One of the most common complaints I hear from board directors is ‘how do we really know what’s going on?’.
I believe an important aspect of this is the quality of reporting to the board. If the information coming to the board is inadequate, the insights and decisions based on that information will be lacking.
Some key tips for assessing reporting to the board are:
Less can be more:
It is a common view among directors that board packs have been growing. Electronic reporting portals have made it much easier to add more and more pages at the click of a button.
This has unfortunately taken away the need to be tighter about what is in the board pack. However, while directors are getting a lot more data, in most cases they are not getting any more information.
Board’s need to ask themselves what do we need to see, with a focus on key measures, succinct management insights, and clear recommendations.
Link reporting with strategy implementation:
I am often surprised by boards that guard jealously their right to shape and form strategy and sometimes take a more sanguine approach to monitoring its implementation.
Most strategy fails because of poor implementation so it’s imperative that reporting to the board has a strong focus on the key strategy implementation metrics. Directors should be asking themselves ‘what do we need to be looking at to give ourselves assurance that strategy implementation is on track?’
Focus on trends:
As they say, the ‘trend is your friend’. Much better information is provided by understanding trends over time rather than a focus on ‘point in time’ metrics. In fact, reliance on monthly variances and movements can crowd out the focus on what the underlying trend is until it is too late.
Moving to annual or quarterly totals can be very useful here. In my experience trends also allow better quality and more honest discussions about what we expect to see going forward.
Not every director likes to receive information via spreadsheets, so think about how board members prefer to receive and process information.
In my experience, good charts overlayed with succinct insights will always be more effective. One of the chart types we use in most board packs now is the waterfall or bridge chart which provides a quick view of movements between two points.
Take a risk approach:
I have found it can be useful to consider the strategic and key operational risks in the business and ensure the reporting to the board incorporates these with the appropriate priority. This particularly means don’t fill board reports up with lengthy narratives around minor risks.
The key to all this however is for boards to be proactive around the reporting they are getting rather than leaving this to management. I know of several boards that allocate time at the end of board meetings on say, a six-monthly basis to do a page swipe and ask ‘do we really need this?’ It is surprising how much can be culled.
That said, it is of course an interactive process and one that must necessarily include management’s input. We want good reporting but we don’t want our management spending all their lives preparing board reports when they have a business to run.
If you need assistance with establishing your board reporting, or would like a review of what you are currently doing in this space then please reach out. If you require some guidance on how best to structure the information flow into your Directors, please don't hesitate to ask for our help.
About the author
Hamish Stevens is an accomplished Board Chair and Director. He was our presenter on the topic of “The Essentials of Risk Management”.