It struck me as I sifted through the papers and board agendas that there was a huge difference in the quality of board papers and board agendas between the various companies which I had been involved with. Then when I compared company performance with what I considered the quality board papers, not surprisingly these were the companies that had outperformed the others both in implementing growth strategies, revenue and profit enhancement, and adding shareholder value. Now this may be coincident and the sample group is certainly not large nor sufficiently diverse enough to be able to reach a definitive conclusion. Nevertheless, there was a thread of logic that roused my professional curiosity and got me thinking about my own experiences as Chairman and the quality of board paper presentation I have demanded which inevitably raised the question: “could I have improved on the standards I set and would this have improved the shareholders wealth?”
A few rules I have (besides the simple administrative ones) which I believe are the catalyst for ensuring quality in both board papers and agenda’s are:
- Each paper presented must be signed off by the CEO as being approved for board presentation regardless of whom the author is.
- Maximum length of any paper, three A4 size pages.
- The board agenda is jointly developed and agreed between the Chairman and CEO, including ensuring the items signalled for follow up in the last board minutes are covered.
- The agenda is split into various sections. After the administrative process, apologies, approval of minutes etc the distinct sections which papers are slotted into are in no specific order:
- (a) Follow through: items that the board asked for more information on or follow up on at the last board meeting.
- (b) Subcommittee reports: including any decisions that the full board may need to ratify relevant to the subcommittee recommendations.
- (c) Strategic monitoring: reporting on progress and variance against the strategic plan and actions to be taken to rectify any shortfalls.
- (d) Decision papers: issues and or processes including new programs or expenditure, communication plans etc which require board discussion and approval.
- (e) Information papers: making the board aware of issues which affect the company but no immediate action is required. Also signalling issues that may in the future require board papers requiring board approval.
- (f) Financial reporting: monthly and cumulative year results, risk evaluation, cash flows, margins, operating costs etc. Major focus on future projections rather than past performance.
- (g) Executive reports: CEO’s report limited to three pages with other executive reports limited to two pages.
I’ve found the above agenda format with some variations has worked well for myself in my Chairman roles but the question remains: could I have improved on the quality of the board papers being presented?.
So with the weather getting worse with the wind and rain I finished my office filing purge and having made great strides in emptying the bottle of single malt, (fifteen year old La Phroaig for those that are interested) I promised myself to focus on improving where ever possible the quality of board papers and board agendas with those companies with which I am involved with. The first step which I intend to take is to make “improving the quality of board papers” an agenda item for discussion at the next board meeting. Based on this discussion then obtain additional feedback from both the executive and the shareholders representatives. The next logical step is to then establish via the company’s governance charter a standard associated with board presentation and regularly monitor compliance and performance. I don’t believe this process will have any immediate effect on company performance but any improvement in the professional standards that govern boards’ professional behaviour has to be a bonus and provide a platform for soundly based decision making.
It struck me as I sifted through the papers and board agendas that there was a huge difference in the quality of board papers and board agendas between the various companies which I had been involved with.