​Effective Reporting to the Board​

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​A report available through Compliance Week provides some interesting and useful thoughts on reporting to the board. Board Reporting Trends and Best Practices in the Digital Age (registration required) wa​s written by the founder of Workiva, a software company, who brings the perspective of an experienced chief financial officer to the topic.

The author's primary point is expressed in a closing comment:

"To fulfill its oversight role properly, boards must understand the critical information available to management and the process that management goes through to make key decisions."

The paper builds to this:

"Setting the agenda should be a partnership between senior management and the board of directors to ensure the board is discussing correct issues — those most important to senior management [emphasis added] and those that increase efficiency and effectiveness."

"Management's perspective on the following topics should be shared with the board:

  • What management reports internally. 
  • What's on management's dashboard.
  • What constitutes success.
  • What keeps management up at night."

"A leading practice is to share the reports with the board that management uses to assess performance and allocate resources. This ensures efficiency, effectiveness, and accuracy, and allows management to focus on one story."

"The key is striking a balance — management should provide the board with enough information to provoke an active discussion, but they want to be sure not to provide too much information, at too low of a level, that it stifles discussion or wastes the time of the directors."

"The best board books [the information provided by management to the board for their meetings — ndm] created today are by those organizations that employ digital board portals, such as Diligent Boardbooks, BoardVantage, Directors Desk, and Wdesk, to deal with the time crunch, allowing more time for analysis."

I have no argument with any of this.

My problem is twofold​, both of which are absolutely critical and neither is done well.

1. The board should receive what it needs for effective governance, not just what management wants to share.

Far too often, the board book represents what management wants to share. The tone of the Workiva report is tilted this way: It's all about the board understanding management.

However, the board has obligations and responsibilities that m​ay require information that the management team is less than anxious to share.

Surveys of board members consistently report dissatisfaction with the information they receive on strategies, performance, and risk. Boards need to take a more authoritative posture: Management works for them, not the other way around. Boards need to determine, with management, what information is necessary, in what form, and when if they are to discharge their oversight responsibilities. Then they need to insist that they receive it.

2. The board books are far too massive to digest​​.

It is common to have board books that are in the hundreds of pages. While moving to tablet presentation (board portals are just a step along the way), more must be done if the board members are going to digest, understand, and then use the information as the basis for meaningful discussions.

  • Information that is not necessary for the board to receive should be eliminated.​
  • Information that is only provided in case the director wants to dive into the detail should remain available, but be accessible through a hyperlink or similar so that those who don't need all the detail can bypass it if needed.
  • On a periodic basis, management — perhaps the corporate secretary, general counsel, or internal auditor — should meet one-on-one with each director and determine how the board book can be improved, so that it meets the director's needs as well as management's.
What best practices in board reporting have you seen and can share?​

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