In Touch Boards: Reaching Out to the Value Critical Stakeholders
IMD, Lausanne, Switzerland
December 6, 2010
10th European Corporate Governance Conference, Brussels
Corporate Governance, Vol. 11, No. 5, pp, 603-610, 2011
The improvements in corporate governance made so far after each crisis have failed to address a fundamental weakness: boards are out of touch often with those who can make or break a company. To support value creation and prevent a future disaster, boards have to go beyond the analysts, consultants, government officials, and get in touch with the company’s shareholders and critical stakeholders, those that matter for creating long term value, sensing the related risk, and are relevant during the make or break periods in the life of the company. This paper introduces the concept of value critical stakeholders and describes how boards can be in touch with them. Boards need an outreach program, an explicit program of reaching out beyond the boardroom, comprising the following elements: identify which stakeholders are critical for value creation, adapt the composition of the board to enable reaching out to the value critical stakeholders, develop communication channels with them, tune into what they are saying and draw on them to promote the creation of long term value.
Keywords: corporate governance, boards, in touch, value critical stakeholders, outreach program
JEL Classification: M00Accepted Paper Series
Date posted: January 12, 2011 ; Last revised: May 2, 2012
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