How are issues raised by the board communicated with management?

  • Radia Guira

This question aims to understand the communication process between the company’s board and its management regarding issues or concerns raised during board meetings. It delves into the mechanisms and procedures in place to ensure that the management receives the necessary information and guidance in a timely and effective manner from the board of directors.

The inquiry explores whether there are formal and structured communication channels or informal and ad hoc avenues for this purpose. It helps assess the organization’s commitment to transparency, accountability and effective governance, which are key aspects of the Environmental, Social, and Governance (ESG) score.

An example response can be: « At our company, any issues raised by the board are communicated to management via formal notice in company meetings and through written communication also shared on our secure online platform for ease of access. In critical situations, emergency meetings are arranged to directly involve the management for immediate action. »

This provides an insight into the company’s procedure and frequency pattern of communicating important matters and the urgency level observed in critical situations. It can suggest their respect for defined protocols as well as flexibility when needed, contributing to their ESG score.

Understanding the Communication Framework

Effective communication between a company’s board and management is crucial for the smooth operation and governance of the organization. This process is not just about transmitting information, but also about creating a dialogue where strategic decisions are influenced by both parties’ insights and concerns. According to Gunster, a solid communication framework allows the board to provide oversight and guidance while enabling management to execute the strategic directives efficiently.

One of the foundational elements of this framework is the establishment of formal communication channels. These include scheduled board meetings, strategic retreats, and regular reporting systems. During these interactions, issues raised by the board are formally communicated to management through structured agendas, minutes, and action items. The communication framework also defines the level of detail necessary in board reports and the frequency with which these reports should be updated and circulated.

Best Practices for Effective Board-Management Communication

To ensure that issues raised by the board are effectively communicated with management, it is essential to follow best practices outlined by governance experts. M. Jennings Consulting emphasizes the importance of clarity and openness. This means that messages should be clear and free from ambiguity, allowing management to understand the board’s concerns and expectations.

Another best practice includes regular interaction between the board and management outside of formal meetings. This can take the form of informal discussions, updates via email or phone, and participation in joint committees. Such interactions help to build a rapport between both parties, encouraging a more candid exchange of ideas and fostering a culture of transparency.

Maintaining documentation is also critical. Written records of communications serve not only as reference points for decisions taken but also as evidence of due diligence and compliance with governance standards. Moreover, they facilitate continuity in cases where there are changes in board or management personnel.

Role of Technology in Enhancing Communication

In today’s digital era, leveraging technology can greatly enhance the communication between the board and management. Tools like secure board portals allow for instantaneous sharing of information and can support the real-time collaboration necessary for addressing complex issues. As highlighted by Effective Governance, technology also enables the tracking of tasks and issues, ensuring that nothing falls through the cracks and that there is accountability in the follow-up process.

Video conferencing and online meeting platforms have also become critical, especially in the context of remote work and geographically dispersed boards. These tools enable the board to maintain a high level of engagement with management without the constraints of physical presence. It is important, however, to ensure that the use of technology does not replace the human element of communication but rather enhances the board’s ability to convey its message in a timely and efficient manner.

In conclusion, the communication between the board and management is a critical aspect of good governance, especially when addressing ESG issues. By establishing a robust framework, adhering to best practices, and embracing technology, organizations can ensure that communications are effective, issues are promptly addressed, and both the board and management can work collaboratively towards achieving the company’s ESG goals. It is these practices that will ultimately contribute to the long-term sustainability and success of an organization.