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Seven ways to up your governance game

In NZ, we are not known for valuing best practice governance.  We are a nation of small businesses, and we often don’t realise it’s time to step up our governance game and the positive impact this can have on organisational performance, company culture and countless other factors.  As board secretaries we witness great and not so great board practice and performance.  Here are seven observations as to what can make a great board that achieves great results.

Quality, independently crafted minutes

How many times have you witnessed a director disagreeing on their recollection of the meeting and the specifics of decisions that were made? A board secretary has a sometimes-difficult task in ‘mediating’ these disagreements to ensure there is an accurate record of the meeting.  

With an independent board secretary, the minutes are less likely to be subject to manipulation (often unconsciously) by the minute taker’s own point of view they brought with them to the meeting.  This is particularly prevalent with minute takers that work in the organisation day to day. 

An independent board secretary has the specific mandate to improve governance standards, accurately record meetings (crucially, the decisions, outcomes and actions), and will expertly handle the frank and constructive discussions that are inherent in the role.  This often leads to better informed directors and a more cohesive board.

Keeping the bigger picture front of mind

It’s essential to always have in mind the role of the board – to set strategy, manage risk and hold the CEO to account.  Ultimately the board is accountable to the organisation’s shareholders (or stakeholders). 

If shareholders are looking for an exit (in the short or longer term), the board papers become the key set of documents for prospective purchasers doing due diligence.  Without them, shareholders will typically find themselves having to accept a lower price than their business is worth or staying in the game an extra couple of years to put this in place.

There is no greater way to build a new owner’s confidence in a company than board papers that evidence a sound board who stay focused on the bigger picture.  Board papers should be written using language that a person not associated with the organisation would be able to understand fairly easily and they shouldn’t be filled with acronyms or company specific jargon. 

The independent board secretary is well placed to run the ruler over the board papers before they get published.  We also assist in ensuring discussions are minuted in a way that links back to strategic priorities, and shows directors have covered/considered their fiduciary duties.

Use of a ‘business case’ for material decisions

Items for Decision should include a substantive business case, noting the need for the decision in the first place, all the relevant parameters to consider, and crucially, a clearly worded recommendation for the board to (hopefully) approve.  Recommendations should also be linked back to the organisation’s strategy.

Executives often forget to include all the relevant information, or will include additional unnecessary information, making their reports less meaningful.  The board secretary can quickly edit reports from an independent perspective, in collaboration with the author to achieve useful reports that in turn stimulate quality analysis and discussion by directors.

Management buy-in to the importance of governance

Let’s be honest, NZ isn’t known for its training of management.  We tend to promote people who are experts at their trade, into management positions, and expect them to step up without specific leadership training.  These managers are unlikely to give a hoot about governance, especially if they haven’t been part of a board reporting process previously. 

An independent governance support specialist can upskill management in producing great reports.  It’s easier to receive feedback (constructively, of course) from a specialist consultant than it is from a time-poor Chair or CE.  In our experience, Directors tend to just put up with poor reporting as a given.  If there’s a governance specialist specifically undertaking this role, management take the task of board reporting much more seriously.  It’s a signal that the board values this task. 

Concise, correctly classified board reports and a succinct agenda

Directors can and should be better prepared for board meetings than they often are.  When there’s concise, quality board reporting, meeting prep becomes much easier, Directors are more likely to spend the extra time thinking about strategy, risk and all the important things they are actually appointed to do.

The meeting itself can be a less drawn-out affair if there’s a proper structure and reports with less detail, enabling the board to focus on the key matters.  Having clearly highlighted recommendations, or papers that note they are ‘for information’, ‘for discussion’, or ‘for decision’, Directors will naturally focus more time on the matters that need deeper thought, not getting stuck in operational detail. 

Many of the items on board meeting agendas are not worth the Board’s time in considering them or the executive time in preparing for them. A good starting point is to make sure board meetings are board meetings and not management meetings that directors attend.  So, in terms of the agenda, our clients who have seen the most success are keeping the agenda snappy, tossing out all those executive reports that are little more than diary dumps for executives to show how busy they’ve been.

A Board secretary can help the Chair in their role of drafting agendas, picking up on the key strategic discussions that maybe didn’t get fully resolved at the previous meeting and require a more structured approach (or a board paper) to enable the board to reach an informed decision.

Smart use of an annual board work plan

A dedicated board administrator can be structured in their planning procedures and keep the chair on track, plus save them time.  A planning meeting with the Chair should be scheduled pretty soon after each board meeting to review the board’s annual work plan, outstanding actions and assist in teasing out any other important items that should be added to the agenda.  These are quick and painless meetings but allow the board secretary sufficient time to work with management to ensure the appropriate papers are researched and written before the next board pack is produced.

Timely board packs

It boggles us how often management seem to think Directors will be keen and able read board packs the day before the meeting.  Most of our clients want their papers five working days before the meeting. There are occasions when there’s a need for a late paper, but it’s helpful to keep this to an absolute minimum. 

When you have a board secretary chasing management for their reports and they know the company is paying for this privilege, they will be more inclined to deliver on time.

If you’d like to understand more about how an independent governance specialist can bring the focus your board needs, email Jo Kelly at [email protected]

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