UNDERSTANDING OF CORPORATE COMMUNICATION

So the Fifth Golden Rule of Corporate Governance is that effective systems of stakeholder communication are in place to ensure transparency and accountability.

The other Golden Rules have focussed on there being an ethical approach to running the business (we define business ethics here), the need to align business goals, to have an effective strategic management process in place and an effective organisation capable of delivering the strategy and achieving the agreed goals. The underlying importance of corporate communication in all these rules is clear. From finding out what our stakeholders think of the company (including how good our communication is!) to disclosing full details of how it is run, (eg directors' remuneration), communication plays a vital role throughout.

The various codes on corporate governance have also honed in on the importance of corporate communication, though purely in this limited sense of disclosure. They require stakeholder consultation, but very little mention is made of incoming communication - it's all outgoing. This seems perverse to us as surely the only way we can really tell if the whole company and its culture is ethical and well run for allour stakeholders, is by talking and listening to all our stakeholders.

As we discuss in our third golden rule about the importance of strategic management, it is also logical that in order to know how well we are doing in implementing our strategy and achieving our goals, we need a monitoring and reporting system which is connected directly to the stakeholders upon whom that success depends.

The requirements of such a system and the resources required to put it in place will be part of the Business Plan. A good system provides the instruments whereby management and all the other stakeholders can be made aware of progress in implementing the agreed strategy. Without first-class systems there can be a dangerous lack of necessary information, or worse, wrong information. All too often, monitoring and reporting systems are designed without adequate regard for the big picture, and with an almost total focus on financial aspects.

In this Fifth Golden Rule, we are looking at setting up channels of communication and how these channels - and the reporting system as a whole (i.e. including internal, operations monitoring) - should be used to

• ensure all stakeholders are happy with the proposed strategy

monitor progress from point A to point B in the strategy

• ensure that stakeholders are receiving all the information they require

Logically, therefore, we need systems which have the following characteristics:

• they serve all the significant stakeholder groups, that is:
• customers
• owners
• employees
• suppliers and other trading partners
• local communities
• in total they communicate the intention to run the company under systems of good corporate governance, and in particular they have very specific objectives in relation to each target group. Following the methodology, then, They will thus include the four elements of:
• Ethics: projecting the ethos which permeates the company, and thus communicating to all stakeholders an image of the ethical company which the board is striving to create and operate
• Goal: reporting on the progress made by the company towards the agreed corporate goals, and in particular fulfilling the specific interests of the particular stakeholders addressed in the actual communications received by them
• Organisation: show that the company is organised effectively to achieve the goals that have been communicated to all the stakeholders, and to look after their individual interests
• Reporting: demonstrate through the high quality of the communications that the accountability and transparency rule of good corporate governance is both understood and being adhered to
• in their execution, high standards are in place to ensure that the communications are easy to understand and do indeed provide the information required by the recipients, in line with their expectations referred to above the systems provide regular communications to all stakeholder groups, and whilst there is an appropriate weighting between the needs of the various groups, no group is neglected, for instance through allowing address lists to become out of date.

 BY MUSA LILIAN BAPRM 42631