29 June 2020 by Peter Swabey
The Chartered Governance Institute has partnered with Diligent Corporation on a series of papers looking at Building Board Resilience
In May this year, keen to meet the challenges of managing roundtable meetings in this COVID-19 environment without a table, round or otherwise, we held a number of discussion panels with members and other governance professionals to develop the thinking for the second in our series of papers on ‘Building Board Resilience’ on which The Chartered Governance Institute is partnering with Diligent Corporation.
In this second study, we wanted to focus on the digital ability and vulnerability of boards during the coronavirus pandemic; how they access the data which informs crisis decision-making and how they use this to lead the company effectively. Does the way in which data is presented to the board affect the quality of the decisions made?
If we have learned one lesson from the impact of COVID-19 on all our businesses, indeed on our society at large, it is surely the importance of having the right information, at the right time, on which to base decisions. It is rare to get unanimity at such events, but all our panellists agreed that in the COVID-19 environment, this is more important than ever and it has meant a number of adjustments to the way in which the governance professional manages the board meeting – or, at least, supports the chair in doing so. They also all agreed with our fundamental premise that the way in which data is presented to the board affects the quality of the decision(s) made, but expanded on this to discuss the ways in which this has impacted the way in which boards work and on the demands that they make of those presenting information to them.
As boards meet virtually, the format and structure of their meetings has changed, but so too has the format and structure of the papers presented to them. There is a greater focus on the essentials. Board papers are expected to be less complex; to contain less information but to be more focussed. At the same time, they are likely to contain more raw data with less management filtering. A number of our panellists alluded to new rules that their board has introduced and which are being rigorously enforced – rules, for example, limiting the length of papers or, especially, the number of Powerpoint slides and requiring a clear statement of what the presenter requires from the board, be it a decision, approval, discussion or noting. Virtual meetings – especially board meetings – have to be more disciplined.
But that can also make them quicker and more efficient. There is often no need for a presentation or discussion of points which are obvious to anyone who has read the papers properly – and make no mistake, the feedback we got was that board members do. Immediate decisions on the ‘no brainer’ items then leaves more time for richer discussion of the more complex issues. One chair has developed a habit of asking each presenter what are the top five points that they want the board to understand (and not to worry if there are fewer than five!). He then asks the board if anything is unclear, asks the presenter what they want from the board, and then sums up. This has made board meetings much more efficient both in terms of time and quality of decision-making. One of our panellists said that “meetings have been better; more focussed and with better chairmanship”. As another company secretary commented, “I was initially worried that matters wouldn’t get a good airing, but they really do”.
The timing of papers also becomes more important. Boards need time to read and understand their papers properly, and yet there is a temptation for some teams, particularly those working in corporate development, finance and crisis response, to hold their papers back as long as possible so that they are as up to date as possible when the board see them. But that does not help the board if the paper is only received the day before the meeting. This problem has been exacerbated by the use of portals as, not only does the board pack not appear to be physically bigger, it also can have additional papers slipped into it less obviously.
There is another benefit to virtual meetings as well. It is not unusual, in our global economy, for one or more directors to have to phone into a physical meeting. The strong feeling of our panellists was that those who do so are disadvantaged, but that in a virtual meeting all are on a level playing field.
Like many board meetings, one of our roundtables did go slightly ‘off piste’, for which I blame the chair! An area which we had not expected to attract so much comment from our participants was the structure of the meeting itself and how the governance professional should (help the chair to) manage it.
As one described it, a virtual meeting needs much more active leadership from the chair and the panel agreed that the governance professional needs to work closely with the chair, be it in training them or simply offering guidance to help the chair be more effective. As one company secretary put it: “Training and steering the chair is important. Actually you are steering the meeting. You may be training the board on how to handle the technology but you are also supporting executive colleagues by doing the same for them and giving them guidance on board etiquette etc. Many of those presenting to the board are nervous, especially now”. ‘Waiting room’ functionality is very helpful for the company secretary managing presenters into the meeting. One panellist noted that “we have also found it useful to have separate meeting codes for the board, for committee meetings and for NED-private sessions”.
But it is not all positive for the governance professional. Our panellists agreed that virtual meetings can make it more difficult for them to communicate with the chair in real time – “you can usually catch their eye or pass a note, but our chair is not all that good at using chat, especially during the meeting and you do need a ‘virtual elbow’”. Some panellists have adopted other solutions, for example a pre- and post-meeting call with the chair or “a frequent exchange of text messages between chair and me during the meeting”.
The board will also need more breaks, in which it can be helpful to turn off the video feed and allow people to stretch their legs and re-focus. We heard of companies who have a 5-10 minute break every hour. Of course, the one person who doesn’t get a break is the company secretary: we have to be good at multi-tasking!
As one of our panellists observed, “once we all got used to it, our SID, one of the most reluctant to move to virtual meetings, asked me why we don’t do it more often. There is absolutely no issue with the quality of debate”. The move to virtual meetings can make boards more responsive and able to deal with urgent issues, and some companies are considering greater use in the future; of course, there may still be benefits to physical meetings, for example, when boards hold strategy sessions. In the short term, however, many NEDs are in a ‘vulnerable’ group and companies will, rightly, be careful before returning to physical meetings. One company secretary commented that “we found that it helped to break up our meetings into smaller, more focussed sessions. An eight hour Zoom meeting is a trial for anyone and, if there is no travel involved, it is relatively easy to find an hour that everyone can do – although we did have to steer some of our NEDs away from a preference for weekend meetings in fairness to our executive team. Some issues, for example those that require board approval, or discussion can easily be managed virtually. This has led us to question how we have done things in the past”.
It is sometimes said that change happens more easily in a crisis but the collective view of our panellists was that many of the changes made to the working of boards as a result of the Coronavirus have made the work of the board easier and will likely be retained for the future.