Board Agenda; a critical decider in good governance

Tuesday, December 16, 2014

In our work with boards of all types of organisations we are continually surprised at how so many work with outdated agendas. These agendas are left-overs from a time when boards acted as committees rather than a governing body.

 

Agendas are cluttered with items and issues that have little to do with the contemporary role of a governing body. This includes:

  • Correspondence

  • Staff reports about operational activities as opposed to the results produced by those activities

  • Operational approvals where these should be delegated to the CEO

  • Financial reports that are more detailed than the board needs to deal with

  • Flyers and advertising material

  • Presentations unrelated to the board’s role or that repeat what has already been stated in a board paper.

 

"But," you argue, "We're monitoring!" Think again. Let’s look at the top clutter-mongers! 

 

Correspondence

For not-for-profit boards in particular, correspondence is one item whose usefulness or relevance is rarely, if ever, questioned.

 

Correspondence should never be an item in its own right. It is only relevant to the board if the contents informs strategy, policy or CEO monitoring.  Most of the time, the vast majority of the correspondence refers to management duties. It is tricky as many boards have poor (or no) strategy, policy and methods to monitor the CEO in place.

 

To hedge their bets, the board will load the board meeting with irrelevant detail in case they miss something or to feel they are doing something. This wastes the CEO’s time and the board’s time.

 

In most instances, correspondence that has implications beyond the CEO’s authority to deal with or that concerns a board policy matter would come before the board. When this happens, the correspondence is part of an agenda topic that analyses and facilitates discussion of the correspondence’s implications. For example, a letter from the local parliamentary member about a change in gambling policy would be addressed as part of the strategic objective, ‘gaming’.

 

Run of-the-mill management information is not relevant; these include complaints and requests for small donations (e.g. free room hire) that can be delegated to management through board policy guidelines. Save the board meeting time to discuss strategy and risk.

 

To remove correspondence from the board meetings, firstly take it off the agenda. Create a short-term correspondence committee, including the CEO on the committee, who will agree what is relevant and what is not and ensure that only relevant correspondence gets to the board.


Type

Generally governance related:

  • Governance invoices

  • Governance-related industry news

  • Government (local, state, federal)

 

Generally non-governance related and should be dealt with by management according to board policy guidelines:

  • Complaints

  • Invitations

  • Letters of request

  • Non-governance related industry news

  • Thank you / congratulations / etc.


Staff reports about operational matters

The primary guideline is that the board meets to do board business, not staff business. The board has limited to receive operational reports and, as such, reports should be written towards a governance context. For example, reporting directly against the strategic plan, policy, performance indicators or vision statement.

 

As a general rule, all agenda-related reports should be read and evaluated by directors prior to the board meeting. They need not be read aloud, or even paraphrased by the CEO or other staff and should only be used as the basis for discussion relevant to the board’s governance role.

There are reports that might be provided to the board as context; we call these ‘for information’. These might not form part of the meeting agenda and may only be discussed on an exception basis.


Operational approvals

We regularly witness CEOs seeking permission from the board to carry out this or that operational initiative. Such permission-seeking commonly results from one or more of several background conditions:

 

  • the CEO does not have the confidence to make his or her own operational decisions and seeks board backing as an insurance policy (a form of upwards delegation)

  • the CEO does not have a clear written delegation and thus is constantly unsure about the boundaries of freedom within which he or she can work and is free to make operational decisions

  • while there is a written delegation, perhaps in the form of Limitations policies or some other documentation, the process of board discussion of such matters is so ingrained into the board’s and the CEO’s modus operandi that it just happens without any question or scrutiny.

 

Operational decision-making is the CEO’s responsibility and the board should not be asked or expected to partner him or her in this.

 

This, of course, is not to say that the wisdom and experience of individual directors should not be available to the CEO rather that the board meeting is not the time nor place these discussions. Opportunities should be found outside the board meeting for the CEO to engage with such director wisdom or experience.

 

Unnecessary financial reports

Top of the list of outdated practices in some boardrooms is the monthly cheque schedule. As interesting as some of the content may be to some directors, this schedule serves little real value to the board in its governing role. The other bug-bear are financial reports that are overly complex, feature excessive tables and do not help tell the story of the organisation's financial position.

 

Financial reports do not need to be difficult to understand. 

 

Far better that the board receives a fully analysed financial report from the CEO addressing predefined financial governance concerns within a strategic context. Measures from past strategic actions, the impact on current trading and how strategy is positioned for the future is better information to highlight.

 

This requires some effort for the board to instruct the CEO in what they would like to see in the financial reports. A good role for the Treasurer.

 

Flyers and advertising material

Including advertising material from the marketing department diverts the board from its governance role and confuses the board into thinking that marketing is a governance role rather than a management role.

 

This is different to material that is advertising from third-parties that relates to director training or governance development opportunities. As this relates to the board’s commitment to its own professional development there is a justification for their inclusion in the agenda.

 

But we're monitoring!

Changing agenda and reporting practices will take time to adjust skills and comfort levels with the board's real role. The contemporary board does not act like a sieve which filters the past dumping everything into the bucket and hoping to become illuminated. 

 

In a good governance culture, the board knows what results should be appearing as the strategy and performance indicators have been carefully prepared as part of strategic planning. When success does not occur, the board look to the barriers and ask intelligent questions of the CEO on such aspects as funding, human resources, skills and marketing. When a major shock occurs, such as a shock change of government policy, the board can immediately look at its strategy and make the necessary adjustments providing new instructions to the CEO.

 

You can't take the time to make these changes if you won't let go of poor practice. It may be scary at first, but it is more exciting to discuss strategy and risk over reading old letters for free room hire (again).

 

References

BoardWorks International (Australia) Pty Ltd (2000). Get that clutter off the Board's Agenda, Good Governance #18.

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