Corporate secretaries sit in a unique position.
Lately, we’ve been hearing a lot of discussion about effectiveness: effective boardroom, effective governance, effective internal controls and effective leadership. What about the effective corporate secretary?
Effectiveness is the ability to manage, assess, evaluate and remediate a situation that allows a professional to gain a competitive advantage while maximizing a given set of resources. The only problem with effectiveness is being able to maintain it.
Corporate secretaries sit in a unique position. They serve as the liaison between the board and senior management and not only know the needs of boards but also have access to the necessary regulatory resources within a company.
But between increased regulatory pressure and shareholders expecting more accountability, it seems this year will definitely test the abilities of corporate secretaries.
In light of the corporate malfeasance that has permeated a number of corporations and the poor leadership at companies like RIM, Olympus, MF Global, Yahoo!, HP and NewsCorp, boardrooms are now facing increased scrutiny from regulators, shareholders, scholars and industry observers. As a result, in order to remain effective, corporate secretaries must go beyond their usual role when supporting the board. They must be able to give clear direction, be forward-looking, competent, creative and assertive when providing advice. They should also stand clear of any instances of ‘analysis-paralysis’, a common problem that can cripple a lawyer’s decision-making process.
In an exclusive interview with Corporate Secretary, Jonathan Block, general counsel and secretary of Hot Topic, a retail chain specializing in pop-culture clothing and accessories, says that in a corporation the secretary’s role is one of the few required by law.
Although the secretary’s obligatory duties are to keep the minutes and official records of the company, ‘The reality is that an effective secretary should be doing much more than that, when it comes to supporting the company and its board,’ he says.
A recent panel at the Association of Corporate Counsel (ACC) Southern California chapter sought to explore the expanding and challenging role of these governance professionals. Block, who served as a panelist at ACC, says increased shareholder activism, the influence of advisory services like ISS and Glass Lewis, and higher expectations from the board, shareholders and regulators regarding transparency, accountability and performance have all contributed to the evolution of corporate governance and, necessarily, the role of the corporate secretary.
After conducting research and using some of Block’s suggestions it is easy to conclude that, in order to maintain effectiveness, a corporate secretary should try the following:
(i) Awareness: Know what’s going on inside the company. Ask yourself: what are the key initiatives? How does senior management operate? What is the vision of the board? What measures can I take to improve communication between the board and senior management to help realize these goals?
(ii) Expectations: The secretary has to be familiar with the expectations of shareholders and the board and must be well versed in governance standards, which means both the strict legal requirements and the demands of shareholders.
(iii) Focus: Remain focused on ensuring the board remains effective. Block says a good corporate secretary can help the board be effective in leading the company and making the right decisions.
(iv) Knowledgeable: Be able to provide the most up-to-date information on topics like sustainability, executive compensation, compliance, technology and industry best practices.
(v) Education: Prior to a board meeting, think of ways you can be helpful to the CEO. Take each governance strand, one at a time, and carefully deconstruct it; provide valuable advice and options for making board members more efficient and effective, in areas such as director education and training.
Building an effective boardroom is not easy but effective companies no longer adhere to the old notion of ‘tone at the top’. Rather, they focus on ‘tone at the middle’, since it’s the actions of those in the middle, like the corporate secretary, that can drive effectiveness throughout a company’s corporate culture.
On a scale of one to 10, how effective are you? Click here to read some responses from our readers.
