Boardrooms are all too often seen as secretive environments where big decisions influencing thousands of lives are made by faceless people. As people outside the boardrooms increasingly demand to hold those inside them to account, opening the avenues to communication will be critical to the long-term success of any company.
LONDON – As the season in which public companies hold their annual general meetings progresses, one persistent issue is the lack of genuine dialogue between company officials and the general public. In place of robust debate and discussion among investors, executives, the workforce, and the community at large, the conversation seems to be taking place in different silos, with one group sitting around the boardroom table and another gathered at the kitchen table.
From the outside, a boardroom is all too often viewed as a kind of bubble where big decisions that influence thousands of lives are made by faceless people. They are perceived as places where big bonuses are awarded to chief executives and where horse-trading and old boy networks are more important than merit or hard work. With people outside the boardroom increasingly demanding to hold those inside it to account, opening up avenues of communication is now critical to companies’ long-term success.
An important feature of this shift will be the realization by high-profile executives that they can no longer afford to brush off criticism with the you-just-don’t-understand defense. When Jamie Dimon, CEO of JPMorgan Chase, said that he didn’t think that United States Senator Elizabeth Warren “fully understands the global banking system,” many were infuriated at the arrogant condescension of his pronouncement. His words tapped into a wider feeling that CEOs are out of touch and unwilling, or unable, to respond to tough questions with sincere answers. Even the widely respected investor Warren Buffett missed the mark when he said that Warren “would do better if she was less angry and demonized less.”
In the absence of genuine dialogue about issues like wage discrepancy, corporate social responsibility, data privacy, and a bonus culture that does not seem to provide the right incentives for hard work or to adequately penalize failure, worries and mistrust are guaranteed to fester. Lack of transparency, absence of clarity, and a paucity of answers feeds into the perception that companies are too often engaged in dodgy dealings and can’t be trusted. Worst of all, the breakdown in communication deprives those around both the boardroom and kitchen tables of the opportunity to realize that they are talking about similar problems and share similar desires to find solutions to them.
Chief executives and board chairs need to think of those with whom they interact as people to talk with rather than at. Leaders who can talk are fine; but those who can listen are even better. Business executives need to realize that if they cannot explain their decisions in ways that investors, regulators, workers, and consumers can understand, then they – not the people with whom they are talking – are the problem.
When activist investors want to take a look at a company, the boardroom instinct should not be to circle the wagons and call in consultants to do battle. Instead, boards and executive teams need to ask themselves why their company has become a target and whether there are legitimate concerns to be addressed.
Access every new PS commentary, our entire On Point suite of subscriber-exclusive content – including Longer Reads, Insider Interviews, Big Picture/Big Question, and Say More – and the full PS archive.
Subscribe Now
Annual general meetings provide an ideal opportunity to stand up and ask hard questions – an opportunity that investors and community members should make certain is not wasted. At Yahoo!’s recent annual meeting, the board was asked a wide range of questions; but, with the exception of a question or two about Alibaba, few of them addressed any of the real issues facing the company today.
CEO Marissa Mayer was asked questions like why the “underline” icon had been removed from the formatting options in Yahoo! Mail and why there was so much spam in Yahoo! Finance. If companies like Yahoo! are to benefit from occasions like this, individual and institutional investors alike need to up their game and ask real questions about the business in the open forum of the annual general meeting instead of airing their concerns behind closed doors.
For the conversation to be truly effective, however, it must continue between annual meetings. Smart business leaders must provide frequent opportunities for the exchange of ideas and expressions of concern. Silos must be knocked down and bubbles must be pierced, with bridges being built in their place. Tomorrow’s successful executives will be those who take the opportunity to join a real conversation and draw wisdom from the crowd.
To have unlimited access to our content including in-depth commentaries, book reviews, exclusive interviews, PS OnPoint and PS The Big Picture, please subscribe
In the United States and Europe, immigration tends to divide people into opposing camps: those who claim that newcomers undermine economic opportunity and security for locals, and those who argue that welcoming migrants and refugees is a moral and economic imperative. How should one make sense of a debate that is often based on motivated reasoning, with emotion and underlying biases affecting the selection and interpretation of evidence?
To maintain its position as a global rule-maker and avoid becoming a rule-taker, the United States must use the coming year to promote clarity and confidence in the digital-asset market. The US faces three potential paths to maintaining its competitive edge in crypto: regulation, legislation, and designation.
urges policymakers to take decisive action and set new rules for the industry in 2024.
The World Trade Organization’s most recent ministerial conference concluded with a few positive outcomes demonstrating that meaningful change is possible, though there were some disappointments. A successful agenda of reforms will require more members – particularly emerging markets and developing economies – to take the lead.
writes that meaningful change will come only when members other than the US help steer the organization.
LONDON – As the season in which public companies hold their annual general meetings progresses, one persistent issue is the lack of genuine dialogue between company officials and the general public. In place of robust debate and discussion among investors, executives, the workforce, and the community at large, the conversation seems to be taking place in different silos, with one group sitting around the boardroom table and another gathered at the kitchen table.
From the outside, a boardroom is all too often viewed as a kind of bubble where big decisions that influence thousands of lives are made by faceless people. They are perceived as places where big bonuses are awarded to chief executives and where horse-trading and old boy networks are more important than merit or hard work. With people outside the boardroom increasingly demanding to hold those inside it to account, opening up avenues of communication is now critical to companies’ long-term success.
An important feature of this shift will be the realization by high-profile executives that they can no longer afford to brush off criticism with the you-just-don’t-understand defense. When Jamie Dimon, CEO of JPMorgan Chase, said that he didn’t think that United States Senator Elizabeth Warren “fully understands the global banking system,” many were infuriated at the arrogant condescension of his pronouncement. His words tapped into a wider feeling that CEOs are out of touch and unwilling, or unable, to respond to tough questions with sincere answers. Even the widely respected investor Warren Buffett missed the mark when he said that Warren “would do better if she was less angry and demonized less.”
In the absence of genuine dialogue about issues like wage discrepancy, corporate social responsibility, data privacy, and a bonus culture that does not seem to provide the right incentives for hard work or to adequately penalize failure, worries and mistrust are guaranteed to fester. Lack of transparency, absence of clarity, and a paucity of answers feeds into the perception that companies are too often engaged in dodgy dealings and can’t be trusted. Worst of all, the breakdown in communication deprives those around both the boardroom and kitchen tables of the opportunity to realize that they are talking about similar problems and share similar desires to find solutions to them.
Chief executives and board chairs need to think of those with whom they interact as people to talk with rather than at. Leaders who can talk are fine; but those who can listen are even better. Business executives need to realize that if they cannot explain their decisions in ways that investors, regulators, workers, and consumers can understand, then they – not the people with whom they are talking – are the problem.
When activist investors want to take a look at a company, the boardroom instinct should not be to circle the wagons and call in consultants to do battle. Instead, boards and executive teams need to ask themselves why their company has become a target and whether there are legitimate concerns to be addressed.
Subscribe to PS Digital
Access every new PS commentary, our entire On Point suite of subscriber-exclusive content – including Longer Reads, Insider Interviews, Big Picture/Big Question, and Say More – and the full PS archive.
Subscribe Now
Annual general meetings provide an ideal opportunity to stand up and ask hard questions – an opportunity that investors and community members should make certain is not wasted. At Yahoo!’s recent annual meeting, the board was asked a wide range of questions; but, with the exception of a question or two about Alibaba, few of them addressed any of the real issues facing the company today.
CEO Marissa Mayer was asked questions like why the “underline” icon had been removed from the formatting options in Yahoo! Mail and why there was so much spam in Yahoo! Finance. If companies like Yahoo! are to benefit from occasions like this, individual and institutional investors alike need to up their game and ask real questions about the business in the open forum of the annual general meeting instead of airing their concerns behind closed doors.
For the conversation to be truly effective, however, it must continue between annual meetings. Smart business leaders must provide frequent opportunities for the exchange of ideas and expressions of concern. Silos must be knocked down and bubbles must be pierced, with bridges being built in their place. Tomorrow’s successful executives will be those who take the opportunity to join a real conversation and draw wisdom from the crowd.