THE LACK OF STRATEGIC INFORMATION CAN LEAVE MONEY ON THE TABLE
The information package that the board receives is critical to the fulfilment of its governance responsibilities. Yet it is too common a practice for board members to be given reports only a few days before the meeting, greeted with hastily prepared bits and pieces of additional information as they walk in the door, or treated to mind-numbing PowerPoint presentations about organisational minutia.
There is a better way which begins with first asking the question: “What information does the board need to do its job?” We recommend that management provide board members with one-page financial and operational summaries that are written at the strategic level which reflects the board’s proper role and where it can add value. Making this happen means assigning resources to providing the information they need, putting processes in place and often overcoming a number of significant challenges.
There are a number of common obstacles. Accounting systems may be inefficient or inadequate for collecting timely and critical financial data. Sometimes accounting departments due to lack of resources or unwieldy software just don’t have the capacity to prepare, analyse and distribute the financials in time for a board meeting. Further, information across departments is not easy to capture. A strategic information package for board members requires that departments such as marketing, sales and IT work collaboratively to collect, analyse and interpret financial and operational data. Finally, the company may lack the capacity to prepare for board meetings. The reality for some companies, especially often those in high growth mode, is that they don’t have the time, infrastructure and people to put together an information package that is geared to the strategic needs of board members.
The best approach is to have the organisational initiative for the provision of timely financial and operational information come from the board itself.
Jul-Sep 2014 Issue