary issues, remuneration matters, employee engagement projects, succession planning/talent retention, BCP and other contingency planning.
CUSTOMERS: For example, covering customer feedback, KPI’s, such as service levels, complaint resolution, product development, fraud prevention, vulnerable customers.
SHAREHOLDERS: For example, covering financial performance, dividend recommendations, shareholder relations, AGM issues, tax matters.
ENVIRONMENT: For example, covering carbon capture initiatives, paper reduction strategies, office environmental footprint, Product climate footprint, recycling strategies.
COMMUNITY: For example, covering non for-profit initiatives, youth training schemes, charitable causes, political lobbying.
REGULATORS: For example, covering risk management, capital and liquidity requirements, financial returns, compliance, internal audit.
The reports would detail what matters to each of the appropriate stakeholders, what opportunities or risks face them and how could the business go about resolving them. These papers are essentially supporting documentation for the recommendation dashboard.
What would be needed to implement stakeholder story telling
There are several ways to embrace the new approach:
Businesses could adapt their team structures by having a “team of team’s” approach with deep multi-talented employees working closely with one another. For example, a governance specialist team with HR, legal, cosec, finance, and compliance skillsets which supports the company secretariat team or is part of the secretariat or legal/compliance function.
Reporting processes and mechanisms could be re-orientated to look through a multi stakeholder lens, widening its capabilities beyond the traditional finance, risk, compliance model, relying on more flash MI, HR employee data, and increased levels of qualitative reporting.
Potentially there could be a reporting council made up of prominent report contributors who oversee the crafting of the story of the period using sophisticated collaboration tools and agnostic team input with the assistance of a governance specialist team or company secretariat team.
What are the advantages of the stakeholder storytelling model
The decision making is upfront, clearly signposted to the underlying reporting to support agile decision-making, enhanced readability, and clarity around the “so what” and “why”.
Board members can gain a holistic appreciation for all the issues facing the firm’s stakeholders, prioritise and resolve them accordingly. In addition, it provides independent non-executive directors with a clearer picture of the state of the organisation, giving them the ability to delve further to better understand its complexities and assist the board in building a better business.
The reporting touches on parts of the business which traditionally have not received the senior management time they deserve given their increasing importance within the corporate world, such as diversity and inclusion, sustainability, board room dynamics, mental health etc.
Helps provide shareholders and regulatory authorities with a better understanding of the true culture of the business by having a greater knowledge of how the business links together to promote the interests of all its stakeholders.
Greater collaboration and co-ordination between senior management and report contributors.
Provides clear evidence of directors undertaking their Section 172 obligations and shows how boards also reflect the principles of the Wates corporate governance principles.
Who are currently using a similar model
There are a few examples of elements of the stakeholder storytelling model within the corporate world, for instance many businesses have reflected Section 172 and the Wates principals into their reporting and some major banks and other financial service organisations have established governance councils or multi personnel combined teams to oversee and shape their governance arrangements and its reporting.
In one example, one of my past remuneration committee chairs, took me through a process she called “playbook reporting” which she had introduced to the board of a major retail manufacturer on which she was senior independent director. It proved a hit with the board, its stakeholders, and the wider business. It shared many of the elements of stakeholder storytelling but was before the days of Section 172 and Wates, so I think there is scope to reinvigorate the approach for 21st century.
Is stakeholder storytelling achievable
A forward-thinking business who is committed to revising their governance structure to best represent its stakeholders, would clearly be the most fertile ground for implementing the stakeholder storytelling model or a start-up business wanting a governance model which differentiates themselves from their peer group which also compliments their lean and agile decision -making framework.
It would be more challenging for those businesses with deep rooted traditional governance models and many layers of management, but if the will and determination is there to really make their board meetings more relevant and engaged, focused on the strategic objectives of their business through the lens of all their stakeholders, then anything is possible.
Let us know
Does the idea have merit? a potential model for the future? or is it a dead duck, impractical for most companies? or have you put in place a similar model? Let us know.
Stakeholder storytelling or not, all businesses should aspire to having a governance model which is future fit.
At Kuberno, we have the experience and expertise to support you to modernise all your governance arrangements, so why not drop into our Governance Gym for a quick workout and contact one of the Kuberno team for a chat email@example.com.