A board’s ability to maintain the quality and suitability of its decision-making hinges on the critical analysis of proposals presented to it.
The board and every director are responsible for ensuring that data given to them is appropriate in terms of form and content for arriving at a decision responsibly.
Critical analysis is one of the four pillars of the Financial and Legal Skills Partnership’s Board Effectiveness Statements of Good Practice alongside board competence, board communication and board culture. These guidelines are recommended if boards are to work more effectively.
Decisions, as in any walk of life, can only be made based upon the information presented. Having the right data enables directors to appropriately evaluate proposals both individually and collectively.
This is why boards should regularly evaluate the management information offered, requesting operational tweaks when required.
Information should be presented on a timely basis, taking into account the potential for directors to look for extra input before decision making. Board meeting agendas should normally drive the information requirements, particularly those on a specific subject upon which the board is expected to take action.
Directors will be expected to give feedback on the information, such as ideas for improving the regular reporting packs.
Board level co-operation
Transparency and connectivity between individuals and groups are essential in every aspect of a business, especially for successful risk management.
This means sub-committee Chairmen taking the lead in sharing data with other sub-committees, particularly where their responsibilities are linked, such as risk and audit.
Boards have to ask themselves if the management information available is clear, accurate and comprehensive enough to be understood, digested and discussed across key committees.
This is a fine balancing act between being sufficiently detailed yet intelligible enough for all non-executive directors (NEDs) to be able to contribute to a debate related to proposals and even challenge them.
Good, clear presentation of information is vital, whether provided to the board before, during and after meetings. Data should be accurate and provided on a timely basis to allow consideration before the decision-making process.
Extra outside expertise, such as the involvement of executives as board meeting attendees, can be sought when required.
Few things mirror the values of a well-managed business than the standards of its written communication. This should be well presented, professional, accurate and finished.
Summary documents will be offered to the board where necessary, drawing their attention to vital information, decisions needing to be taken and would-be risks.
Each board member should take responsibility for recognising spheres for improvements to reports and management data.
Any information flow breakdowns in boards or committees should be brought to the attention of the Chairman or Company Secretary to ensure quick remedial steps can be taken.
The executive team should be charged with percolating appropriate information across the firm, making sure that messages are reaching all employees from top to bottom of the organisation.
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