Regulatory and public scrutiny of UK boards has increased over the past five years and this trend looks set to continue. We collaborated with Cambridge Judge Business School to assess the impact of these changes.
What do boards spend their time on?
In the first article in this series, we discussed how boards are being given an ever-greater volume of information. Over half of those we surveyed said their board packs had increased in length since 2011 — mainly as a result of more reporting on compliance, regulation, and risk.
But is the increasing share of the board pack devoted to these matters leading to an increasing amount of time spent discussing them in board meetings, too? Are boards now spending most of their time on their supervisory responsibilities rather than their strategic ones? And, if so, is this something that worries them?
Boards want to spend more time on strategy
The answers to these questions are more nuanced than anyone who has heard directors grumbling about excessive regulation and box-ticking might have expected.
On average, boards spend only 32% of their meeting time on strategy, compared to 41% on performance and 26% on governance. Nearly half of those we surveyed (44%) would like to find more time to discuss strategy.
But few think it should be at the expense of governance
So far, so predictable. But when respondents were asked whether they would like to spend less time on performance or governance to free up time for strategic discussion, the answer was “No” in the vast majority of cases. Only 16% felt they spent too much time on performance, and only 14% on governance.
So, it is not the case that boards are wasting time on unimportant issues that could be better spent on strategy. Performance and governance — in terms of both setting targets and monitoring whether they are met — are also an essential part of the board’s responsibilities. Rather, boards are facing a significant challenge in ensuring they spend sufficient time across everything they oversee: strategy, performance, and governance.
And no one wants more meetings
One way this might be possible is increasing the amount of time boards spend in the boardroom. But our research found little evidence of this happening. While a significant number of directors reported that their overall time commitment had increased — particularly in financial services (92%) — 75% of them reported no change in the frequency or length of board meetings. In some cases, the total time spent in the boardroom has even reduced.
Some organisations may well need to review whether they are allowing sufficient time to cover everything they need to discuss, but more meetings on their own are not the answer. The agenda and papers also need to be addressed. Otherwise, having more meetings simply exacerbates the excessive paperwork problem.
The six conversations every board should be having
So, how do you do that? We suggest using the Six Conversations Model — a structure we developed through our extensive work with boards and executive committees.
The model takes the three key reporting areas of strategy, performance, and governance, and explores each through the board’s dual role:
- Steering — shaping the organisation and helping it achieve its long-term aims.
- Supervising — monitoring the organisation and providing assurance.
Our research suggests that board packs are dominated by governance-focused papers that address question numbers five and six, to the detriment of strategic discussion and the board’s steering duties. To streamline the board pack and free up time to discuss strategy, boards need to ask:
- What discussion should take place at a sub-committee level, and not at the board level?
- What is the right level of detail for the board?
As the expectations placed on boards — by regulators, investors, the public, and themselves — continue to increase, so will the mismatch between the things that boards need to do and the time they have to do them. That makes it even more important that they make the best possible use of that time.
In our view, the ability of board members to do so will be determined long before they sit down at the boardroom table — by structuring agendas that enable them to spend sufficient time on the most important issues and by producing clear, succinct board papers that prepare them for these conversations.
The directors we surveyed share this view. When asked what difference they would most like to see in board reporting, the two most frequent responses were a more focused and relevant board pack (48%) and improving the ability of paper writers (22%).
The Board Intelligence platform was designed for exactly these two things. With Agenda Planner, boards can build effective forward calendars designed around the Six Conversations Model. And with the Academy, report writers have the tools and training they need to write short, great board papers. To find out what this looks like, book a demo.
Our sample size of 50 board members included Company Secretaries (72%), Chairmen (10%), NEDs (10%), and CEOs (8%). Organisations working in 23 of the 42 sectors defined by the FTSE 100 were represented, with the largest share of responses (25%) coming from financial services firms. 10% of responses were from firms in the FTSE 100. In addition to an online survey, nine half-hour interviews were conducted with a mix of Company Secretaries, Chairmen, NEDs, and CEOs. Appropriate methods of statistical testing (regression analysis, Z-score testing, and T-test testing) were used to validate the robustness of the quantitative data. All data in this article is statistically significant.