‘Disruption’ has been a significant theme of corporate life for several years. Rapid advances in technology coupled with changes in consumer preferences and values have seen businesses embark on digital transformation programmes designed to make operations more agile and competitive. However, these initiatives have rarely started with the board.
The historic formality associated with board business, and its close ties with legal departments, have perpetuated a business-as-usual approach. This has seen governance largely remain a traditional activity, bound closely to a quarterly cycle and seemingly insulated from the fast-paced transformation underway in the rest of the organisation.
COVID-19 has changed this dramatically and brought systemic disruption to the forefront of board strategy and operations. It has accelerated change and provided a mandate for more agile, dynamic governance at the pace the business demands.
From an operational perspective, boards were deprived of the opportunity to meet in person at a time when rapid, informed decision-making was critical. Directors — along with the rest of the business — were forced to adopt digital alternatives to familiar processes. Meetings switched to virtual and more frequent formats, as daily changes required boards to give constant support to executive teams. This also meant boards needed more information delivered more quickly — a world away from the painstakingly assembled quarterly paper board pack — but with an equally high requirement for accuracy and completeness.
Strategically, the imperative for effective leadership has never been stronger. Alongside the immediate health crisis, the board’s role has expanded and diversified as the pandemic accelerated concern about broader societal and environmental issues. As a result, directors must commit to increasing their knowledge and understanding of a far greater range of issues as stakeholder capitalism takes centre stage with investors and broader society.
How Digitisation Supports Modern Governance
Modern governance is the evolution of leadership, board and operational practices to drive sustainable performance and inspire stakeholder confidence. It combines technology, insights and processes to support organisational transparency and allow businesses to respond effectively to the diverse and often unexpected pressures they face.
For example, digital tools to support essential board activities, such as meeting preparation and the use of virtual meeting software, allow directors to meet more frequently and communicate securely. Gone are the days when personal assistants wrangled with diaries to get directors in the same room four times a year. Now a director can effectively contribute wherever they are located.
When meetings take place, directors are better informed. By developing a reporting infrastructure that ensures information flows unimpeded from the business to the board, governance teams can deliver accurate, real-time data to facilitate better decision making and give directors a complete view of the business. By automating data collection and analysis where possible, digitisation also relieves the administrative burden on the corporate secretariat and releases precious time for higher-value activities.
What Are The 6 Pitfalls to Avoid When Transitioning to Virtual Board Governance? Find Out Here.
Data Security as a Pillar of Modern Governance
Security has always been a priority for board business, with the organisation’s most sensitive and privileged data shared and analysed as a matter of course. Digitisation adds new challenges as cybercriminals increasingly target digital channels and data-sharing tools.
The rapid switch to remote working prompted by COVID-19 exposed some of the less-than-secure processes that boards have been using to share confidential data, such as personal email and public data-sharing tools. Essential to modern governance are communication channels and data-sharing tools designed specifically for board use cases. These must be ultra-secure and protected from external cyberattack and unauthorised access by company insiders. Ensuring that directors adopt secure approaches to their board work is also critical to keeping data safe.
Access to Insights Supports 21st-Century Governance
The critical dependencies between business, society and the environment have been thrown into the spotlight due to the pandemic. Its effects have been unequally distributed across communities and geographies, many of which simultaneously dealt with extreme climate events. The way businesses responded to the onset and unfolding of the pandemic has been judged on far more than the actions taken to safeguard economic value.
How an organisation supported its employees’ wellbeing, local communities, and — where appropriate — made direct efforts to fight the virus have contributed to how investors and consumers view and value it.
This has altered the type and complexity of the information directors need to provide strategic oversight and challenge to the organisation. A deeper understanding of the business’s performance, on a broader range of metrics, is required. This must be accompanied by comprehension of the context that the organisation operates and the performance of its peers.
As a result, there are significant requirements for continuous director education on the trends and issues affecting the sector in which the business operates. Access to varied and credible intelligence is crucial to ensuring directors are effective and informed stewards of the organisations they serve. The good news is that in today’s data-rich environment, the information is all available. The challenge is distilling it into relevant insights that are digestible for busy professionals.
Diligent’s Modern Governance platform meets the need for secure real-time information sharing and access to timely insight. It does this by allowing the board and C-Suite members to use any device to securely connect to relevant intelligence that helps them fulfil their role. It collates the full range of data types, from internal reports and board meeting materials to information about competitors and broader industry trends curated by Diligent’s team and trusted third parties.
Digitisation Accelerates Board Transformation
As the board’s role continues to evolve and demand faster, more frequent interactions, the secure digitisation of board processes and intelligence-sharing is fundamental to enabling it to keep pace with the demands of today’s businesses and the environment in which they operate. By formalising the emergency virtual processes and adoption of tools that was undertaken as a stopgap last year and building them into strategic activities, boards can transform from the top to deliver leadership and modern governance for a post-pandemic world.
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