UK directors aren’t happy with the board packs they are receiving, a recent survey shows. The board packs are too long, too complicated, not focused properly, and don’t include the information boards need, directors say. The adoption of board pack software could change all that and improve board book production.
Board Packs, UK boards and the Company Secretary
There is a lot that could be improved, according to UK directors. And a secure board portal could easily provide most of the improvement required.
A survey by the Institute of Chartered Secretaries and Administrators (ICSA) of 80 UK-based board members and governance professionals came up with these conclusions: UK board packs are too long, too backward-looking, too operational, tend to downplay bad news, too internally focussed, make it too hard to extract key messages, not readily understandable, too time-consuming to read, and too time-consuming to prepare.
Surely a long list of complaints! Yet all of these complaints can be addressed with an effective board portal. “Regulatory requirements and external expectations that boards should be all-seeing and all-knowing have no doubt contributed to the excessive length of board packs and the imbalance in the information that boards receive,” explains ICSA policy advisor Chris Hodge.
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Board Pack Length and UK Companies
“But although external pressures impose some constraints, the remedies largely lie in the hands of boards and those who support them. Boards can be clearer about the nature of the information they require – providing the leadership to go with the purpose, to use the UK Financial Reporting Council’s terms – while management and the company secretary can think more carefully about the format, the frequency, and so on,” Hodge adds. The most common challenge identified by respondents is that board packs are too time-consuming to prepare. This was the view of 78 per cent of total respondents, and over 70 per cent of respondents from each sector.
This is not surprising, given the average length of UK board packs. At quoted companies, board packs run to 215 pages, on average. At unlisted private companies, board packs are only slightly shorter at 204 pages. In the public sector, they also reach 215 pages, on average, and at other companies, they run to 197 pages, on average. That’s a lot of reading, yet, at 1 percent of all respondents, the board packs average 800 pages each.
A large number of respondents consider that the board pack is too focused on operational, rather than strategic, issues (68 percent); on internal, rather than external, developments (56 percent); and is not sufficiently forward-looking (59 percent). While these concerns are shared by the majority of respondents from organisations of all sizes, some are felt most acutely by the smallest organisations. For example, 86 percent of them feel that their board packs are too operational and 71 percent that they are too backward-looking. By comparison, 64 percent of respondents with a turnover of over £500 million feel their board packs are too operational; this is still a significant percentage, however.
These complaints seem to run across all sectors, the survey shows. One might have expected board packs at R&D organisations or high-tech companies to be better focused than most, but that does not seem to be the case, according to the survey. It is, however, notable that, relatively speaking, respondents from the public sector are less concerned about their board packs being too backward-looking and operational (43 percent of respondents from the public sector feel they are too backward-looking, as opposed to over 60 percent in all other sectors).
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Improved Board Pack Production
Of the respondents, 40 per cent complained about receiving papers after the deadline; other issues they identified included the lack of standardised reporting formats and managing the revision and collation of the various reports. This suggests that there is scope in many organisations to improve the process of producing the board pack, as well as improving its content. One further criticism, from about half the respondents: not knowing what board members want. The producers of board packs either lack the background or the experience required to provide information and analysis that is directed at board-level decision-making. One can imagine the frustration of a director who reads a 215-page board pack and doesn’t find a useful selection of information.
Diligent Board Management Software Resolves Board Pack Issues
With Diligent Boards, the main portions of board packs can be made available online in a secure environment well before the board meeting. Directors can comment or add to board packs, and they can be updated in real time. What this means is that the length of board packs can be limited, as content can be focused through dialogue. There is no need to worry about focussing subjects properly, because directors can express their requirements via the portal, and then the relevant information can be searched out in the portal library.
Diligent designed the Governance Cloud with the processes of board directors, executives, general counsels and company secretaries in mind. No other company offers such a comprehensive array of board software tools that are cohesive and connected to fully meet the needs of today’s board directors.
The few governance solutions that are in the market today have largely been fragmented and disconnected from other processes. Board directors, general counsels and company secretaries are realising the need for governance solutions that help them manage governance activities effectively and efficiently. Boards need board management software to help them streamline duties for compliance, regulation and governance while keeping all processes in a highly secure, confidential platform.
- Diligent Boards
- Conflict of Interest forms (pre-filled forms)
- Board Assessment Tools
- Resolutions and voting
- Diligent Messenger
- Diligent Minutes
- Insights (curated content and videos)
- Entity Management
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