Stakeholder voting technology is growing in importance as organisations increasingly involve clients, shareholders and partners in strategic decisions-making during these turbulent times. Simon Verdon, CEO of election software specialists, Democracy Counts Limited, considers the challenges.
Thousands of elections take place every year in the UK. Some are high profile and determine the direction of the country for decades to come, while others are focussed on specialist or relatively niche sectors that attract little widespread recognition.
Regardless of the profile all types of election are run for an important purpose. It is therefore vital that those involved with any type of electoral event, whether voters, candidates or the organisations for which they are taking place, are confident that they are well-run and produce fair and transparent results.
Stakeholders and shareholders use voting as a means of communication with boards of directors, and protest voting can lead to significant changes in corporate governance and strategy.
In its simplest form, voting is usually shorthand for a question being put to an eligible electorate to secure a majority view on the preferred outcome. This may be the election of an individual or group to a particular post or position of authority, a referendum on an issue, or a survey to determine support for or against a proposed action.
In a statutory context this might mean the election of MPs, members of the Scottish Parliament or Welsh Assembly; Referendums; Local Councillors; political executives; Police and Crime Commissioners; Health Boards, and Trade Union ballots among others.
In a corporate or governance setting it can include voting at shareholders’ meetings, the election of Board Members, user surveys to gauge support for a particular course of action, or even a vote of confidence, or otherwise, in a CEO and their planned course of action.
Clarify, evaluate and analyse
Judicious use of voting systems in non-governmental ballots and the intelligent use of data mining of the responses can provide invaluable commercial insights which can inform future strategies, identify key and hard to reach sectors, and provide robust data for marketing — all of which add significant value to any organisation.
To be truly effective, organisations need to be clear about their goals and what the ballot or survey is designed to achieve.
To be truly effective, organisations need to be clear about their goals and what the ballot or survey is designed to achieve. Woolly questions lead to woolly answers, diluting the value of responses and undermining subsequent analysis by creating uncertainty in the outcomes.
Furthermore, careful consideration should be given to the content of any questions that are asked. Consider the Scottish Independence Referendum in 2014 for example. The Electoral Commission recommended against the adoption of the Scottish Government’s proposed question on the basis that it could, potentially, influence the way in which people voted.
Extensive thought also needs to be given to the most effective voting channel, or channels, with regards the voter demographic and their access to technology. In the present COVID-19 environment, a much greater emphasis is being placed on moving away from traditional in-person voting to more remote forms, such as online, telephone, SMS and postal voting.
Each option brings its own advantages and disadvantages and those administering elections need to be fully aware of these for all options. It is vital that the method of election does not inadvertently disenfranchise any eligible participants. Common to all voting methods, however, is the need to ensure the absolute integrity of the democratic process and the use of fair, accessible, and transparent methods and documentation.
A key element in any ballot is confidence in the outcome. As recent events in the United States have shown, having a clear majority is no guarantee of confidence or the acceptance of an election result.
Simply making allegations of unfairness or fraud without any empirical evidence has been sufficient to undermine confidence.
It is concerning to all those involved with the delivery of democratic processes that simply making allegations of unfairness or fraud without any empirical evidence has been sufficient to undermine confidence in the outcome amongst a significant numbers of electors.
With this in mind it has become more important than ever that elections are administered in a manner that removes the potential for any questioning of the results based on issues associated with the running of the poll itself.
It has been interesting to observe how the likes of Dominion and Smartmatic, largely unheard of outside election circles before last year’s Presidential race, have now become household names, frequently referenced on cable news, phone-in chat shows and even Saturday Night Live. It is expected this growth in profile will continue as voting software companies pursue those who have disparaged their products’ integrity as a reason for electoral losses suffered.
Timing and conduct
Whatever the reason for the election, potential voters need to know in advance that they are going to be asked to vote, the issue to be decided, the timetable for voting, the voting medium, candidate information or the issue to be voted on and the pros and cons of each case.
All of this detail needs to be provided well in advance of the vote being taken. In all cases, special care should be taken to avoid any hint or accusation of bias, real or imagined, especially when organisations are conducting elections themselves.
Most non-governmental bodies now offer voters a variety of mediums to cast their vote. For security purposes electors usually have to provide their signature and date of birth when returning a postal ballot and these are then compared to information provided previously.
Given the costs associated with postal voting, an increasing number of non-governmental bodies and commercial organisations are looking at supplementing voting by post with lower-cost digital methods.
Online voting is becoming more prevalent and usually requires security codes to be issued to voters when election notices are provided in advance of the poll. Other verification methods, such as the use of unique QR codes that are scanned on receipt can further streamline the verification process and make voting quicker, easier and in keeping with modern electoral demands.
Voting by SMS is another common method used by non-governmental bodies and operates along similar lines to online voting. Telephone voting additionally allows electors to enter their security details and voting preferences. The latter’s deployment is becoming less frequent as organisations pursue other, more user-friendly methods of engagement.
Some investors have embraced empty voting strategies to decouple voting rights from cash-flow rights, enabling them to mount aggressive programs of shareholder activism. In other instances, market-based methods have been used to establish the value of voting rights, and show how this can vary in different circumstances.
Shareholder and stakeholder voting is at the heart of a wide range of corporate governance protections.
A best practice approach to ensure election integrity and transparency is to ensure attention to the following categories:
· Maintenance of membership databases
· Preparation of polling schemes
· Setting up and administering nomination processes
· Production, printing and delivery of election stationery
· Provision of multi-channel voting
· Risk assessment and evaluation
· Counting, declaration and certification of results.
Shareholder and stakeholder voting is at the heart of a wide range of corporate governance protections. The rights to choose members of the board of directors, approve mergers and acquisitions, and amend articles of organisation hold significant sway over important corporate decisions.
A large concentration of voting power in the hands of management tends to disavow the discipline of corporate governance and the market for organisational control.
The wider availability of data is contributing to a surge of innovations in the business world, such as the incorporation of ownership and governance data into debt ratings. Regulators are beginning to take a strong interest in shareholder and stakeholder voting, along with the concept of a more direct link with approving executive compensation and nominating director candidates.
Many public companies are coming under shareholder pressure to modify their voting rules, causing hundreds of large organisations over the past several years to switch to majority vote elections, empowering stakeholders with the opportunity to block the election of objectionable director nominees.
The market is now such that those managing elections require election technology and methods which are secure, reliable and cost-effective. Ultimately, in order to effectively engage the democratic process, the voting experience must be as straightforward and trustworthy as possible.