How high-performing boards stay ahead

The need for boards to show their value is more urgent than ever because time is money, and a high-performing board can be key to a company’s growth.

The growing costs in running modern board meetings are mounting. Overseas research shows the cost of running a single board meeting can range from NZ$55,000 to $105,000 for a medium-sized organisation, and from $650,000 to $1 million for a large organisation. 

This begs the question: how can boards ensure their efforts always add maximum value? 

Many directors feel board meetings take up time that could be better spent elsewhere. Harvard Business School research in 2019 showed 35 per cent of time spent in board meetings is unproductive, with 73 per cent of directors found working on other tasks during meetings. 

Additionally, the ‘What Directors Think’ report by the Diligent Institute found 19 per cent believe their board weakness links back to disengaged or underprepared directors. This might be addressed with solutions that encourage active engagement in board meetings. 

Virtual meetings have shown promise in helping address attendance and engagement. Still, longer-term research is needed to confirm if the trend is sustained.

Another action to enhance engagement is ensuring better preparation. When information is concise and digestible, it encourages debate which facilitates more meaningful decision-making. 

Directors are constantly exposed to the same rapid changes in technology as workers in all. They must proactively equip themselves with knowledge and information to make strategic decisions in the face of constant disruption. 

This challenge of understanding, and adapting to, the constant changes in technology was highlighted in the What Directors Think survey by Corporate Board Member. It reveals that alongside capital allocation, mergers and acquisitions, and other core business issues, cyber security, and artificial intelligence have begun to dominate board agendas. AI is rapidly advancing, as are the risks and costs of inadequate cyber security preparedness.

Furthermore, the 2024 Cybersecurity, Audit and the Board report also names AI and cyber security as areas most directors struggle to oversee effectively because of a lack of specialised knowledge. The report identified similarities in companies that were best prepared to oversee these risks, noting boards with specialised risk or audit committees see better outcomes than companies that rely solely on the board for risk oversight. 

Mitigating risks requires leadership with the skills and knowledge to effectively oversee and ask the right questions. At the same time, directors must ensure governance structures, such as risk or cyber committees, are in place to more effectively distribute oversight and provide additional supervision that boards, with so many competing priorities, cannot do consistently. 

At a roundtable discussion with corporate governance leaders in Melbourne recently, one point of consensus was the need for relevant, reliable and timely data that aligns with business goals and strategic priorities for a board member to capably oversee governance. 

Boards must strike a balance between operational and strategic discussions, with a bias to thinking strategically, and having the right data at their disposal is paramount. If directors are drowning in too much data, they may not find the valuable insights needed to think strategically. Instead, they will defer to operational questions.

Not all risks are equal, so the board must prioritise risks according to areas that require the most attention. Ensuring the board is using the right technology to run its meetings is paramount in ensuring directors can collaborate effectively on the right problems, share insights and data, and communicate seamlessly with other internal committees. 

Value-adding boards employ solid frameworks. These ensure alignment and self-reflection that are the basis for good governance. This is achieved by first performing a needs-based assessment and research on best practices. 

They gather input from all relevant stakeholders to draft a framework for the board to approve and adopt. They also have mechanisms for continued monitoring and a structured review process that includes self-assessments from board members. 

With companies generating large amounts of data every day, technology has become an indispensable tool in providing effective oversight and governance, as it opens a streamlined path for the most critical insights to reach the board. This enables the board to be more proactive in making smart and strategic decisions. 

On the directors’ part, an intelligent data consolidation platform saves time in identifying insights, while also enabling better decision-making. 

As the world evolves at a breakneck pace, it also creates less certainty about what exactly good governance should look like and how boards can ensure they continually add value. 

Fortunately, there are methods to ensure an organisation’s governance frameworks are on the right track. For instance, boards that have a consistent system for self-assessment set their organisations up to become value drivers and outperformers. 

The characteristics of highly productive boards include well-considered and always-evolving governance frameworks; access to in-depth insights into threats and opportunities involving the latest emerging technologies; and the right technology that enables efficient, effective and productive board meetings. 

The quick and intelligent evaluation of large volumes of data via technology is a major differentiator in today’s competitive landscape. Directors who capably deliver strategic value not only have access to, but also take full advantage of, these razor-sharp insights to add value consistently.