Managing Board Communications
Nick Midal: Good afternoon, everyone. Thank you for coming, participating in this webinar. The board is the ultimate strategy and oversight authority of the organisation. To be able to do its job, it needs to be supported with a well-crafted communications infrastructure to ensure confidentiality and efficient receipt of information. However, as the conduit between the management and the board, company secretaries face the challenges of handling multiple digital communication channels, managing expectations, and curating the quality and detail of the information.
Company secretaries and board chairs typically work together in the process of board communications. So how can board chairs and company secretaries implement a robust communication infrastructure to maximise productivity and facilitate effective decision making?
Again, good afternoon. For the next slide.
My name is Nick Midal. I’m the vice president at Hawkamah. And I’d like to welcome you to the second webinar of the Hawkamah and Diligent partnership. With me are Qais Gharaibeh, the director of Middle East business Diligent, and Doctor Ashraf Gamaledin, Hawkamah CEO.
The focus of today’s seminar is about managing board communications best practice guidelines.
In the next slide. This session will last about 30 minutes. You can ask questions at any time during the webinar. We have the question window on your GoTo webinar panel at the side of your screen. We will try to get through most of the questions that you post in the last few minutes of the session. Any questions we can’t get to, however, we’re gonna try to follow up on with you individually. In that same panel you will notice a white paper with guidelines on improving board communications that we have made available for you. We urge you to download that white paper.
This session will be recorded, and everyone will receive a copy of the recording within the next few days. Now I’d like to hand over the microphone to Doctor Ashraf to talk a little bit more about the work Hawkamah does.
Dr. Gamaledin: Hello, everyone. Let me give you just a quick introduction about Hawkamah. Hawkamah is a world class corporate governance institute working to help in building sound organisations, corporate sector reform, strong backing and financial sector, and good governance. Our vision is to see the MENA region enjoying healthy corporate governance environment and frameworks. Our mission is to assist companies to develop sound and globally recognised corporate government frameworks. Hawkamah helps also in building qualified directors and top executives who are able to apply corporate governance in their own institutions. Our strength as Hawkamah lies in our research and years of experience in the region, our world class experts, and proximity to the countries and companies of the MENA region, as well. Hawkamah has partnerships with most of the corporate governance institutions regionally and globally.
We offer our director developments program as well as company secretary program, and some of the pointers which are covered in the webinar today reflect good practice in corporate governance that we have seen in leading institutions in the region.
I’d like now to hand over to Qais to give us introduction about Diligent.
Qais Gharaibeh: Thank you, Doctor Ashraf. So, a quick word about Diligent as an organisation. We have been providing a board portal technology in helping a board of directors run more effective communication and collaboration for the last 16 years or so. We have offices worldwide in 12 different locations. We have five data centers located all over the world, including the United States, Canada, and Germany. We have helped over 4,700 companies and over 140,000 board members worldwide in making the transition to digital communication and collaboration solutions. And we have been very successful with this. We provide our service that is known as software as a service, or in other words, at the end of each year, customers can elect to either stay with us, or to move on to another way of providing the board portal technology if they wish. We’re delighted to say that 99% of customers do stay with us and continue to work with Diligent. And those retention rates really are world class. So we’re very proud of that fact.
Next slide please.
So before we start, I would like to take a look at the agenda for this presentation. We’re going to address the following topics. We’re going to talk about the communication process, and how board of directors usually communicate. We’re going to talk about communication problems in the board room, both from the board member and the company secretary’s perspective, and what are the challenges that they face. We’re also going to talk about how to leverage technology to improve communications. And then we’re gonna talk about some communication guidelines, best practices, and tips that you can take away with you from this webinar.
Let’s get started. Back to you, Doctor Ashraf.
Dr. Gamaledin: Thank you, Qais. Now, okay. What ingredients are necessary to create robust communications infrastructure in the board room? We all know that effective communication breeds engagement, which breeds collaboration and productivity, which essentially equates to better decision making in the board. Essentially, a strong communications foundation is required to maximise productive output.
Next slide please.
Now, what best communications process do you apply? Coming back to the basics, I think it’s helpful to remind ourselves of the communications process. The center, the channels we use, and the noise or distractions around the encoding and decoding messaging. Today, we will set up some guidelines around the channels to use, and how to eliminate the noise in your communication.
Next slide please.
Let’s explore some of the miscommunications and challenges board directors face. Here are some of the common ones we face in conferences across the region.
Unclear agenda. We have seen examples of agenda items which, the item itself is so big, that you are not sure exactly what is going to be discussed on that agenda, making it even harder to prepare for the meeting beforehand. Second problem we see is poorly compiled board books. We have seen instances where board books do not contain relevant information, or we provide too much information to be discussed. We have also seen board books that are poorly organised and difficult to navigate through. There are, for example, no tabs or various agenda items.
Also we can see an ineffective distribution of material. We have seem some boards receiving bulky board books, by mail or receiving them over in secure email servers. Sometimes board material are too large, but they are sent over batches by emails, making it more hard for board members to grasp information.
And also, directors lacking time to review the material. We have seen board materials being sent to board members a day or even hours before the board meeting itself. Now, remember that the board members do not receive the materials well in advance. They cannot adequately prepare for the meeting itself. And also, we have seen poor meeting follow-up. When decisions are being made on the board, what happens after that is extremely importation. Because that’s when you follow up on the decisions which have been made to make sure the decision actually takes place in the company itself.
Next slide please.
Now, next move from the company secretary perspective. Some of the miscommunications and challenges that actually they face include:
Number one, part of the company secretary’s job include managing the communications between the board and the management. And as such, some information bias can develop. After all, it can be difficult to avoid getting into the politics between the board of directors and the executives or senior management of the company.
Second challenge is cumbersome board meeting preparation processes. Often times the board meeting preparation requires the input of multiple departments. Audit department, risk department, H.R. department, and so on. But more importantly, once the input has been received, you need to prepare the materials or file the report, and ship the board facts with also making sure materials are up to date is a challenge for the company secretary.
Another challenge is information sourcing for board packs, knowing what information needs to be included in the board pack, and the processes of collecting that information is also a challenge fort the company secretary.
Finally, using outdated, insecure communication tools. For example, physically mailing or email board packs, which is both inefficient and insecure practice that might result in leaking out information from the board to other stakeholders.
Next slide please.
So how can we bridge the gap between the board of directors and the company secretary? Here are the basic guidelines for building a robust communications infrastructure. Following the steps outlined in each of these should make a big difference to the effectiveness of the board and its value of the company itself.
First thing is, what are the meeting preparation best practices that we can undertake? How do you develop effective agendas for the board? What are the guidelines of producing good board material guidelines, and what are the tasks to post-meeting follow-up for the company secretary? Crucially, technology, of course, can help facilitate better practices for each of these elements. And for that, I will pass the microphone to Qais to explain more.
Qais Gharaibeh: Thank you. Yes, Doctor Ashraf. Board portal software has been designed to specifically handle all aspects of the board room communication and processes. Here are some of the overarching benefits. For a board of directors, it facilitates board communications. It allows for more strategic discussions at meetings, with quicker handling of routine items. It also provides easy access to current and historic company information. For company secretary, it streamlines faster material production. You can utilise the questionnaire feature for feedback in post-meeting evaluations. It eliminates printing and shipping and travel costs. And more importantly, it securely archives board packs for company records.
I’ll take you through how to utilise your board portal to support some of these best practices. In the next slides, Doctor Ashraf will talk about some of the common practices and best practices that are being used, and then I’ll try to translate into how this can be done utilising the board portal technology.
Over to you, Doctor Ashraf.
Dr. Gamaledin: Thank you, Qais. Now, let’s study first how to itemise your meeting preparation process in terms of applying frame for that, which is very important for company secretary.
Next slide, please.
Now, this is the general timeline that you should be following this on the best practices. 45 days before the meeting, you have to prepare the agenda, or the agenda for the meeting. 30 to 35 days before the meeting, you should review the agenda with the CEO and the management. 30 to 35 days, as well, corporate secretary sends the email about deadlines for the board and different papers for the boards. Back.
15 to 20 days before the meeting, review the board presentation materials by participants. And then eight to 10 days before the meeting, the final review of the board materials by the CEO. And then, minimum seven days before meeting, the distribution of materials to the board, corporate, and begin the pre-drafting minutes.
Back to you, Qais.
Qais Gharaibeh: Now, by distributing the material on a board portal a week in advance, you can give board members adequate time to review and prepare for the meeting, which is quite essential for an effective board meeting. You can also provide up-to-date information, readily accessible in real time so that everyone is on the same page before the meeting. This also frees up a lot of admin time in preparing for the board meeting.
Dr. Gamaledin: Now, the agenda for the meeting is really the road map for the board itself, and it’s one of the key effectiveness factors for the board. How do you design an effective agenda? We have a few tips for you.
First thing, and foremost, try to develop and manage a consent agenda. Not good to have [inaudible 00:13:27] one. Make a separate consent agenda for items that don’t require discussion or debate. Second, stacking the routine items at the beginning or at the end of the meeting. Third, include shortened letters for all executive summary to give an overview of the meeting topics and schedule. Four, identify items requiring board action or resolutions, and indicate why that item is on the agenda. For example, an annual review, board evaluation, the legalised requirements, board policy, whatever. And try to indicate the agenda of the chair, CEO, and meeting secretary to that ensure board action or decision is actually taking place.
Finally, have the company secretary provide specific information requiring approvals, instructions, and directions for people joining and leaving the meeting as it goes, as well as expected time in for them. Also, you may want to consider concluding board and committee meetings, or a discussion with independent directors for feedback on topics presented. Back to you, Qais.
Qais Gharaibeh: So, the meeting agenda should live within your board portal and include and link out to specific supporting information. By sorting your agenda on the board portal, this helps to easily communicate to the board members which agenda items to prepare for, and which require decisions or actions.
Now, let’s talk about another best practice in the guidelines on preparing a board pack. Back to you, Doctor Ashraf.
Dr. Gamaledin: Thank you, Qais. Now, for you to prepare the board pack, will result in effective board meetings. So it is very important to have the right pack. Now, if you are preparing the board pack, try to remember the following. Number one, engage with directors to ensure the type an the quantity of information they request is made clear. Second, always remember the purpose of a specific information being included in the board pack, as well as the process and form. So do not put irrelevant information in the pack.
Third, consider developing a standard template for management to use for all board submissions. Maybe a one page template which asks for the context, highlighted information, and management recommendation usually will facilitate better board decision making. And of course, all information should be proceeded through the company secretary, and not director, or him. Back to you, Qais.
Qais Gharaibeh: It’s also important to ensure you have a proper records management process, and all communicated documents are properly filed. Board portal solutions greatly assist in this, as you can archive previous board packs. Always remember to add any hard copy document tabled at the the meeting to the electronic pack to ensure you have one consolidated and completed version.
When you share information via email, ensure also that you also keep a proper record. So with this, we’d like to open the room for questions from the audience. I’m handing back over the Nick to see if any of our attendees have anything they would like to ask.
Dr. Gamaledin: Now, before that, I will just say that, in fact, one of the important facts that you have to pay attention to is to follow up after the meetings. And for that, let me just give you three quick tips.
Number one, delegate decisions. You have to delegate to those accountable in the items that they were delegated. And make sure you get a status report. Number two, plan next meeting agenda. And you have to add items which were not covered in that meeting. Number three, conduct a post-meeting survey. So in that respect, you can actually do this through questionnaire, a phone call, or a visit. But you have to get these back on that meeting.
Nick Midal: Well, I think there hasn’t been a lot of questions being posted. But I think, as we move forward and try to get some of the best practices, and one of the reasons why Hawkamah’s been excited about this partnership with Diligent is trying to, on the one hand, bring forth the good practice the technology brings in better governance, in better management of meetings, of decision-making, on a board level, on the one hand. But on the other hand, to the extent that we can actually use this technology to be able to facilitate better decision-making.
I think ultimately one of the questions that may be directed to Qais, is say, if a company buys into this idea, bringing in technology into their board processes, how do you start? Who should start? How have you seen it in your engagement with companies in the region? How do you get started with this process, if we are to bring in technology into the board process?
Qais Gharaibeh: Sure. Well, typically the conversation usually starts with the corporate secretary, because they are usually the people that are responsible for driving the governance around the board communication. They are also the ones that are faced with the most challenges in preparing the material, making sure the board packs are properly assembled, ensuring that there’s proper agenda with the right, relevant content for it. And they’re the ones that are driving the biggest part of communication for the board.
So if you remember the first slide, we talked about communication and how it drives engagement, and then it drives collaboration and so forth. So when corporate secretaries get involved, and they see the benefits of automating the process and the workflow, they start to realise the tremendous benefits and organisation can get, and they’re able to see how they can drive the governance process for communication in a much more effective way.
Board directors then start to use the system. And once they use it, they usually transform to a different world of more productive outcomes, right? And this way, as you could imagine, board directors usually sit on multiple boards, so when they go to sit on another board, they try to bring that same experience with them, and they start that discussion about automating that workflow for the board portal. So this is one aspect to respond to your question.
But there’s another aspect where an organisation decides that they want to implement or to deploy the solution. There is a clear and structured process that Diligent follows to ensure that the adoption for automation of communication is maximised. So what we do is that initially, we set up a project plan together with the corporate secretary to ensure that the system is configured according to the requirements of the communication with proper governance about who accesses what information. And then after that we set up a stringent training plan to make sure that each and every user that will be interacting with the system is properly trained and is very comfortable in using the system.
Now, the system is highly intuitive. Directors would require less than 30 minutes to become fully fluent in how to utilise the system. And corporate secretaries usually take a training or two. Each one of them lasts about an hour. And then once everybody is trained, our presentation to the board to set up the right expectation on the best practices of using the system is delivered. And then eventually, a time is set for the next board meeting where the board can go paperless and they can start using the system in order to receive the contents and to be able to do all sorts of workflows associated with the board of directors using that system.
Now, it’s important to mention that Diligent offers 24/7 support to all the users of the board portal solution. Board of directors are usually very appreciative of the way that Diligent delivers this support, specifically around the proactive support where we see if the director is struggling to interact with the system, we’d really make a proactive push to make sure that they’re utilising the system well.
So as you can see, if you apply the right methodology for deployment, you will find that adoption for the system is very well efficient. And this is really what contributes a lot to the 99% retention rate that Diligent enjoys with our customers. I hope this answers your questions.
Dr. Gamaledin: Yeah, actually, I have a comment. Because based in our experience in the region, what we see is the concept of confidentiality and information leakage from board meetings or board packs or so on. I think one of the issues that we need to make sure of is information security. For example, now you have cloud computing, and you have email, so if our board information is saved in [inaudible 00:23:09] somewhere, what are the measure to make sure there is no breach of this information, nobody will have access to it, and so on? I mean, how sure are you of that?
Qais Gharaibeh: Sure. When you are working with the software as a service provider as Diligent, you need to make sure that the highest standards of security are applied on deploying the solution, and the best practices in the security processes in administering the solution and the business is followed. So Diligent is ISO-27001 certified. So you need to make sure that the service provider is certified with the proper certification to make sure that they are following the right security procedures around the system.
In addition, the system should encrypt the data to make sure that when the information leaves your company site, it is fully encrypted in transit, on the hosts of the service provider, and also on the mobile devices of the directors. So data should be encrypted all the time.
The way that the decryption of this data is handled should be done in the most efficient way. So, for example, Diligent uses a high security module device, which acts as a vault in order to release encryption keys only to authorised users. Another important aspect is you need to make sure that control of your data is 100% in your hand. So, for example, when the company site is created as a service portal, and the user names and passwords are created, then you need to be sure that the service provider does not have any back door to access this information. Diligent does this very effectively, but this is a long discussion to explain how this can be done in the background.
And then finally, inside the system, you need to ensure also that the users are accessing the right information that concerns them. Typically, board of directors have multiple committees, and certain committees should have access to only specific information, while other committee members or other committees should not have access to the same information. Let’s take the remuneration committee, for example. And the executive committee. So the remuneration committee should have confidential information when it comes to the remuneration of the CEO until it’s publicly released. Or until it’s decided to be released to him. So, you need to make sure that the system enables you to define access per user on a granular level to make sure that only relevant information is going to the right users.
So those are different areas around security that can be done. One last point that is also important to mention. Of course, you can apply all the security methods that you can, but you need to always test it and make sure you are not vulnerable to a breach. So what Diligent does, is we deploy a third party companies, multiple companies, in order to try to do penetration testing on our environment. We do this on a quarterly basis, and we also invite customers to test the environment themselves. On average, there are five to six different penetration tests that are being conducted on the Diligent environment on a weekly basis. And if we find any vulnerability area, we fix it immediately and we make sure that the system is immune to it.
So, yeah. These are the different kind of things that you could look at from a security perspective to ensure that your interest is well-protected.
So that’s quite a good number of customers, and we started covering the region about 18 months ago. And we are witnessing tremendous success on onboarding new customers with regards to the adoption of the service locally. Any of the customers I mentioned, if anybody would like to have a reference call to check how they are effectively using the board pack, or the board portal, I would be more than happy to connect you with them.
In addition to that, sorry, I think you asked with the guest about the touch IDs. Our system supports touch ID on the iPad, and we are now in the development phase to make sure it is also supported on the Android devices and Windows devices where possible. This is very helpful for the board of directors. As you can imagine, board of directors usually meet five to six times a year. So they interact with the application five to six times a year, more or less. If you want, you may double that number if they want to prepare for the board meetings properly. So they could easily forget their password. But with the touch ID, it enables you to ensure that you don’t have to worry about remembering the password.
Nick, I think you had a couple of other points that you wanted me to comment on?
Nick Midal: Very briefly about the typical average cost per user? And then I think we can respond online about moving to digital board packs later on, because we are running out of time.
Qais Gharaibeh: Sure. So, the average cost of such a system per user is around $1,400 U.S. dollars per year. It’s an annual subscription. This is for the executive directors and for the administrators or department secretaries because there’s more functionality on that system. The average rate is about $1,600 per year. So it’s quite affordable when you look at the average cost per company per year. Typically you would have about seven to 10 different directors, so expect a cost around anything between $15,000 to $25,000 per year.
Nick Midal: Perfect. Sounds good. Thanks. I think we need to move head. If we could go into the Next Steps slide, please?
Qais Gharaibeh: Sure. So, before I let you go, I just quickly want to summarise the takeaway of today’s webinar. Different stakeholders of the board face different communications issues. A robust communication structure is essential.
Key guidelines: Efficient and timely meeting preparation. Effective agenda is quite important. Coherent board material is very essential. And of course, post-meeting communication would provide a lot of value in ensuring that the right actions are taken. The right board portal solution can greatly simplify this process for you.
That concludes today’s webinar, and thank you Doctor Ashraf and Nick from Hawkamah. There are several ways that you can learn more about Diligent board portal solution. Please visit our website, www.diligent.com, or you can also contact me directly on my local number, +971-56-6839330, or via email. We will make sure that you receive this information by email following the webinar.
Also, please if you could, participate in our survey at the close of this webinar, as this will help us to continue to improve our content and make it most relevant to you. Thank you for your time, and thanks everyone for being a part of this webinar.
Director Middle East Business
The board is the ultimate strategy and oversight authority of the organisation.
To be able to do its job, it needs to be supported with a well-crafted communications infrastructure to ensure confidentiality and efficient receipt of information.