Category: Government Affairs and Public Policy

Boards Of Directors in 2017: 5 Trends To Be Aware Of.

Previously posted in Private Company Director Magazine

The Responsibilities Of Boards Continue To Increase, Demanding Increased Director Awareness and Understanding Of Developments Likely To Impact That Business.

2017 Board of Directors Predictions: 5 Trends to Watch
By Brian Stafford

“For board members and directors tasked with guiding their companies through these changes and the complexities that could arise in the aftermath of 2016, change is needed in the boardroom as well. From expanding skillsets to greater accountability for brand reputation and issues management, here are five of the top trends that will make the biggest impact on boards in 2017”.

2016 was a year marked by significant changes—stunning political upheavals via Brexit and our own controversial new President-elect; a growing number of big-ticket, multi billion dollar M&A deals amid massive enterprise court battles, particularly in the technology sector; evolving regulations and proposed governance standards; as well as persistent and increasingly destructive cyber security attacks, threatening everything from the outcome of the U.S. election to the sale of Yahoo to Verizon for $4.8 billion.

For board members and directors tasked with guiding their companies through these changes and the complexities that could arise in the aftermath of 2016, change is needed in the boardroom as well. From expanding skillsets to greater accountability for brand reputation and issues management, here are five of the top trends that will make the biggest impact on boards in 2017.

Prediction 1: Individual Accountability Becomes a Focus

Board members will be measured by more than just collective financial performance, but also for their personal effectiveness, diligence, ethical quotient (EQ) and contribution to the corporate brand. Thus, it will be imperative for board members to evaluate the security of their confidential digital communications (both personal and professional), and adopt modern best practices designed to protect the integrity of sensitive information, and ultimately, the brand’s reputation.

Prediction 2: Diverse Board Members Wanted (& Needed)

Boards have often been criticized for lacking the diversity and modern skillsets needed to compete in today’s fast-paced and technology-driven business world. However, in order to both solve complex challenges facing businesses today, as well as capitalize on market opportunity globally, more diverse views, experiences and skill-sets in the boardroom are needed.

This evolution will revolve around three key areas:

1. More women as directors
2. Board members with varied skill sets (such as technology and security)
3. Unwavering commitment to technological adoption in the boardroom, and across the enterprise.

Prediction 3: Greater Accountability Calls for Improved Collaboration

In 2017, board members must also have more transparency, authority and collaboration to advise and make key decisions in tandem with company decision makers.

As the level of accountability grows, there will need to be a redistributed line between the board and executive management. This new redistribution will also guide how the board interacts with activist investors, shareholders and each other.

Prediction 4: Cyber Security Becomes a Board Problem

In 2017, boards will need to strongly consider adding individuals with CIO/CISO experience. Cyber security is perhaps the single biggest risk to enterprises today, with breaches impacting corporations around the world daily, and many are not ready for battle.

To help better prepare, boards will need to make it a priority to enhance public-private partnerships and utilize third party providers to leverage the cumulative cyber-knowledge of its whole network. This will help solve fundamental problems like a lax security culture, knowing where data is located and how regulations will impact the company.

Prediction 5: Political Changes Enter the Boardroom

President-elect Donald Trump promises to bring about a variety of changes to foreign policy, domestic practices and corporate governance. With Trump in office, board members will need to keep an even closer eye on how corporate governance is set to change, including new requirements for board oversight as well as the evolving role of the corporate secretary. In fact, there’s already talk of potential changes to key legislations such as dismantling Dodd-Frank and swift immigration and labor changes.

2017 will undoubtedly be a transformative year for many enterprises and the boards that govern them. While time will tell how each of these trends will impact boards, I am willing to bet that those that continue to evolve and adhere to industry best practices will outperform those that stick with the status quo.
Brian Stafford is Chief Executive Officer of Diligent Corporation. Brian is responsible for all day-to-day operations, with a focus on accelerating global growth and incorporating scale into the business in order to seamlessly manage the growth. Brian previously served as a Partner at McKinsey & Company, where he founded and led their Software-as-a-Service Practice. Prior to his tenure at McKinsey, Brian was the Founder, President and CEO of CarOrder, a division of Trilogy Software based in Austin, Texas. Brian is also an active seed stage investor and start up advisor. His other passion lies in the arts, supporting the NYC community in his role as a BAM board member.

Government Relations Is Serious Business, And More Than Just Lobbying

Lobbying Is Not Enough to Build Influence Among U.S. Lawmakers
Michael D. GottliebElise Gurney
DECEMBER 28, 2016

Posted in The Harvard Business Review, December 2016

Lobbying Is Not Enough to Build Influence Among U.S. Lawmakers

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As organizations shift their focus toward understanding and investing in their Washington brands, they add more structure and certainty to their government affairs strategies. By collecting and heeding the most relevant data—the feedback of policymakers—companies equip themselves to make the most informed decisions about their investments in Washington.

Every budget item should justify its existence. But when it comes to influencing federal policy, companies don’t always used the right yardstick—or any yardstick at all—for determining and improving return on investment. A firm may have seen success on past legislation, but how much of that outcome had to do with our company’s engagement? And how will we fare in the next policy fight? With so many moving parts in the policy space, determining a Washington strategy (and a budget) can seem equal parts art and luck.

Enter the concept of a Washington brand, which is the measure of a company’s long-term reputation and influence among the powerbrokers of DC—from K Street to Capitol Hill to the White House—who write the laws and regulations affecting corporate bottom lines. Just like consumer and employer brands, a Washington brand captures how the audience perceives a company, and how those perceptions influence their future behavior. Do these policymakers respect a given company? Do they care what that company thinks, and actually listen? Is that company their first call when they have a question? As it relates to DC, a strong brand offers an upper hand in influencing policy outcomes.

Importantly, that Washington brand can be measured, tracked, and analyzed. Through an annual survey of more than a thousand federal policymakers (and subsequent interviews with over 400), National Journal’s Policy Brand Research captures and quantifies Washington’s perceptions of 100 organizations across 15 industries, from energy to healthcare to technology. The last several years of this research have surfaced the specific activities and approaches to advocacy that can strengthen a Washington brand—and those that can’t.

Building a Strong Washington Brand

So how does a company build and maintain a strong Washington reputation? Not, as it turns out, through lobbying alone. Lobbying represents just one of twelve key activities that contribute to long-term efficacy and influence in Washington. But the best path forward depends on each organization’s unique situation, shaped in part by its corporate practices and the realities of the industry; a strategy that strengthens one company’s reputation can have the opposite effect on another. Crafting an optimal approach therefore requires a critical assessment of each organization’s strengths and weaknesses.

Consider a Fortune 100 company whose history of vocally opposing regulations landed it in the lower half of the Washington reputation ranking. National Journal’s Policy Brand Research identified this refusal to compromise as a major roadblock to the company’s Washington brand, and guided the organization toward a more collaborative posture—not just on rules and regulations, but around workforce development and diversity initiatives. Federal agency and White House staff in particular took note; they began inviting the company into conversations and seeking out its perspectives. Eventually, cross-Washington respect for the company’s input rose.

The outcome was drastically different for another Fortune 100 company that sought to boost its reputation in the wake of a corporate crisis. Without first assessing its standing in Washington, the company ran a high-profile ad campaign to promote its corporate social responsibility to policymakers. For a company that had already created a strong impression of its corporate conduct, this would have likely bolstered existing perceptions and provided a reputational boost. But this company enjoyed no such effect. Because it had failed to address the issue head-on, Washington influentials saw the campaign as nothing more than a public relations ploy that increased their existing skepticism.

As organizations shift their focus toward understanding and investing in their Washington brands, they add more structure and certainty to their government affairs strategies. By collecting and heeding the most relevant data—the feedback of policymakers—companies equip themselves to make the most informed decisions about their investments in Washington.

Companies have long relied on data-driven approaches to track and improve every other business function. Why should government affairs be any different?

Michael D. Gottlieb is Executive Director of National Journal’s Policy Brands Roundtable, a research and consulting firm that serves corporations and associations.