Company boards are drowning in paperwork and the increasing volume of information has reached such a scale that it is undermining team work, the ability to make good decisions and prevents boards from becoming more diverse and inclusive, a study by ICAEW has found
Zsuzsanna Schiff, author of the report, said: ‘Board packs are often more than one thousand pages long – containing vast information on compliance, risk and finances when boards should be focused on strategy.
‘The tension that exists, particularly in financial services, between collective decision making and individual responsibility is exacerbated when board members cannot see the wood for the trees.’
Following a series of interviews and a review of research, ICAEW concludes that boards are not victims of this overload, and must do something about it. They can take action to improve governance, with a number of recommendations outlined in the report.
This explores how boards can decrease reliance on experts and restore collective responsibility, which empowers a more diverse array of individuals to join boards, making them truly inclusive.
Three key principles for effective board packs are that boards need to define their needs and communicate and pursue those persistently; responsibilities for board packs must be well defined; and non-executives need to be vocal about their need for good board papers.
Practical recommendation for board chairs and non-executives include having a contents page to give the board pack a coherent order and provide better context for non-executives. This should also include a time plan. Educational papers should be provided separately.
Proportionality is important, and minutes should reflect their purpose of capturing the wisdom of the board, without superfluous detail. Expectations should be clearly set out to place responsibility on specific people for the required papers. Escalation needs to be carefully considered.
The report also recommends feedback should be encouraged by the chair, and highlights that deadlines are of critical importance. Pre-meetings are helpful for non-executive directors as they allow discussion of the issues without the presence of executives.
Philippa Kelly, ICAEW’s head of financial services, said: ‘Assuming people will continue to cope with the status quo means board positions remain the preserve of those who know how to play the game. Financial services firms need to attract new blood and different points of view but information overload puts people off and can get in the way of seeing the bigger picture.’
Information overload: effective boards and committees in financial services, is here.
Report by Pat Sweet
