A Seat at the Boardroom Table

10 years, 8 months ago


The recent launch in South Africa of the third version of the King Report on corporate governance has underlined the heightened role for public relations practitioners within organisations, writes Gillian Findlay.

September 2009 saw the launch of the third report on corporate governance in South Africa, the King Report on Governance (King III Report). Since the first King Report was published in 1994, and its successor, King II in 2002, it has become the best practice standard of Corporate Governance for both directors and regulators.

The importance of King III is that it is no longer restricted to companies, but broadens the base of application to encompass ALL operating entities in the private sector, the public sector and non-profit sector.

Importantly, for the public relations practitioner, King III stresses that communication must be driven from the boardroom. For an industry that has been seen as "spin doctoring", this comes as a welcome move – the process of communicating with stakeholders rightly becomes a leadership issue.

King III recommends an "inclusive stakeholder approach". By this, the report means that entities need to consider "the legitimate interests and expectations" of all stakeholders, not just shareholders. These include investors, suppliers, labour unions, government, staff and society at large, among others. All have a right to be informed or "enlightened".

This is aligned with S32 of the South African Bill of Human Rights: the right to be informed, as well as the Promotion of Access to Information Act, 2000. That all stakeholders are informed regarding the company’s activities, stance, and progress in terms of its corporate citizenry and performance across all metrics, while the remaining the responsibility of management, will be executed by the communicators.

Integrated reporting

King III requires "integrated reporting" of social, environmental and economic issues and public relations practitioners will need to be a part of this move to strengthened stakeholder communication and information transfer.

Specifically, King III notes that "Individuals today are the indirect providers of capital. They are consumers and, as citizens, they are concerned about the sustainability of our planet. Those who prepare integrated reports should give the readers the forward-looking information they want. Today’s stakeholders also want assurance on the quality of this forward looking information. By issuing integrated reports, a company increases the trust and confidence of its stakeholders and the legitimacy of its operations. It can increase the company’s business opportunities and improve its risk management. By issuing an integrated report internally, a company evaluates its ethics, fundamental values, and governance, and externally improves the trust and confidence which stakeholders have in it."

The integrated report is required to have enough information to demonstrate how the company has both positively and negatively impacted on the economic life of the community in which it operated during the year under review, basically addressing the planet-people-profit triple bottom line. In addition, it needs to be forward looking: it should contain information on how the board believes that it can improve the positive aspects and eradicate or ameliorate the negative aspects, in the coming year.

A careful balance

It is about balancing the short term with the long term – while an entity may perform well in the short term via tactical means, if it does not preserve the environment, in the long term the entity will not be able to exist.

The board needs to monitor and manage the relationship between the entity and its stakeholders. King III recognizes that: "The board should appreciate that stakeholders’ perceptions affect the company’s reputation". An important function of public relations professionals is to manage perceptions and reputations. By placing this responsibility in the boardroom, the public relations profession will be required to work closely with the highest level of management to achieve these goals.

While it is important to communicate the facts, it is critical that the company is actually performing in line with best practice. Ultimately, it is about the sustainability of the business or entity, and paying lip service to the ideals will not see them being achieved. The communication needs to be backed by reality and it behoves the profession to ensure honesty in its information flow.

Strategic crafting

In the past, the role of public relations has sometimes been confined to tactical pursuits such as rebutting criticism and putting a positive spin on activities, with the function generally housed in a public or corporate affairs department. Seth Godin (2009) refers to this as mere publicity (getting unpaid media attention), not PR which is "the strategic crafting of your story". It will become essential that communications becomes strategic in nature, operating from within the decision-making unit of an organisation.

Communicators have a duty to be open and honest and to provide as much disclosure as possible regarding the entity’s practices and achievements. The King III Code states that "Transparent and effective communication with stakeholders is essential for building and maintaining their trust and confidence." Ideally, organisations need to engage with stakeholders, to set up a dialogue or a conversation with them. This will alert them to trends and issues and will enhance relationships between the parties.

The communication imperatives for organisations imply a heightened role for public relations practitioners, with a clear emphasis on honesty and integrity and finally offering them a seat at the boardroom table.

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The Author

Gillian Findlay

Gillian Findlay qualified as an economist and has nearly 30 years of experience in the economic, financial and investment fields. With a post-graduate qualification in marketing, she established Cambial Communications in 2006, specialising in marketing and communications in the financial and allied services industry.

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