The way UK boards work is changing. While flexible and remote working has been on the business horizon for some time, COVID-19 has accelerated the trend. Companies that had long-term plans to shift infrastructure and security footprints to accommodate the demands of Millennial and Generation Z employees have seen the deployment schedule shrink from five years to five days. Working from home has become a necessity, not an option.
At board level, the trend and enthusiasm for virtual working lagged behind the workforce. An older director demographic and attachment to traditional workstyles means board governance processes have largely remained tied to the tried and tested conventions that have been in place for decades. The formal board meeting has been sacrosanct and executive assistant teams, to quote a senior governance professional we spoke to recently, have had to “move heaven and earth to get a director to a board meeting physically”.
However, the enforced shift to home working and the consequent implementation of virtual and remote board activities makes now a good time for companies to review board governance best practices and to advise directors of the new security, process and practical requirements that arise as boards pivot towards digital operations.
The rationale for board governance best practice
Adopting best practices for conducting board business is important to ensure that actions take place with the proper degree of rigour, security, director engagement and process consistency. A well-governed board should translate to a well-governed business, and it is important to ensure that governance is suited to the environment it is operating in.
When a shift as comprehensive as we have seen in the past six months occurs, it is necessary to check that existing practices, processes and expectations are still relevant and achievable. This doesn’t just apply to changes as dramatic as we’ve recently experienced. Whenever there is an alteration in how the board operates, its membership or support structure, it is a good opportunity to evaluate board governance and make sure it is still fit for purpose.
Look at what has changed
It is helpful to look at what has changed and identify the effects this might have or risks it might introduce. Home working, virtual board meetings and more digital information-sharing are all factors that need investigation. These are some of the issues that we have seen organisations addressing over recent months:
1. Home working: security for data shared outside the corporate perimeter
More home working means more company data being shared outside the (relative) safety of the corporate IT perimeter. Directors, company secretaries and administrators working from home may be using personal devices, unsecured home Wi-Fi networks and personal cloud accounts that don’t meet corporate security standards. This is particularly relevant to non-executive directors using devices that are not company-issue. Now that the corporate office extends into employee and director homes, organisations should be considering whether they need to send IT teams out to audit individuals’ home set-up. Certainly, revising Bring-Your-Own-Device (BYOD) policies should be on the agenda and businesses should consider providing dedicated devices to non-executive directors.
Organisations should also look at practices around information sharing and collaboration, especially for the most sensitive board-level materials. Email – particularly personal email accounts used by non-executive directors – is notoriously exposed to hacking risk so alternative secure channels should be considered. These include board portals that enable secure collaboration on board materials, even when working remotely, and dedicated secure messaging systems for directors.
It is not just digital security that directors and corporate secretariat teams should be aware of, but physical and audio, too. In the home working environment directors must be mindful not to leave printed materials where other people could read them and make sure that they are securely disposed of when no longer required. Similarly, participants must make sure that virtual board meetings cannot be overheard by unauthorised people – the use of headsets is recommended so the dialogue stays between participants.
Now is a good time to develop and share up-to-date best practices around all aspects of information security with directors, executives, company secretaries and board administrators, so a good culture is developed, and everyone is aware what is expected.
2. Virtual meetings: authorisations and voting
Putting pen to paper to authorise board resolutions, approvals and minutes is not as easy as it once was. While sending documents through the post is an option, it is slow and cumbersome. Electronic signatures (or e-signatures) are the logical solution. However, it may be necessary to amend the company’s articles in order for their use to be permitted. The same is true for virtual board meetings and electronic voting – if the company’s articles do not permit them, they will need to be amended. Amending articles to permit virtual processes should be a priority for organisations to ensure board continuity in the event of further government stay-at-home orders.
To explain more about how electronic and digital signatures can be used, Kate Graham, Partner, Entity Governance & Compliance at PWC, and her team have put together a useful guide to board continuity for company secretaries that highlights the factors affecting board governance when working virtually.
Voting on resolutions is another process that changes when meetings are virtual. It is made easier with digital voting tools. Directors can make their vote during the meeting at the touch of a button and it is instantly recorded, meaning there is no ambiguity for minute-takers over who has voted what way. Digital votes can have e-signatures attached, in the case of formal resolutions, or less formal “straw poll” votes can be easily set up to gauge opinion on key issues. Boards should consider adopting digital voting tools as a best practice to facilitate virtual board meetings.
3. Virtual meetings: management, minute-taking and engagement
Everyone has learned fast when it comes to the best practices around virtual board meetings. Many of the Diligent community are building new board governance best practices that incorporate the ideas and experiences shared during our series of webinars. Key themes and best practices that emerged include:
- Have dedicated people running meeting technology such as video call platforms, board portals, voting tools etc, and a separate person taking minutes to ensure proper focus is given to both tasks.
- Adopt a secure method to share conference meeting access details e.g. within a dedicated board portal and not via email, to avoid the risk of hacking.
- Recognise that long periods behind a screen are tiring and regular breaks are needed, as well as shorter sessions.
Organisations are also noting that chairs play an important role in ensuring director engagement and participation when some or all are attending remotely, and that some chairs may need additional support in adapting to a virtual meeting environment.
This article has covered just some of the aspects that UK boards should consider when adapting governance best practices to reflect the realities of current – and future – working conditions. As the annual cycle advances, strategic governance processes such as board evaluations, director and officer questionnaires and onboarding newly appointed directors should also be reviewed to ensure they remain effective and fit-for-purpose for the environment they operate in.
WANT TO LEARN MORE?
Learn how your board can improve their governance and rely on Diligent’s dedication to customer performance. Request a demo today
December 28, 2020
What Role Does the Board Play in Business Continuity Planning?
Continuing in the face of adversity has been the dominant theme of the past year. When the scale of disruption caused by COVID-19 became clear, businesses worldwide were forced to adapt rapidly to the restrictions that came into force overnight. While many organisations have business continuity plans designed to keep…
December 21, 2020
Business Continuity Plan Maintenance: A Step-by-Step Guide
A business continuity plan (BCP) is a living, evolving document. Designed to be activated when unplanned disruption strikes, it must be flexible enough to guide actions regardless of the specifics of the situation. In a fast-changing environment, business continuity plan maintenance is an essential part of the business continuity programme…
December 8, 2020
Board Meeting Minutes Best Practices and Guidelines
Guidelines for Board Meeting Minute Taking In order to keep the courtroom from invading the boardroom, the most basic rule is, “saying less is often better,” warns the London-based law firm Bricker & Eckler in a recent note. “Today’s business climate places heightened…