Board Papers and Modern Governance Tools
Not long ago, UK boards expressed considerable dissatisfaction over the quality of their board papers – in a survey by the Institute of Chartered Secretaries and Administrators (ICSA).
The challenge is clear: UK boards, under pressure to perform, have less and less time to spend reading board papers, which are getting longer and longer, in an ineffective effort to try to answer every conceivable question a board member might have. Yet ICSA research shows that board members have a total of four hours to prepare for a meeting, irrespective of the length of the board pack.
Board papers need focus – that is, the right information for the issues under consideration. How to manage this?
ICSA makes the analogy with a Formula 1 racing squad: “The drivers are the ones who get the car over the line, but success is not down to their talents alone. An F1 driver is joined on the circuit by an entourage, dedicated to telemetry, feeding the driver real-time information about everything from clutch torque to the temperature of the tyres. Teams invest a significant part of their budget in the latest information gathering techniques to optimise race performance and unlock their driver’s potential.”
What is the size and scale of the challenge that companies face in building a balanced board?
Many boards of directors put great effort into making sure that they have the right people around the table. But these people need the right information in order to make the best decisions. And they don’t have endless hours to spend acquiring it; like F1 drivers, they need just focused content with the key issues covered.
And, there is another aspect to board papers: Directors in the UK may be held to account on how they make decisions. They will need to show that they have made a good faith effort to find the elements needed to make the best decisions possible – this is part of their fiduciary duty to the company. Directors must be able to depend on their board papers so that they can account for decision-making, but filling board papers with endless material does not fulfil this requirement.
Getting Board Papers Right
ICSA proposes that the first step be prioritisation:
- Is the board clear about how it wishes to divide its time between strategy, operational performance, and governance and compliance matters?
- Is the board clear about which decisions it needs to take and the criteria for determining when other matters are significant enough to be brought to their attention?
- Do the forward meeting plan and individual agendas reflect the board’s priorities?
The first step should be taken by the board itself: Over the course of the year’s board meetings, how much time will be spent on strategy (many boards have a “strategy day,” for example)? What are the key strategic issues that need to be addressed over that time? There will, of course, be unscripted issues that arise, but they can be fit into the overall plan. A similar plan should be made for operational issues and governance and compliance issues.
This is where board management software can provide critical support. With a record of all the discussions and exchanges among board members, as well as a library of materials available with documentation on everything relevant to the board’s work, directors can review the aspects of strategy, operations and governance that most require their attention.
These plans should be correlated with the board’s agenda for meetings. It’s possible that a particular question may need development with management, so it should be scheduled for a time when the CEO can join the board meeting. Or, a board paper that previously addressed a particular issue may need to be expanded in a different way.
Find out about ‘Board Meeting Minutes and UK Legal Requirements‘
Here again, the board management software can help with details on agenda development and objectives easily available to all board members and the company secretary via the online library.
With all this in mind, the authors of the board papers can go to work. They should first be carefully briefed by either the chair or the company secretary on how to focus their research. The brief should include exactly how the work should be presented: Different formats may work better in varying contexts.
The board management software provides invaluable tools for research and writing, along with secure channels for discussion when the need arises for input from the board. Such input can ensure that the focus of each paper is adjusted specifically to the board’s needs. What’s more, if a board member is an expert on this specific subject – for example, cybersecurity issues – the authors will certainly want input from him/her both before and after writing the board paper.
Once all the papers are prepared, the chair should go over them to ensure that the papers set out all the relevant considerations and implications of which the board should be aware?
With this done, the papers can be securely stored on the board management software, and distributed via the secure channels it provides. Reactions from board members ahead of the meeting can easily be incorporated into the papers, as the board management software permits updating and revising in real time.
Diligent Governance Cloud Supports Board Paper Production
All of the function described above for board management software, and much more, are provided in the Diligent Governance Cloud.
The main portions of board papers can be made available online in a secure environment well before the board meeting. Directors can comment or add to board papers, and they can be updated in real time. What this means is that the length of board packs can be limited, as content can be focused through dialogue. There is no need to worry about focussing subjects properly, because directors can express their requirements via the portal, and then the relevant information can be searched out in the portal library.
Diligent designed the Governance Cloud with the processes of board directors, executives, general counsel and company secretaries in mind. No other company offers such a comprehensive array of board software tools that are cohesive and connected to fully meet the needs of today’s board directors.
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