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August 10, 2006 5:57 PM Age: 11 yrs

A Call to Action: Brand Management Starts with the Board

Category: CG Commentary & Opinion, Eleanor Bloxham
Source:  by Eleanor Bloxham

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by Eleanor Bloxham, Chief Executive Officer,

The Value Alliance and Corporate Governance Alliance, an international board advisory and education firm. Information at:

http://www.thevaluealliance.com/partners/governance_accountability.htm

Copyright 2006 The Value Alliance Company. All Rights Reserved.

With all the money spent on marketing glitz, Internet strategies and eye-catching advertising, you would think that more companies would invest in something that's an even surer way to protect and promote their brand: Director education.

Great US and global companies have in recent years squandered millions of dollars in brand equity. Why? Because their boards of directors did not live up to the great brands that had been created by their founders.

When boards destroy value, they must be held accountable. Today, lack of director education is no longer a tolerable excuse.

Were members of the board of a prominent retailer unaware of the Business Roundtable’s guidelines on shareholder relations when they didn't attend the annual meeting -- or allowed the CEO to refuse to answer shareholder questions? Did they think they were above good practice?

In designing and executing their stock options plan, did a healthcare company's [board] compensation and audit committees not know that truly independent advisors (not always the usual suspects) and strict internal controls are critical to avoiding financial malfeasance?

Did the board of a multinational beverage firm fail to understand the lesson that pollution does not pay and that even if it occurs half-way ‘round the world everyone will learn of it? Or that certain incentive structures can promote accounting misdeeds -- which is even more troubling when financial gurus sit on the board audit committee?

Did the board of one of the largest retailers in the world not understand that no matter how big you are when you deal with stakeholders -- employees, suppliers, the community, and others -- that fairness must rule the day? And that "push" always begets "shove"?

In today's world, directors who go with the flow, are uneducated and sloppy, just make the good directors look bad. The bad apples do spoil it for the rest of the barrel.

Unfortunately today, there is still a wide practice in companies with management teams pre-screening and pre-selecting board candidates and advisors, and controlling information flow and director education, to assure it is all "safe" for consumption. So directors must ask themselves this question: Is all the information I need to know really getting through?

No matter how well-governed a company may seem, we have seen overnight how easy it is to mis-step and how important vigilance and the right information can be. This is not a time of complacency for anyone. Boards need to recognize that technology, the speed of information and the globalization of the capital, customer and talent markets have changed the game. And these forces, on almost a daily basis, are driving new expectations and corporate governance standards.

To be competitive in a global world, good governance (that is, how and why decisions are made) is critically important. Why? Because how and why decisions are made will always drive the character and the outcomes of a firm.

Today, directors can choose to be truly aware and take right actions -- or go the way of the "three monkeys."

Governance is not about regulation - it's about choice. Let's hope more directors will become more vigilant and educated in what they now don't understand. A pipedream? Not based on the actions and decision-making – and correct behaviors – of the committed and conscientious directors that I know and respect.

 

Eleanor Bloxham welcomes comments and questions.  You can contact her at: ebloxham@thevaluealliance.com.  Telephone: 614-571-7020 – Fax 614-891-3578

 

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