The long-awaited Draft King III Report and its Principles have been made public by the Institute of Directors in Southern Africa (IOD). Of particular interest to Public Relations/ Corporate Communication is Chapter 8: ‘Managing Stakeholder Relationships’.
The Principles underlying King III’s Chapter 8 are stated to be the following:
8.1. The board should take account of the legitimate interests of stakeholders in its decisions.
8.2. The company should proactively manage the relationships with its stakeholders.
8.3. The company should identify mechanisms and processes that promote enhanced levels of constructive stakeholder engagement.
8.4. The board should strive to achieve the correct balance between its various stakeholder groupings, in order to advance the interests of the company.
8.5. Companies should ensure the equitable treatment of shareholders.
8.6. Transparent and effective communication is important for building and maintaining relationships.
8.7 The board should promote mutual respect between the company and its stakeholders.
(Principles 8.8 to 8.10 deal with Dispute Resolution).
I have invited Estelle de Beer to comment on the Draft of King III. She is one of the 108-member Committee, led by Mervyn King, who substantially reworked the 2002 King II Report. (After 17 yrs as a PR practitioner, Estelle joined the Dept of Marketing and Communication Management at the Univ of Pretoria, SA where she has been teaching Strategic Communication Management for the last 7 years). Estelle’s input in the King III Report has been made via the Sub Committee on Compliance and Relationships. She has played a substantial role in that, for the first time, stakeholder relationship management as part of the inclusive approach to corporate governance has been treated as a separate chapter in King III. Following are her comments.
<While initially seen to be part of the sustainability chapter, it became clear during the deliberations on the various topics covered by King III that the management of relationships with stakeholders was such an important element of corporate governance that it needed more detailed coverage. It was concluded that pro-actively focusing on stakeholders with legitimate expectations and managing the relationships with them will contribute towards transparency and enable them to determine the value of an organisation. It will also ultimately result in a positive reputation for an organisation.
Chapter 8 was compiled by representatives from practice and academia representing legal, business and communication fields. This multidisciplinary approach ensured a rich content and contributes to the legitimacy of the subject. One can now regard this chapter as being representative of the typical opinions of an organisation’s dominant coalition on stakeholder relationship management. Since King III will typically be read and applied by the dominant coalition in organisations, its approach to stakeholder relationship management should soon permeate management thinking. It can therefore be expected that the strategic positioning of the corporate communication and/or stakeholder relationship management function in the organisation should improve.
In the spirit of the Excellence Study, it is clear that there are strong expectations from top management for the stakeholder relationship and corporate communication function to be managed strategically. The challenge is now for corporate communication managers and practitioners to deliver on these expectations. In many organisations the benchmark practices set out in the King Report III for stakeholder relationship management have been part and parcel of corporate communication practices. However, in King III these practices are recognised as being strategically important for the sustainable existence of the organisation. It is recognised as being part of proper sustainability, strategic management and good governance practices, which gives stakeholder relationship management and the corporate communication function legitimacy in the organisation.
A two-way symmetrical approach (although normative) between an organisation and its stakeholders is also encouraged in King III. This is evident in the first paragraph of the chapter on Managing Stakeholder Relationships, which states: “A stakeholder-inclusive corporate governance approach recognises that a company has many stakeholders that can affect the company in the achievement of its strategy and long-term sustained growth.” The Report also states that: “Companies should take account of the fact that stakeholders’ interests in the company could change and so re-examine the interests of such stakeholders at appropriate levels.” >
There is much more to be said about the principles covered (or not covered) in King’s Chapter 8, and how it relates to public relations and corporate communication. Estelle and I therefore invite you to comment here on PRC on the Principles (or Chapters) that have a bearing on our field. We will put these comments together and submit them to the Institute of Directors in Johannesburg on behalf of PRConversations. The final version of King III is set for release on 1 September 2009, after public input has been considered. So here is your chance to have your say!
Anybody can, of course, submit their comments directly to Lindie Engelbrecht, CEO of the IOD (by 25 April 2009) at the following email address: kingIII@iodsa.co.za or via http://african.ipapercms.dk/IOD/King3/ However, we hope that you will share your comments with us too.