What the Board Should Know About Communication

• Leadership
• January 14, 2011
• by Merrie Spaeth

This commentary is based on Merrie’s remarks to the National Association of Corporate Directors in Austin, Texas on December 3, 2010.

Henry Kissinger is supposed to have said, “Just because you’re paranoid doesn’t mean they aren’t after you.” I’m not sure he actually did, but as members of corporate boards, whether the companies are public or private, you need to take the position that “they” – customers, employees, regulators, the general public, shareholders – are indeed “after you” and will hold you accountable.

Last May, John Brennan, chairman emeritus of Vanguard, and one of the world’s most successful and respected businessmen, wrote a piece for The Wall Street Journal titled, “Improving Corporate Governance: a Memo to the Board.” On his list of eight recommendations, number three was “communicate.”

My topic today: How do you define “communicate?” Ask 10 people; get 10 answers. The following is a 10-point checklist list for how to think about communication, and equally important, make sure the entire board and company thinks the same way.

1. Communicate for influence.

Instead of thinking about what you want to say, communicate to influence a key constituency. This sounds like common sense but most companies approach communication with the attitude of what they want to say or what they think an audience needs to know. Effective communication aims to influence the listener.

2. Redefine effective communication.

What does “influence” mean? How much do people remember from what you say, a lot or a little? Everyone knows it’s just a little. Effective communication means understanding how to influence what the listener hears, believes and remembers. Again, this sounds like common sense, but it’s actually a revolution in how to think about communication. There are many important implications of adopting a philosophy of influencing what people remember as opposed to what the company wants to say.

3. Have a model to visualize how to think about communication.

See our Influence Model™, which delineates two networks of communication, with three distinct routes. These routes are becoming “integrated,” that is, “traditional media” is starting to use social media, as are companies and various groups. While this often blurs the line between what is formal and what is informal, we still think internal and external target audiences categorize information according to whether they know the company controls it. Information from the informal network, which includes “media” and “groups,” is still considered more objective than the formal network or what corporate controls.

4. Alignment is key.

In a crisis, messages can go “out of alignment,” meaning what the company says through their “formal network” of communication is being undercut by the news coverage or what people are saying to each other through the “informal network.” There are many implications of misalignment.

The Wall Street Journal compared what Lehman Brothers executives were saying internally and externally in the 24-hour period before they went bankrupt. Internally via emails and phone calls, executives discussed the need to find $3 billion in a hurry to avert disaster. Externally, in calls to analysts or comments to reporters, they were cheerfully predicting success and a clean balance sheet. There is no longer a dividing line between what you can say internally and externally.

The most obvious instances of “misalignment” are when advertising and marketing material is undercut by what the employee, customer or public experiences. HP has a wonderful ad featuring Abigail Breslin, a young actress, jumping on her bed and talking about how her HP Printer has allowed her to preserve her memories by printing pictures. It’s a lovely, moving ad. At the very same time, two young soldiers serving in Iraq posted a short video on YouTube featuring the printer. But their situation is a little different: the printer doesn’t work, and HP wanted them to pay to learn how to fix it. They are not happy. Looking straight into the camera, they talk about how they are defending freedom while HP’s printer doesn’t work, which makes their job harder, and HP is trying to squeeze money out of them. Then they shoot the printer to pieces. The bottom line is millions of people saw the video and the company did not respond. HP should have shipped working printers to the soldiers as fast as possible and publicly vow to do better.

5. The methodology for communication should be standardized.

Whether you are dealing with HR and employees, analysts and shareholders, regulators or customers, communication should have a global approach. Some people think of “media” training or “presentation skills” or “leadership,” as simply a job for the marketing or communication department. Our position is that a company needs a communication approach which stretches across the entire global platform. For that, the model and methodology have to be robust, simple and flexible.

6. An outside viewpoint is almost always required.

It’s hard to tell C-suite inhabitants that they need help. However, be careful you don’t pay for bad advice. Remember HP CEO Mark Hurd’s behavior last summer when it was discovered that he was “associating” with a woman, not his wife, and charging thousands of dollars in entertainment expenses spent with her. She then filed a lawsuit charging sexual harassment – but with no sex – and the board panicked. After consulting with a supposed expert, they fired him. Maybe that was the right course of action, but it garnered significant negative exposure and public criticism.

7. The new “media” channels have resulted in a democratization of dissent and complaint.

Revise your strategic planning accordingly. Everyone has a cell phone with a camera or the hotline number to the local media, federal regulators or activist groups. The example of soldiers posting their complaint on YouTube is just one example. We are in the middle of a similar situation: A resort had an accident which caused severe injuries, resulting eventually in death for a visitor. Resort guests circulated pictures taken with their cell phones. They were not trying to leak information or be critical, but simply asking friends to keep the family in their thoughts and prayers. Still, the pictures and incident went to thousands of people, attracted press attention and damaged the resort’s business and reputation.

8. Have competitive video ready.

Imagine what kind of adverse event could threaten your organization then produce visuals or video that would be helpful in managing the immediate need for information by the public. There are a number of proven ways to do this, but a strategy needs to be tailored to each company or industry and to the anticipated crises. I can’t share real examples since our clients consider these extremely sensitive, proprietary strategies. In fact, they tell us this strategy is their secret weapon!

9. Enlist and empower your employees and customers.

One of our criticisms of how BP handled the oil spill last summer was that the company didn’t involve its employees for some time, and then almost exclusively in advertisements. We thought the ads were great, but there were too few of them and too late. Interestingly, when one investigative news reporter was finally allowed to talk to BP employees working on the relief well, they were credible, compelling, likeable and committed to BP. One of the BP employees working on the relief well told the reporter, “We know what we’re doing,” and I believed him.

A crisis is like a campaign— your most effective advocates are people who can talk to their neighbors or talk to you as if you were a friend or neighbor. It is common sense to put these strategies in place before a crisis occurs.

10. Learn personal communication techniques that allow you to be conversational while controlling the message.

The latest issue of Harvard Business Review has a study from two Harvard professors which finds that, “people often trust eloquence more than honesty.” I’m not sure I agree with the way they have expressed it, but I thought it was interesting. They found that if listeners like a speaker and feel a response is “eloquent,” they are more receptive than if the speaker is bluntly “honest.” Fortunately, executives can be both honest and persuasive, but it takes a high level of personal skill and practice. Today, a great deal is expected of senior management. They are not just “managers,” they are motivators, and they need to understand that everyone around them will mirror their behavior and repeat their words.

We just had an interesting example; a recently promoted executive was meeting with his new employees. He offhandedly described another division as “second rate.” That comment traveled through the organization instantly and caused an internal crisis.

Former presidential speechwriter and author, James Humes, said, “The art of communication is the language of leadership.” Senior management of a company, particularly a public company, needs to be adept at this “language” and consider it a leadership skill, not the responsibility of the communication or HR departments. Charles Schwab, the creator of the financial and banking group, said, “I’ll pay more for a man’s ability to express himself than for any other quality he might possess.”

Today, you, as board members, should pay attention to the third point of Mr. Brennan’s check list. You’ll save your company a lot of trouble and probably a lot of money, too! I hope these brief suggestions are helpful and provide the basis for questions or discussion with your management.