Boards have always had a strong focus on corporate reputation. This intensified over the past couple of years given the crises that many businesses have faced, as well as the increasing attention being paid to ESG. Fidelio certainly sees this trend reflected in both Board Search and Evaluation assignments. There has been an implicit understanding the Chair has a critical role to play with regard to corporate reputation. This oversight and accountability is becoming increasingly explicit, given the factors and risks outlined above combined with more fractious relations between business and politics, as well as the speed and vitriol of social media. All this contributes to heightened reputational risk for the corporate and for the leadership team. Trust and reputation clearly underpin valuation and the Board has a vital role to play in overseeing reputation, to the extent that Sir Peter Gershon, former Chair, National Grid Group, recently described the Chair as “Chief Reputation Officer”. Given the relevance of corporate reputation on the Board Agenda, Fidelio was recently pleased to host a webinar exploring in practical terms Chair leadership in a crisis and in pre-empting crisis, effectively as a custodian of reputation. We invited three highly experienced Chairs to join us in this highly topical discussion:
Ruth Cairnie, Chair, Babcock International
Sir Ian Davis, retiring Chair, Rolls-Royce
Sir Peter Gershon CBE, former Chair, National Grid Group
The importance of corporate reputation was incontrovertible but not all our Chairs agreed with the premise of the Chair as Chief Reputation Officer. Yes, the Chair has a clear reputational role to play, but it was argued that the Chair should not be “Chief” anything as this implies an executive role. Three important strands of agreement did, however, exist regarding the role of the Chair vis-à-vis corporate reputation:
Tone from the top: The Chair evidently has responsibility for the tone from the top. This is a critical aspect of ensuring a healthy corporate culture; the Board also a vital role to play in setting the parameters and providing oversight of the culture throughout the organisation. Fidelio’s current research into the role of “The Board and the Future of Work” is providing evidence that companies with a strong culture and shared values including around compensation have been well positioned to take tough decisions through the recent COVID crisis.
Pre-empting crisis: Culture is critical but in any crisis communication is key and a wise Chair will be thoughtful about the organisation’s ability to engage with shareholders, stakeholders and the media. Most of this engagement takes place at executive level and the responsible executive roles are in the gift of the CEO but the Chair and Board will want comfort that critical positions including the Investor Relations Director, Corporate Affairs Director and Government Relations Director are occupied by capable individuals. Indeed Fidelio’s Search practice is seeing strengthened interest in all these roles. The Chair will also want assurance that both Board and Executive are well prepared for crisis, including crisis drills and scenario planning.
Navigating crisis: Even well-run companies with experienced Chairs hit crises. An effective Chair will have the leadership experience and judgment muscle to guide the organisation through fast-moving and challenging times. A key consideration is providing support and guidance to the CEO. The Chair is seldom in the foreground but typically does provide an important engagement role with major shareholders and stakeholders. And if the CEO is entangled in the crisis, the Chair may well step into the foreground.
To view Fidelio’s full discussion of the Chair as Chief Reputation Officer, including practical insights into the Chair’s role as the key custodian of corporate reputation, please click here.