We have gone deeper into this criticism in hundreds of board evaluations and might easily agree with directors’ concerns. It is not safe, however, to assume this is solely because of management shortcomings.
In most cases, directors should look in the mirror for the answer. Usually it is because they have not done the work needed to produce a clear brief on their information needs. So, every board meeting for many management teams is an unwelcome experiment: “Will what we provide this time hit the mark?”
We find a consistent theme with unsatisfactory board meeting materials—they contain too much of ‘the wrong stuff’. Like alluvial gold mining, a great deal of ‘overburden’ material must be shifted to find the odd fragments of gold. Shortcomings in information provided to boards via the monthly board meeting packs include:
Many boards must therefore work inordinately hard to be any more than spectators to the work of executives and are drawn inexorably into working in rather than on the business. While this partly reflects management’s inexperience and lack of training in reporting to a governing board, it is also a reflection of the way boards go about their work. Rather than specifying the information they want, they tend to be passive and reactive, waiting to see what they get, only to be dissatisfied.
No matter what the cause, this imposes significant costs on an organisation. Direct and opportunity costs include the time and management effort to produce reports that are of little relevance or help to the board in performing its governance function. Management time is wasted, and directors must laboriously review all the material provided so they don’t miss the specks of ‘colour’ that might be found somewhere in the papers. Indirect costs include the less visible consequences of role and accountability confusion relating to the different interactions and flows of information between shareholders, directors, executives and staff.
In the worst cases, information inadequacy is at the heart of corporate collapse due to non-executive directors being uninformed, unaware and unable to perform effective oversight. We were interested, therefore, to read a recent post by Dr Chinyere Almona, Director-General/Chief Executive at the Lagos Chamber of Commerce and Industry (LCCI) on the subject of Board Information Architecture (BIA).
The BIA is a framework of information available and accessible to directors. Almona argues that boards should be able to rely on a robust, up-to-date and appropriately designed BIA. It is vital that the board—not the executive—defines the BIA, letting the chief executive know what they want to receive, why and when.
Almona describes the following roadmap for developing a suitable BIA. We have added some thoughts of our own.
The BIA must be aligned with the specific goals of the business and the real world in which it operates, not some kind of generic prescription. In this context, the directors’ role is to ask questions that will guide the development of a robust BIA. To facilitate this, they must fully understand the business. What is the business model? What is the value proposition? What are the key business risks? How does the business generate revenues? And so on.
To ensure that directors have the most relevant information, executives must understand the context into which they are providing information. Board dialogue must cover the real needs of both directors and executives. What are the priorities for board time and attention? Which stakeholder interests and vulnerabilities are they most concerned with? Why does the board need a particular piece of information? How often do directors require the information?Where should they look (internally and externally) for the information they need? Not everything they want to know need be put into board meeting packs.
What is the appropriate structure, format, volume, etc for the board? As the company’s operating environment and board membership change, so will the answers on these points. What content is already available, and in what ways does it meet or fall short of the current requirements? What content should be repurposed, reworked or removed? What content does not yet exist but is needed? The board must answer these questions. As Almona points out, inadequate communication about reworking or removing content could lead to disenfranchisement.
Management is the main supplier of the information the board wants, so executives responsible for preparing board materials should:
For a robust BIA, periodic reviews and meaningful conversations with board members are crucial. It is also worth exploring BIA patterns in similar companies or boards.
BIA checkpoints
Almona concludes by suggesting some starting points for board discussion about your BIA:
