Is any meeting really worth a quarter of a million pounds and over 100 days of preparation?
You would think not. Yet that is the typical cost of a single board meeting for a large listed company in a regulated sector like financial services.
While that may be an extreme example, the cost of preparing papers for board meetings is significant for all organisations irrespective of their size or sector. Even small charities with a turnover of less than £10 million will typically devote 20-25 days to the task for each meeting.
These are some of the startling findings of a new cost calculator developed by Board Intelligence and ICSA: The Governance Institute, which has been made available to help organisations quantify the time and effort that they put into briefing the board.
The cost calculator is built around the main processes involved in producing and reading board packs that are common to all organisations: writing board and committee papers, including briefing authors and reviewing drafts; compiling and distributing those papers; and the time the board and committee members spend reading those papers.
Users of the calculator are asked to input some basic information about their organisation:
Having input the information, the model makes a series of calculations and produces two figures: one showing the total number of days involved, the other the associated cost (in either pounds or euros). Both of these are presented as ranges. While the assumptions underlying the figures have been rigorously researched and tested, it would be misleading to pretend they were accurate to the last minute, penny or cent.
When testing out the calculator with some ICSA members and other volunteers, we found that both the time and costs associated with board preparation were much higher for large or more heavily regulated organisations.
This is hardly a surprise. Typically they have longer board packs containing more individual papers than smaller or more lightly regulated organisations, with a greater proportion of the papers being complex ones that take longer to prepare.
In addition, papers usually take longer to produce because there tends to be a greater number of people involved in the process and a greater number of review stages. And the salary and related costs of involving senior management in writing and reviewing papers can have a significant multiplier effect on the total costs, particularly in large listed companies.
While the absolute numbers for large organisations might dwarf those for smaller ones, this is not just a big company issue. Using the example I gave earlier, 20-25 days and £4,000-5,000 per meeting can be a significant drain on the resources of a small charity reliant on the goodwill of volunteers and donors.
Of course, you can argue that this is time and money well spent if it ensures that the board is getting timely and relevant advice and information, enabling it to make better quality decisions that secure the long-term future of the organisation.
But too often, it seems, that is not what happens.
Research by ICSA and Board Intelligence into the effectiveness of board reporting, published last December, found that the majority of organisations of all sizes and sectors believed their board packs are too long, insufficiently forward-looking, and too focused on operational rather than strategic issues and on internal rather than external developments.
Meanwhile, earlier research by Board Intelligence found that the amount of time directors allocate to reading their board papers is between three to four hours, irrespective of the length of the board pack.
Put together the data on the quantity and quality of board packs, and it appears that at present many organisations are spending too long and too much on something wrong and untouched.
By highlighting the hidden costs associated with preparing board papers, we hope that the evidence provided by the cost calculator can help to create a mandate for change in those organisations where it is needed. We also hope that the guidance and self-assessment tool that ICSA and Board Intelligence will launch later in the year will help them to implement that change.
Chris Hodge FCIS is policy advisor at ICSA: The Governance Institute