Boards of directors have been operating perfectly well for hundreds of years using paper board packs, so what can digital board – or meeting – packs delivered via a board portal do better?

In an article published in The Sunday Times of London on 13 January 2013, a non-executive director by the name of Rita Clifton was quoted as saying ‘from a personal point of view it’s been enormously liberating to be able to carry things around on my iPad’. She continued, ‘It’s fantastic not having to lug around great, fat wads of paper’.

And so in 32 words Ms Clifton made a compelling case from a director’s perspective for adopting board portals that use tablet computers to deliver electronic rather than paper board packs to directors. Ms Clifton was also quoted later on in the article stating that security has also been enhanced by the use of tablet computers and electronic board packs. Those of us who attended the October HKICS Corporate Governance Conference 2012 can confirm that security is apparently the number one reason why companies are adopting electronic board packs. Mark Peters, Head of Secretariat, Balfour Beatty Plc, said that security of board papers and information was the main reason behind his company’s change from paper packs to electronic versions.

But why all the fuss? Haven’t boards been operating perfectly well for hundreds of years using paper board packs? What can digital board packs delivered via a board portal do better? Well, yes, boards have done well over the past few hundred years but times have changed and boards have to keep up with the times – a digital board pack can offer so much more than a traditional paper one.

Why change?

There is certainly resistance by some board members to giving up paper. In my own brief experience with ICSA Boardroom Apps, I’ve often been told that board members won’t change to using tablet computers or something similar because they prefer reading papers – ‘this is our company culture and practice’, I am told. I would dearly like to reply ‘I prefer receiving written letters to emails but times have moved on and written letters are a rarity in today’s highly- connected and fast-paced world’. Would a director, or more to the point an entire board, seriously insist that people only communicate with them via written letters or physical memos? Would such behaviour be considered to be in the best interests of the company? The answer is clearly no.

While a letter, or even a hand-written note or memo, is on occasions entirely appropriate (and if you are like me very much appreciated) it is unlikely that insistence on using only this type of written correspondence for communication with and by board members would be considered in the best interests of the company, or practical. And this is the question directors must ask themselves when considering switching from paper to digital board packs – is it in the best interests of the company to do so?

When considering switching to a digital board pack, directors should ask themselves questions such as: will my productivity (or the company’s) increase? Will the change save the company and/ or myself time and money? Will it be more secure than our current practice? Will such a change warrant the costs involved (and indeed will there be any long-term savings to be gained)? What other advantages will result from such a change?

With apologies to Monty Python’s sketch ‘what have the Romans ever done for us’ in Life of Brian, which of course ended up highlighting a long list of the achievements of the Romans including sanitation, roads, irrigation, law and order, public health, wine etc, we should perhaps look at what board portals can do for your company.

Added functionality

By pairing the latest tablet technology with an application, a whole host of powerful features and functionalities for directors become possible. Using just a tablet computer, directors have instant access, online or (depending on the service provider) offline, to all of the details and documents for their board meetings plus the ability to annotate. In addition, if you so choose, every board and committee paper is at your fingertips. Non-executive directors can use one device to access different papers for multiple companies and/ or committees. Using a digital library means that background papers, news articles, websites, company charters and/ or articles of association, terms of reference for the board/ committees etc, are all instantly available and accessible (and searchable). Literally thousands of other applications that help directors and company secretaries, as well as CEs, CFOs, CIOs and other C-suite level executives do their jobs better, are available, instantly.

The above are a few advantages of a digital board pack versus a paper one from a user’s perspective, but it might also help decide whether or not the change is right for your company if the opinion of the company secretary is sought. After all, most directors (and CE’s for that matter), have very little to do with the actual preparation of the board packs. Once their reports/ papers have been sent to the company secretary or board administrator, I doubt much thought is given to what happens next. The fact is that preparing board and committee papers is an enormous undertaking.

Physically compiling packs of 150-plus pages for a dozen or more directors can take hours, often at night. Even sending papers to directors in PDF format still requires a director to print out the papers and put them in a folder. The reluctance of a director to do so is quite common. In my own experience as a Chief Executive in Hong Kong and attending meetings for international organisations, I have come across this attitude. Directors are generally quite busy people and don’t want to take time out using their own printers to print out board papers, hence the company secretary’s office more often than not undertakes this tedious task and couriers the physical pack to the director.

Again, in my own experience, I can tell you that on more than one occasion a director did not receive the board papers because the courier had left the package in the wrong place or delivered it to the wrong address, or delivered it the correct address but had left it by the door and someone had walked off with it! If that doesn’t send shivers down the collective spines of directors and company secretaries alike I don’t know what will!

A few pet hates

Late updates. I can say with hand on heart that I am quite tolerant of mishaps. Things go wrong, we fix it and we move forward. However, one thing in the corporate environment that still makes my blood boil is late updates.

It is a feeling that I know many other executives and directors share. Having spent several hours reading, reviewing and annotating a document, only to be told as one walks into the board room that an updated version of agenda item X has been prepared is an extremely frustrating experience. Even receiving a paper a few hours prior to the meeting is an improvement. At least it gives one an opportunity to read, digest and think about the update. By using a digital board pack solution, directors can receive updated papers and have time to consider them. It’s a far more efficient system.

Disappearing trees. During my time in Hong Kong, I have always been very conscious of the amount of paper organisations I worked for or headed used. Not just when compiling meeting folders but in general. I have previously instigated a policy of recycling and, where possible, printing on both sides of the paper, but still the amounts used even in relatively small organisations, were considerable.

I knew that if we could eliminate board and other committee papers, it would go a long way to reducing the amount of paper consumed. For example, in one organisation which I headed, there were more than 25 committees, panels and working groups including its board of directors. Admittedly some of these were ad hoc and others did not meet often, but some did meet regularly including the board, operational committees and audit committee. Add these to the various sub- committees and already we are looking at a substantial number of meetings and folders. The board, and its three main committees, averaged between 10-12 members each plus two or three executive staff.

Let us say, for example, that the main board of even a relatively small organisation, has 14 members (including at least one based in mainland China which is quite common nowadays), plus the CE, CFO and Company Secretary, bringing the number of board packs required to 17. If we say that the average board pack consists of about 250 pages (not uncommon in my experience), for each meeting the secretariat would need to compile about 4,250 pages of written information – let’s say 2,125 pieces of paper if we use both sides of the paper. Again, in my experience, it not uncommon for staff putting the actual paper packs together to have stay in the office until midnight and beyond so that the packs could be couriered to the board members the next morning.

If the board of our above example meets six times during the year it would use approximately 12,750 pieces of paper for its meetings (not counting the notepads used during the meetings). The figure would be even higher if, again as is often the case, the board has additional meetings. In addition, it is usual for an additional pack to be prepared for record purposes or in case a board member loses or forgets his/ her pack.

That’s an astonishing figure for an SME, with a relatively modest-sized board. Think of the trees that could be spared if this small organisation went digital and used a board portal? The courier costs would also be reduced substantially (especially if some of the directors lived abroad), not to mention the sparing of the staff who often stayed until gone midnight to compile the paper packs. I can tell you from my own experience that staff who work through to midnight have severely diminished productivity levels the next day.

If these are the savings and efficiencies that can be made at an SME, imagine those that could be made at larger companies? The truth is that it is very difficult to justify the continued use of paper packs other than the fact that directors are comfortable with paper. But who ever said that having directors comfortable was in the best interests of the company?

So what have digital board packs ever done for us, apart from being more secure than paper packs, easier to update, more efficient, allowing direct instant access to a wide variety of material and background information, saving staff time and saving trees plus so much more? Well, if you embrace them – quite a lot.

Phillip Baldwin

Head – Hong Kong/ China, ICSA Boardroom Apps Ltd

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