Effective communication in corporate governance

Good governance starts and ends with the quality of communication. As the saying goes, “good governance dies in darkness.” A company that is not transparent, cannot boast of being effectively governed.

For example, lions are said to be kings of the jungle for a reason. One of the reasons is effective communication. A pride of lions communicates effectively to hunt prey and protect their territory. Likewise, a board must communicate effectively to make decisions that protect the interests of the company and its stakeholders.

A pride of lions communicates with a variety of vocals, and body language, for example, growls, roars, and tail movements. Each lion has a unique voice, and the pride relies on effective communication to work together and achieve its goals.

Similarly, a board must communicate effectively to make decisions that reflect the interests of the company and its stakeholders. This includes ensuring that everyone has an opportunity to speak and be heard and that everyone’s perspective is taken into account. Effective communication helps the board to build trust and relationships, to develop shared understanding and agreement, and to identify and manage risks.

A pride of lions must communicate with another pride or group of lions to protect their territory and resources. Similarly, a board must communicate with external stakeholders, such as investors, regulators, and customers, to ensure that the company is meeting its obligations and delivering value to its stakeholders.

A case of DBS

DBS Bank of Singapore is an excellent case study for understanding effective communication in corporate governance. Following the bank’s transformation journey since the 2010s, the bank has won multiple awards for corporate governance, including being named “Asia’s Best Bank” and “World’s Best Bank” by Euromoney magazine. This success is partly attributed to the bank’s commitment to effective communication and transparency; a mark of well-governed organisations.

One example of DBS’s commitment to effective communication is its annual report. The bank’s annual report is well-designed and easy to read, and it provides a clear and transparent overview of the bank’s financial performance, risk management practices, and corporate governance policies. The report also includes case studies and stories that bring to life the bank’s strategy and values, making it easier for stakeholders to understand the bank’s operations and decision-making processes.

In addition, DBS places a strong emphasis on stakeholder engagement. The bank has established a stakeholder engagement council that includes representatives from a wide range of stakeholder groups, including customers, employees, and investors. The council provides a forum for stakeholders to share feedback and ideas, and the bank uses this feedback to inform its decision-making processes.

DBS is a big investor in technology which it uses to improve communication and engagement with stakeholders. For example, the bank has developed a digital platform that allows customers to provide feedback and share ideas, and it has also created an employee engagement platform that encourages employees to share their thoughts and ideas on a range of topics.

Case study 2: Johnson & Johnson

In the 1980s, Johnson & Johnson faced a crisis when some of its Tylenol products were said to have been tampered with by lacing them with cyanide, resulting in the deaths of three people by October 1st 1982. Johnson & Johnson’s response to the crisis has become a model for crisis management and corporate governance, as far as effective communication is concerned.

When the crisis occurred, Johnson & Johnson’s leadership responded quickly and decisively, withdrawing all Tylenol products from the market and launching a nationwide recall. The company also communicated openly and transparently with the public, informing them of the situation and urging them not to use any Tylenol products until the issue was resolved.

Johnson & Johnson’s response to the crisis was an example of effective communication in corporate governance. The company provided clear and timely information to the public, and it took decisive action to protect the safety and well-being of its customers.

In the years since the Tylenol crisis, Johnson & Johnson has continued to prioritize effective communication in its corporate governance. The company provides regular updates on its website and social media channels, and it engages with stakeholders through a range of communication channels, including customer service, investor relations, and employee communications. Johnson & Johnson also uses technology, such as its Health Partner app, to engage with customers and provide them with information and support.

The J&J case provides guidelines on how to respond in case of a crisis.

Copyright Summit Consulting Ltd. 2023 All rights reserved.

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