Board communication: new CSIA guidance
Having access to the right information plays a major part in boards making the right decisions. A new set of guidelines published last month by the Corporate Secretaries International Association (CSIA) aims to help corporate secretaries fulfill their role supporting the board’s information needs.
Keeping directors informed, whether via the director induction process or the preparation of board materials ahead of board meetings, is one of the most critical areas of corporate secretaries’ work and arguably the area where they have the greatest influence on ensuring the right outcomes.
This area, however, is also one of the most challenging to get right – how do you ensure directors have all the information they need while avoiding information overload? How should you navigate the politics involved – particularly where management wants to control the information getting to the board, or where information on the performance of a particular individual needs to be passed on in as sensitive a manner as possible?
A new set of guidelines published last month by the Corporate Secretaries International Association (CSIA) aims to answer these and other tough questions regarding board communication. The Ten Practical Guidelines to Improving Board Communication (available on the CSIA website: www.csiaorg.com), gives practical advice both at the administrative and at the strategic level to help corporate secretaries in this complex area of practice.
Inform directors about the wider context
The first of the 10 guidelines (see ‘The CSIA 10 guidelines on board communication’ below) relates to the scope of information the corporate secretary needs to provide for the board and urges corporate secretaries not to limit themselves to providing only information relating directly to the board agenda items.
‘Many corporate secretaries may feel that it is not their responsibility to source and supply general information to the board,’ the guidelines state. The CSIA reminds practitioners, however, that ensuring that directors have all the information they need is part of the remit of the corporate secretary role and starts on day one of the director’s term with the induction process facilitated by the corporate secretary. The guidelines urge corporate secretaries not just to look at the ‘traditional’ sources of information but to include information that could be of value to the board in respect of current decisions, future risks and industry developments.
‘This proactive action is probably one of the most meaningful and value-adding steps you can take from a strategic support perspective in enabling and assisting the board,’ the guidelines state.
Understanding directors’ information needs
It may seem a rather obvious point, but it is clearly crucial for corporate secretaries to first understand what are the information needs of the board as a whole and of individual directors. The CSIA guidelines stress the need for corporate secretaries to ‘engage with your directors to ensure you understand the type and quantity of information they would prefer’. The CSIA suggests keeping a register noting any specific or special requirements, and recommends engaging with management and other key stakeholders on the information that they would like to share with the board.
Navigate the politics
Playing the informational go-between for the board can be a hazardous occupation. There may be times when management wants to control the information getting to the board, or when the board wishes to control the information reaching stakeholders. The CSIA guidelines provide useful advice on how to navigate the politics involved in information support, highlighting the need for corporate secretaries never to hide information from the board because it would protect or suit management. ‘A good cultural test is sometimes whether bad news travels as fast as good news,’ the guidelines point out.
The guidelines also stress that corporate secretaries need to consider the best means to impart information – particularly where sensitive matters need to be raised. ‘Personally raise matters that would warrant the attention of the board if not done by others – but determine the best means to do so, a private conversation with the chairman might be a better option in certain instances than a blanket email to all,’ the guidelines state.
Take accountability for board communication
Another key point made by the CSIA guidelines is that the corporate secretary is ‘not just a post box’ when it comes to board communication. While it may be tempting to see the role as essentially receiving and passing on information without the need to make judgements about its adequacy, appropriateness or means of dissemination – the CSIA stresses that corporate secretaries need to take accountability for all aspects of board communication.
The guidelines remind practitioners that they need to make judgements about what information the board needs and the best format and process for board communication. ‘Be proactive,’ the guidelines suggest, ‘reach out to those responsible for preparing submissions – the corporate secretary can help to materially improve the quality of board papers using their unique knowledge of the board’s vantage point and information needs. This also greatly assists in ensuring your colleagues perceive you as a value adding partner.’
On a related point, Guideline 4 points out the advantages of the corporate secretary becoming the custodian of all communication to the board. This helps to ensure that the right information goes to the right recipients, that confidential and sensitive information is protected and that there is a central repository of information in case of any litigation or queries in future.
How much is enough?
Surprisingly, the tricky question of judging how much information is appropriate, is only addressed in the last of the 10 guidelines –’rather communicate more than less’. The principle, the guidelines state, should be ‘if in doubt, put it out’. However, this issue is addressed at greater length, and from a different perspective, in the introduction to the guidelines.
‘Management prefers bombarding directors with as much information as possible to avoid being accused of opacity, whilst directors often complain that they are receiving too much information and it is being presented to them in ways that don’t highlight the key issues in order to stimulate the requisite discussion and debate, leading to less transparency and neither party’s objectives really being achieved,’ the guidelines state.
Clearly, the danger of information overload is very real and practitioners do need to consider whether the proposed information provided to directors will actually assist them to perform their fiduciary duties, oversight role and to comply with legislative and regulatory requirements.
The guidelines note that the usage of board portals has become relatively common and urges corporate secretaries to consider utilising such a solution, ‘if affordable for your organisation’. They also list some of the more prominent advantages of using board portals, including those listed below.
- Using digital board packs reduces paper and printing.
- Use of a board portal increases security, some examples include:
- In most instances more than one password is required to access the device, thus eliminating the risk of unauthorised access of information.
- Devices can be wiped easily and remotely, if stolen or misplaced. The risk of hard copy documents being left to lie around and accessed is eliminated.
- The ability to email or forward documents can generally be limited or eliminated completely, thus again reducing the risk of unauthorised distribution of information.
- Materials can be distributed quickly and easily accessed from remote locations.
- Virtual assembly is possible over a period of time, thus allowing the corporate secretary to commence with portions of the board pack on receipt, whilst other documents are still awaited.
- Changes in the order of documentation, late additions or replacements can easily be made, whilst the main portions of the board pack can be made available, allowing directors to commence with preparation, whilst further additions can follow.
- The board pack is immediately accessible once ‘live’. This greatly assists when directors are travelling and eliminates courier costs, additional time requirements to courier and other logistical and delivery annoyances.
- Improved management of conflicts of interest is possible as access can be restricted for those directors not entitled to view documents (if so required by local legislation or governance practices).
- Board portals enable easy access to archives of past minutes, meeting materials, charters and other general information.
- Effective and efficient management of written resolutions, as voting is generally possible by a click of a button.
- Reduced costs when compared to printing.
- Notes and comments can be made electronically on the board documents and, in some of the solutions, shared with other directors or kept private (based on the director’s choice in each instance).
The ‘Ten Practical Guidelines to Improving Board Communication’ was launched at the ICSA London office in conjunction with a webinar on 28 April 2016. The webinar, chaired by Carina Wessels, Past President of CSIA, together with the guidelines, are available online via the CSIA website: www.csiaorg.com.
SIDEBAR: The CSIA 10 guidelines on board communication
- Become a gatherer of broad-based information.
- Be an honest broker of information and communication between the board and the executive/senior management team and avoid playing politics.
- Engage with your directors to ensure you understand the type and quantity of information they would prefer.
- Ideally all information to the board should always be processed and distributed through the office of the corporate secretary.
- Always remember what the purpose of specific information is, when determining its appropriateness, as well as the required format and process.
- Develop a standard template to be used by management for all board submissions.
- You are not just a post box.
- Consider the most appropriate means for communication.
- Ensure you have a proper records management process and all communicated documents are properly filed.
- Rather communicate more than less.