Corporate Governance – What Information Should the Board Receive?

This question is important and complex. The answer is also different for different organizations. A small company with a representative Board (predominantly shareholders) will want significantly more detail on progress and forward looking strategies, costs, projections, business plans, etc., than other types of organizations.

What are the metrics used to provide the Board with the right information so they can make informed opinions and thus provide appropriate input and advice to the Executive Team? Are these metrics tied to the strategic plan of the organization? If not, they should be. An informed Board always plays a large role in setting strategy and the Executive Team is responsible for ensuring that strategy is executed. My own experience is that execution is best done using an Implementation Plan, which is comprised of goals to meet the strategic objectives and the actions that will be taken to meet these goals. Together the Board and Executive Team can come up with the metrics that arise from this planning process.

However, Boards must be careful not to place too much emphasis on metrics alone and not understand actions being taken to report only positive metrics to the Board. We saw very large banks in the U.S. focus only on the metrics and not realize how staff were selling millions of mortgages to people who did not have the financial capacity to repay them. This is what brought on the global financial crisis that started in 2007. I hope we have learned from that crisis what it really means for a Board to understand how metrics and strategy intermix to provide the right information for informed, collaborative decision making around the board table.

Transparency, open dialogue, and good relationships amongst Board members and with the Executive Team will always be the best way to ensure an organization stays healthy and meets challenges with “what if” scenarios built in.

But even with risk built into strategy and planning, companies were not really ready for what is happening now with COV-19. We may have been expecting a market correction and felt that it was needed but we didn’t know what the spark would be. I believe it is important now for all Boards to be in a dialogue about what may happen if this becomes a pandemic or a global emergency. Companies with large workforces or those that derive their income from large gatherings need to be coming up with new ways to work – whether that be working from home or finding ways to gather online, or some other new and creative ways to weather this storm the world is currently facing. Let’s work together – not just between nations but also between companies.