6 Pitfalls to Avoid When Transitioning to Virtual Board Governance

The COVID-19 pandemic has dramatically accelerated the transition to using digital and virtual tools to solve all kinds of challenges as organisations have fought to maintain continuity at a critical time. Digital alternatives to in-person meetings and workflows are becoming essential and are particularly important at board level, where the discussions and decisions that guide organisations through these uncharted waters are taking place.

As it becomes increasingly clear that the changes to working practices that marked the start of the crisis are here to stay, making the transition to virtual board governance is becoming imperative. However, getting it right is a challenge requiring a fine balance of technology, process and culture change. Here are some of the risks and pitfalls that can befall organisations aiming to change the way the board does business.

1. Assuming transitions are temporary

Humans don’t always embrace change. In a time of uncertainty there is a natural instinct to cling to what we know and look forward to everything returning to normal. When we believe transitions are only temporary, we are willing to put up with inconveniences on the basis that they won’t endure over the long term. The reality is that limitations on in-person meetings and processes that depend on physical interactions will be with us for a considerable amount of time. Organisations are doing themselves and their boards a disservice by not embracing this opportunity to improve and secure virtual board processes so the business can continue to function effectively over the long-term.

Lisa Pascoe, VP of Governance and System Effectiveness at Sparrow Health, recently spoke at our Modern Governance Summit 2020 and explained how her organisation has seized the initiative on dealing with COVID -19 disruption: “The silver lining of COVID is it’s making us take another look at our processes and how we can do them better. How could we do them more securely? How could we make things easier for our users?”

Setting the right tone when switching to virtual governance is therefore essential. As Pascoe states, it has to be pitched to stakeholders as a permanent evolution to a better, more user-friendly and secure way of conducting board business, not something that will revert to former practices when the crisis is over.

2. Incomplete transitions

A pitfall often experienced by organisations is when they opt for the “sticking plaster” approach to fixing immediate challenges, adopting a mix of incompatible solutions that don’t necessarily integrate well together. This results in an incomplete transition to virtual board governance, leaving some processes stuck in the past.

When embarking on digitisation projects, an organisation needs to look at all the processes that support board operations, identify inefficiencies and areas of security concern and scope out a solution that can address them as one. A good example here is that raised by Judi Coleman, Exec Assistant at Greater Baltimore Medical Center Healthcare. Her organisation was using Diligent Boards to share meeting materials securely but had stuck to a formula for meeting minutes that had evolved over 30 years. By adopting the Diligent Meeting Minutes software, Judi implemented an end-to-end minute drafting, review and approval process that avoided using insecure channels: “What we [used to] do is print out the minutes and email them to my board members and say, ‘Please review these’. [We] don’t have to do this anymore and [we] can electronically and securely send them for approval. And that has made my CIO very happy because we’re really secure right now.”

3. Abandoned transitions

Incomplete transitions are not ideal, but sometimes changes to board governance are abandoned altogether. Doing so leaves organisations with at best a set of cumbersome legacy processes that don’t integrate well, and at worst significant security vulnerabilities and an expensive software investment sitting on the shelf.

The single biggest cause of abandonment is user resistance. This was a problem before the COVID-19 crisis and, although directors and administrators may have managed to adopt digital tools once there was no other alternative, many are still operating considerably outside their comfort zones. Digital governance tools need to be straightforward, intuitive and supported by gold standard customer support services if they are to gain traction with users.

Again, the culture change needed to move to digitally enabled board operations shouldn’t be underestimated. The rationale and benefits for the move should be clearly articulated in a business case that is about implementing lasting change. The impact of the crisis should be just one of several key drivers, including improved security, stronger compliance, better efficiency and enhanced collaboration. If these are not included, the change risks being viewed as a temporary solution to a temporary problem, rather than lasting progress towards better governance.

4. Using a mix of partially secure and unsecure systems

In the throes of a crisis, people get creative and use workarounds to get the job done. For example, meeting materials that would have previously been sent through the post might be emailed as PDFs, or directors might be asked to print out an emailed document and sign it at home, then scan it using a phone app and send it back attached to an SMS.

Emergency solutions work for the short term but workarounds like those above are a classic example of security being sacrificed for the sake of productivity. You might be using a board portal to share board meeting materials securely, but if you send your Zoom link out to external directors’ personal email accounts your meeting could be hacked and those confidential materials visible on a shared screen. Similarly, if the conversations that take place around agenda items, board pack contents and authorising board decisions take place through standard email channels, those processes become significantly less secure.

Ideally, organisations need a virtual governance solution that permits secure collaboration on board materials and allows for the exchange of ideas through channels that are familiar, but at the same time, secure. Solutions such as Diligent Messenger and Diligent Secure File Sharing keep confidential interactions safe from unauthorised observers.

5. Not taking full advantage of virtual governance benefits

Organisations struggling to respond to the immediate pressures in a crisis can be forgiven for breathing a sigh of relief once they have a secure board governance tool in place. However, once the basics are embedded and directors and administrators are comfortable, it is time to look at what broader governance processes can be virtualised using the tools available.

Judi Coleman of Greater Baltimore Medical Center Healthcare has adapted her use of Diligent Boards to support the director onboarding process by building all the information into a board book that is shared with the new directors and forms the basis of the virtual onboarding meeting. She has also adapted the questionnaires tool to support in-meeting voting so the process is comprehensive and transparent: “We have a rule that every director has to vote on every resolution when the meeting is virtual,” she says. Using questionnaires means Judi can track who has voted and send reminders to anyone that has not yet registered their decision.

6. Taking a short term tactical—rather than long term strategic—approach

When businesses are in crisis mode, the long-term view is often obscured as directors and executives deal with immediate demands. Hence, tactical workarounds that were supposed to be temporary become hard-wired into processes. They become “the way we do it”.

It is important when transitioning to virtual governance that organisations take a long term strategic approach, with a roadmap for digitising processes that will support governance ambitions and lead to a new normal that exists not just because it was precipitated by a crisis, but because it genuinely represents an advance in the direction the business needs, and wants, to take. A key aspect is choosing a solution that meets governance needs now and in the future, and provides the change management support needed to avoid incomplete, abandoned or insecure transitions.