By Blandine CORDIER-PALASSE, La Revue RH&M, n°80 p.50
The responsibility of companies is no longer simply to increase profits. Nor to maximise shareholder value according to the vision of Milton Friedman. Companies must promote the general interest. The consequence of this transformation is to extend the role of boards of directors beyond monitoring economic performance. To encompass the corporate project and the consideration of stakeholders - also known as CSR.
This paradigm shift is having a number of impacts on boards of directors, including taking stakeholders into account.
Stakeholders are defined by ISO 26000 as "any person with an interest in the decisions or activities of an organisation: shareholders, employees, customers, competitors, suppliers, local communities, residents, public authorities, financiers, banks, etc.". Taking them into account should have a lasting effect on the roles and logic of action expected of the company. This impact is all the greater for boards of directors given that the European legislator has strengthened the transparency requirements for non-financial information. It has also extended the duty of vigilance to production and supply chains. Implementing good governance requires directors to include all these facets in their corporate strategy. Their added value therefore increasingly lies in their ability to question, to challenge habits and to take decisions that ultimately underpin "a common higher principle".
The board becomes a forum for reflexion and action, exercising a power of control and support for the governing bodies.
These changes mean that directors of all companies need to take the following points into account in their work:
Review the organisation and transparency of corporate governance.
Assess the way in which the company manages its risks. This ranges from its physical facilities to its reputation, from legal and regulatory risks to securing its resources.
Examine measures to improve employment and working conditions.
Measuring environmental impact and monitoring progress.
Analysing respect for the interests of customers, consumers and stakeholders.
This means extending the scope of interaction between Board members and stakeholders. It also requires more meetings, both internally and externally. This may mean developing new ways of working together. Both at Board level and with Group entities, and new skills for directors.
Assessment: A major challenge to ensure that the Board is fully equipped and integrates this new situation into its governance.
In the context of this paradigm shift, we recommend undertaking an assessment of the governance bodies, Board and management. Numerous assessment proposals have emerged in recent years: if they are based on a tried and tested methodology and solid HR analysis skills, they will lead to a summary report and discussions rich in lessons and recommendations for improving the efficiency of these governance bodies.
