- Board packs are on average 288 pages, which takes over 9 hours to read — boards can’t digest it all.
- “Information overload is a real problem, but boards are perfectly capable and equipped to control it. They are not inert, so they do not have to accept what is given to them.”
What’s the problem?
The ICAEW has published a new report, commissioned by the PRA and using Board Intelligence research, highlighting a common and critical problem in Financial Services boardrooms. Board packs are continuing to increase in size, sometimes breaching 1,000 pages. It is not humanly possible for a director to read, understand and digest this level of information in the limited time available before being asked to take decisions on the back of it.
Whilst this growth makes packs much harder to read, it also creates danger that important information is missed and key risks unacknowledged. It forces the directors to go looking for the information they need, searching for the needle in the haystack.
The introduction of the Senior Managers and Certification Regime (SMCR) has only exacerbated this. Report writers are tempted to include everything they know about the subject and all available data to satisfy the Senior Manager’s need to know what is happening in their organisation and to remain on the right side of the regulator. This simply increases the information overload, whilst further obscuring the relevant facts.
What can you do?
Boards must take responsibility for this. They do not have to accept what is given to them. They can be more effective and efficient by better defining what they need. As the report puts it: “If a concentrated effort was made between the chair, board members, executives and company secretaries, they would be able to improve the volume, quality and focus of the packs.”
Each of these parties can help push change:
“The chair of the board is responsible for running the board and for the board pack, including the pack’s length.”
“Non-executives need to be vocal about their need for good board papers.”
“Company secretaries play a vital role
— they can make an enormous contribution to the success of the board.”
The ICAEW sets out some key practical recommendations, including:
- Papers should have a clear purpose. The board must decide where their attention needs to be aimed and what information is required to create a productive discussion.
- Greater focus is needed. More concise papers, and a more coherent pack without unnecessary repetition, should be produced clearly for the board with their priorities in mind. The papers should include what is needed, no more and no less.
- Templates increase efficiency. They help distinguish routine and specific reporting and reduce time to familiarise directors with the content.
- Expectations should be clearly set out. Good practice is to structure around context, questions and conclusions – this will give clear focus and consistency.
- Feedback should be encouraged by the chair. Not providing clear and strong feedback will result in the same sort of papers/packs being produced over and over again.