With the overlapping demands of hybrid work, COVID-19 isolations, cybersecurity threats and a fast-changing business environment, directors are increasingly engaging with technology.
The processes of board minutes and reporting have changed markedly over the past decade, with the recent pandemic adding greater impetus to the move to digital delivery. The tools with the greatest impact are not themselves new. However, the application of these technologies is generating new ideas about how to run board meetings more efficiently and effectively.
Experts say printed reports are increasingly rare in favour of reporting dashboards. The main reason is that dashboards are “drillable” — if there’s a number that needs more investigation, you can click on it to see the underlying transactions.
Drillable dashboards are a huge boost to a board’s efficiency. It means a query doesn’t have to wait until the next meeting to be resolved. The board can take a look immediately and get a quick answer. Instead of directors wading through a 200-page report to discuss at the board meeting, they review metrics on dashboards. Meeting time is then reserved for discussing the insights from those metrics.
“There are a lot of businesses asking, are we still in the right business? Are our income lines, revenue lines, service lines still the right ones? Are we still heading in the right direction? Or should we be doing a sharp left or a quick right?” says Amanda Kenafake GAICD, CEO and director of Toowoomba accounting firm Power Tynan. She also sits on the boards of the USQ Student Guild, regenerative agricultural NFP Lachlan Hughes Foundation, Food Leaders Australia, technology consultancy PT2 and financial planner Magnify Wealth.
Strategic horizons are now more commonly measured in months rather than years, says Kenafake. During the height of COVID lockdowns, a company’s prospects could change dramatically within a quarter. Five-year reviews have been replaced with 12-month or even three-month plans.
The increase in more timely advice has prompted boards to spend more time forecasting outcomes for various scenarios. What-if analyses based on inflation, price rises for critical products, pricing reviews.
Popular lightweight tools such as Spotlight Reporting, Futrli and Fathom create benchmarking and three-way forecasts from small business accounting software. The next level in complexity and power are business intelligence tools. This is a crowded bracket, with names such as Tableau, Zoho Analytics, Domo and QlikView. However, Microsoft Power BI is emerging as a de facto leader. Some boards are using dedicated financial modelling tools such as Modano.
Good boards were already forecasting before the pandemic, says Kenafake, but it has become much more common. “Because COVID-19 jumped up and slapped you in the face, a lot of businesses thought, we’ve got to have a plan. It’s not just business as usual. There has been a fundamental step change in a lot of industries across the board.”
One area ripe for improving efficiency of a board meeting is report design. A well-designed report slashes the preparation time for directors and pushes the board to spend more time on the most serious issues. Companies are investing in reporting tools to develop a set of reports better customised for the board’s needs.
“In hospitality, it’s not enough to look at profit and loss, you want to look at a daily breakdown,” says Inbal Rodnay Steinberg, who sits on the boards of the Charles Bonnet Syndrome Foundation and Kinfolk Enterprise, and is head of technology and innovation at accounting firm BlueRock. “Monday afternoons are very different to Friday mornings. The average figure for the month means nothing.”
However, most accounting software doesn’t come with industry-specific reports. The first step is always to contact the vendor of your current software and ask whether they have a similar report. If that fails, then you can often find reporting tools that will connect with your accounting software. Some of these will include industry templates.
If you’re dealing with multiple data sources, Steinberg recommends Microsoft Power BI. If Excel is your only option, you can still create a multilayered report with interactive dashboards using Power Query.
Steinberg was serving on the board of a not- for-profit that used a custom-built CRM to track patients. She added business intelligence tool Zoho Analytics and created a demographic breakdown of the patients, the number of new patients that month, and how they discovered the NFP’s service.
She has also produced customised reporting at BlueRock for several industries. These included pharmacies, which follow strict privacy laws that complicate the use of out-of-the-box solutions. Hospitality businesses also require customised reports that merge information from multiple systems for hourly cost/sale analysis and to inform staffing decisions.
One measure of a board’s effectiveness is the quality of its advice to management. In this aspect, timely data is more important than the latest tools. Boards are looking for external data that can affect performance in the near or mid term. A classic example is weather data. Companies in rain-affected industries such as construction can model the number of available hours for outdoor work. This will determine whether projects will be completed on schedule and indicate available capacity to start new projects. Agriculture is another big consumer of weather data. A farm can use a three-month forecast to make decisions about when to plant certain crops.
Building companies are also pulling pricing data from trades websites to monitor the cost of materials and improve the accuracy of their quotes.
“A lot of suppliers are pushing up prices at the moment,” says Kenafake. “They know what the up-to-date pricing is on trestles or wood. They might have paid 50 cents for screws last month and now they’re [paying] 80 cents. It’s like the light has been flicked on and people are saying there’s information out there I can get to come to me. It’s a quick and easy litmus test — am I doing the right thing?”
The human element has become much more important in this shift to remote teams, with hybrid workplaces and restless employees leaving for greener pastures. Boards are using people- based metrics to determine staff engagement and its impact on corporate performance. Power Tynan uses a tool called Everperform to track performance, relationship, wellbeing and productivity data. “A lot of firms are trying to pull data together on people, on engagement and how happy they are, the kind of work they’re doing, whether they’re being productive,” says Kenafake. “That seems to be coming to the forefront a lot more. [Using a reporting tool like Microsoft Power BI], you can overlay how happy someone’s feeling with the productivity and revenue of the business.”
Power Tynan is pulling real-time data from the accounting files of several other firms in a benchmarking exercise. Kenafake says she can look at her firm’s performance halfway through the month and see if it is on par with other accounting firms for that month.
Bye bye email
Boards are taking a much more proactive approach towards security due to highly publicised hacks and legislation defining notifiable data breaches. Directors are realising the sensitivity of financial and personal information they previously distributed via email, which has prompted a shift towards hosting information on secure portals.
Directors can log into shared drives in Google Workspace or Microsoft SharePoint, and safely download directly to their devices. Often, the information doesn’t even need to be downloaded — a portal may contain a link to a financial dashboard that is viewed within the browser.
This is particularly true with not-for-profits and educational institutions where volunteer directors use email addresses attached to their personal or workplace accounts. “I’m not comfortable with confidential information going there,” says Steinberg. “Especially with school boards where they have names of kids, and who paid and who didn’t pay for whatever.”
The company secretary may still email out an agenda, but will notify directors to check the drive or portal to view their board packs or minutes. Businesses are using password managers such as LastPass to control access to portals. LastPass can share login credentials for a portal or shared drive with a group of people without revealing the actual password. An administrator can manage access to the information by adding or removing people from the group, and can reset the password at any time without affecting access. Encryption and two-factor authentication are also more common — sometimes mandatory — steps to gain access.
Email is losing ground to business chat applications such as Microsoft Teams and Slack. “Instant messaging increases the communication within the board between meetings,” says Steinberg. For example, if there was a question where the CEO said, “We’ll come back to you,” information could be shared in the group chat and other directors could add further requests or ask for the issue to be tabled at the next meeting.
Another common scenario is when an organisation is preparing an email or other communication for public broadcast and wants feedback from directors. It’s much easier for a director to give a thumbs-up in a chat application and track who has responded than to wade through an email chain. And people respond much faster to a group chat than to email because it is less formal.
“Psychologically, writing an email feels like a bigger commitment,” says Steinberg. “With instant messages, it’s very easy to just do a thumbs-up. If I’m replying to an email with 10 people copied on it, I need to sit down and think before I write it.”
Quality minutes are an essential part of directors’ meetings. They show director dissent, clarify the board’s intent or demonstrate compliance with legal responsibilities. In court proceedings, they help prove/disprove whether directors fulfilled their fiduciary duties.
But the process for creating and confirming minutes has been laborious and extended. Now, boards are modernising the minute-taking process in several ways. Board meetings are increasingly hybrid — video meetings have lowered the barrier for participation for directors in isolation with COVID-19 or other illness. Various tools can record meeting audio, identify individual speakers and create real-time captioning, which can aid in live minute-taking.
The AICD view is that recording board meetings verbatim or via transcript-style minutes is inappropriate. Board minutes are used to record the decisions of the board; to convey board decisions to the executives who will implement them and serve as a reference to the board if it wishes to revisit a decision.
Boards often store the minutes of each meeting to their board portal or shared drive for reference. Instead of emailing the minutes several days after the board meeting, the onus is now on directors to log into the portal or drive to check the minutes are accurate. The expectation is that directors will review and approve them immediately after the meeting.
“We don’t even send minutes out anymore,” says Kenafake. “They’re just uploaded on the portal, we have a read and if there are any concerns we can ratify the changes at the next board meeting. There’s no waiting around, it’s pretty much automatic.”
Another approach is to use a shared document such as Microsoft Word Online or Google Docs. Directors can see how their decisions are recorded in the minutes and make corrections or clarifications on the fly.
“If it’s in a shared document, you can comment on it right away,” says Steinberg.
Microsoft Office 365 has tightly integrated this process with its communications tool, Microsoft Teams. Companies are setting up a dedicated Teams channel for their boards, which includes a single page for accessing minutes, links to dashboards and login details for the next meeting. Teams can record the audio, video and screen sharing from a video meeting, all of which can be saved to the board’s Teams page. Anyone who missed the meeting can watch it on demand.
“We save everything within Teams,” says Kenafake. “The efficiencies are great because all the papers, recordings, everything that you want to read if you want to join the meeting — it’s all there. You don’t have to ring the company secretary.”
Board reporting suites such as BoardOutlook and GovernRight provide a wide range of tools for performance reviews and compliance. The three most-used features in BoardOutlook are board evaluation, director skills matrix and CEO 360, a tool that collects feedback from the board for the CEO, says BoardOutlook managing director Steve Pell. The typical feedback process falls down in two areas, the first being efficiency. When boards use email or survey tools to solicit feedback from directors in larger companies, it can take several months to compile into a report.
“People forget the feedback they’ve given and issues raised at the time,” says Pell. “Think about the middle of COVID-19, how different the world was within four months. The longer you take to turn around a board evaluation or a CEO feedback process, the less likely it is you commit to meaningful actions, implement those actions and see improvement over time.”
The second greatest risk is confidentiality. Feedback on fellow directors is not always positive — strategic contributions below expected levels, poor preparation or even falling asleep during board meetings.
“That kind of feedback is both sensitive and explosive around director relationships,” says Pell, noting a chair can quickly end up with a dysfunctional board if the wrong person accesses a shared spreadsheet. “You’ll never get frank feedback again, because no-one will trust the process.”
Every picture tells a story
The addition of visual cues is an easy antidote to over-complex board reports. It’s difficult to know what to make of a single number in a P&L report, says Steinberg. It’s much easier with an arrow indicating up or down, or a trend line.
Boards can select five KPIs and directors agree on the range for each KPI under a traffic-light system, so when the board meets, they can move faster through the “green” KPIs and spend more time discussing the “red” KPIs. This is particularly powerful when using a business intelligence dashboard such as Microsoft Power BI. A report can use rules to highlight numbers of charts if they exceed set thresholds.
A consistent visual framework can also reduce the time directors spend ingesting board packs, says Pell. Every time a director picks up a board pack with a new layout, they need to spend time familiarising themselves with the way the information is displayed.
BoardOutlook includes longitudinal tracks on board performance with a visual framework to help directors review strategy and stakeholder management year on year.
“If you can take out the orientation time, you can dramatically deepen the depth the conversation gets to in a shorter space of time,” says Pell. “[It goes] straight to what does this mean and what do we do about it?”
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