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What should be in the board pack?

A Board of Directors has a series of responsibilities that can only be discharged properly by having access to the right information – but how do you decide what should be in the board pack?

One of the difficulties of sitting on a board, especially if you are a Non Executive Director (or NED) is that the focus needs to change from the day to day running of the company to a more strategic and oversight role. This is where many NEDs suffer because it’s a natural reaction, especially if you have many years experience in a managerial capacity to want lots of in depth material. It’s a reaction that can prove counter-productive because lots of detail can lead to a loss of focus on the job directors are there to do.

So how do you decide what needs to be included in the board pack?

This is almost like a ‘piece of string’ question because companies are all different. Larger companies may have more onerous reporting requirements and a bigger board but there are some general rules of thumb that can help.

Executive Summary – and it really should be a summary. It’s sponsored by the MD whose aim should be to give the board an overall high level view of what has happened since the last board. It’s the entree if you like to the more meaty reports from the leaders in the functional areas. Of course often the MD feels they are the most important person in the room and will try and write a novel but that’s not the point of the exercise. It really is only the precursor to the main event. Keep it to a side of A4 if possible.

KPIs – this again should be a high level report based around the key drivers of the business. The KPIs themselves should be chosen well in advance by the board and should be a result of their understanding of how the business runs and what they key drivers are. A really well designed KPI report will include around half a dozen metrics that will encapsulate exactly how the business is doing and will again fit on one side of A4. In an ideal world each of the functional departments will have a KPI that they will report on in subsequent sections so that the whole pack forms a pyramid.

Finance – Above all the board are the keepers of the shareholders’ money so a finance report is a key component of a board pack. Remember though that your FD is a numbers man/lady and they’ll want to include information down to a low level. They really should only give you the information one level down from the KPI’s and then use this as a method of stimulating questions because it’s the discussion in a board where the real value lies.

Marketing – for any company the driver to success has to be an effective and active marketing department. For companies that practice a customer focused methodology then it’s crucial as marketing will influence everything from product development right through to after sales servicing. Of course marketers are fantastic salespeople and will love to tell you everything in great detail. Again they need to be focused on providing a level of information appropriate for strategic discussion and not how many hits the website has had.

Operations – This is probably the area where companies will differ the most but of course it is also the engine room of the business. This report needs to be all about how the firm goes about it’s work. What’s working well and what not so. What does the company need to do differently and what investment needs to be made to make things better?

Compliance – often firms need to report out to an external body such as OFSTED, CSCI etc. It’s important that these bodies are given comfort that their concerns are given prominence at board level but also that the firm internally considers matters of compliance all year round and not just at reporting time. Again this needs to be at a high level and could take a similar form to the risk register.

Risk/Audit – The Directors are custodians of the firm so they need to be mindful of risks that may turn up in the future, assess these and mitigate where required. A comprehensive and updated risk register is the key here and again forms the spur to discussion. Similarly they need to plan an audit and work on the findings and the level of information will naturally change just before and after an audit.

Projects/special reports – there are points throughout the year where something may be happening that requires The Directors attention. It may be the findings of the remuneration committee or a large company wide project that is occurring but whatever it is the board need a good high level overview of how things are progressing.

PESTLE – this really goes to the heart of what the board are there to do. It doesn’t need to take the form of the ubiquitous PESTLE (Political,Economic,Sociological,Technological, Legal and Environmental) format but there needs to be an appreciation of the firm’s place in the world and the external factors that could affect it. After all if The Directors don’t understand where the rocks are how will they steer the ship?

It’s also really important to think about how this information will be consumed and used. SME NEDs often only get one day a month paid and will be expected to attend a meeting for half a day. The pack needs to be light enough that it can be read and understood within an hour or so. It needs to strike a balance between enough detail for good understanding but not too much that it takes an age to read because trust me – people won’t read it. Remember also that we are all different. I hate paper information, some people love it so be prepared to provide it in whatever way is most comfortable for your individual Directors.

Consistency is important as time spent looking for where the latest sales figures are will put people off but also mean that they have less time to actually understand the numbers. Keep a consistent format and style for each report each month and make sure that the pack is distributed at the same time every month so that the directors know when to expect it.

The aim of the board pack is to educate and inform but also to stimulate debate. As a general rule of thumb one quarter of the meeting should be given over to presentation of the reports for each area and three quarters should be allowed for discussion because as started earlier this is where the real value is added. The overriding message has to be focus,focus,focus.

Although there is no ‘standard’ board pack, following the guidelines above should get you most of the way towards a good level of content for your company to make the most of it’s Board of Directors’ talents.

Isango8 specialise in information presentation. If you’d like us to help you reformat your board pack and identify your KPIs then please get in touch for an informal chat and we can tell you how we can help.

 

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