In our new thought leadership report we investigate what information board members currently receive, how board packs are prepared, and how this impacts the work of boards and committees. We interviewed non-executive directors, company secretaries and executive management responsible for preparing board and committee packs, as well as companies providing services to boards for the electronic management of board information. A desktop review of existing research gave further context to our interviews. This report focuses on the preparation, provision and use of board committee packs within the financial services industry. However, boards in other, especially highly regulated, industries can learn from the experience of banks, insurers and investment managers.
Board packs contain vast amounts of information on compliance, risk and finances when boards should be focused on strategy. The tension that exists, particularly in financial services, between collective decision making and individual responsibility is exacerbated when board members cannot see the wood for the trees. Yet boards cannot be the victims of this overload – they must do something about it. Assuming people will continue to cope with the status quo means board positions remain the preserve of those who know how to play the game. Financial services firms need to attract new blood and different points of view but information overload puts people off and can get in the way of seeing the bigger picture.
We have assembled a detailed list of proposed actions for boards to consider, in order to improve their governance in light of these challenges. The proposals work within the context of three overarching principles:
- boards must define their needs and communicate and pursue those persistently;
- responsibilities for board packs must be well defined;
- non-executives must be vocal about their need for good board papers.
Information overload can obstruct the ability to develop a holistic business strategy. The boards which learn to manage it effectively may acquire a huge advantage.
Author:
Philippa Kelly, Head of ICAEW Financial Services Faculty
