While there is unlikely to be a one-size-fits-all model, there are several common foundational principles from which all boards can build, which are detailed in the EY Board Effectiveness Framework. Though they may increase on the margins, it is unlikely that the number or duration of board and committee meetings will radically increase. The same is likely the case for the time directors commit to their role, which many feel grew in response to the series of disruptions that companies experienced in the past three years. Spending more time in one area likely entails taking time away from other agenda items. Boards may need to make intentional trade-offs as they transform how they receive information and how they get work done. For example, a greater focus on management summaries and KPIs means that the board may have less engagement with corporate performance details. More group learning may mean less collective board time available for other activities or scheduling learning opportunities outside board meetings. Given a wide variety of internal and external pressures, some of these changes may be inevitable.
We have identified a few areas where boards can consider making trade-offs to increase their effectiveness:
Creating more time for discussion in board meetings by doing more work before the board meeting
For the last two decades, it has been almost conventional wisdom that great boards have great discussions. It is not surprising that board members want more time for dialogue with each other and with members of management. Boards may seek to expand board and committee meeting time to accommodate such discussions. However, in our experience, there is scant evidence of this. Rather, something must come off the agenda. Our survey indicates that many would reduce the time for management presentations. Such presentations often cover routine matters that could be covered in a consent agenda. However, to do this, directors must commit to a careful review of management material as part of board preparation. In short, more time for discussion likely means that board members do more work before the board meeting. They may also need to work with their general counsel and governance teams to put safeguards in place to ensure that all board members can fulfill their fiduciary duties for oversight of routine matters.
Asking management for more interpretation of results while recognizing the potential of a narrow view of the company’s position
Some boards have experimented with management giving a written interpretation of financials and other materials in the board book. These can then be the focus of discussion as they specify which topics are for information only, which require specified director dialogue and which require votes or consent. However, boiling down corporate performance to specific mission-critical issues and focusing on a few KPIs that can fit on a dashboard may lead to a more limited representation of the firm’s position. This may place a greater burden on management – and the board – to ensure that some safeguards are in place and that an accurate and holistic picture of the firm is in place.
Streamlining board-management communications by coordinating asks from individual directors and working together to prioritize information needs
Management fatigue is real, and many boards see streamlining communications as a means to both clarify expectations and reduce the burden on management. It is not unusual for individual directors to ask well-intended questions of management that may be lower value and consume significant management follow-up time that is out of proportion to the issue’s significance for board oversight purposes. A streamlined approach may require individual directors to temper their own requests and take time to coordinate requests with other members of the board. To do so, board leaders (the lead independent director or non-executive chair and key committee chairs) may need to take on more active roles in vetting and coordinating board members’ information requests to management.