In my experience board packs (i.e. the pack of information sent by a company to the board prior to each board meeting) could often be better and are sometimes the source of conflict between management and their non-exec directors. That happens because as documents they have their own history and inertia to change which stops people thinking about them from first principles.
This is my attempt to put that right…
When I open up a board pack I want to know how the business has performed in the last period and how the team feels about the prospects going forward. It really is as simple as that.
Often in good companies the information in the board pack is pretty much the same as the information the management team uses to manage the business. If you find yourself generating information just for the board (and I mean generating, not summarising) then it is probably worth asking why it is that the board feels it needs different information from the management team to assess the performance of the company.
Where it gets slightly more complicated is that there are absolute and relative and quantitative and qualitative aspects to answering this question.
On the quant side a good board pack will include the key metrics of the business compared against plan, both for recent history and going forward. The most appropriate time increment for a startup is usually monthly. Choosing the metrics well is obviously important and will be an evolving process. The trick is to strike the right balances between meaningfulness of metric and ease of data collection, volume of information and workload for management, and finally stableness of metrics and the pace of change of the business.
On the qualitative side a short statement from the CEO about how she feels about the strength and pace of development is always very helpful as is a brief update on matters important to the company from the relevant departments. That might cover progress against known issues in development, a developing relationship with a key partner or any HR issues. There shouldn’t be too much text though, and repetition from one board pack to the next is a bad sign.
Some of the ways I have seen board packs lose their way:
- they become bloated – new things are added but nothing is ever removed, and then producing the board pack each month becomes a big effort
- non-exec directors keep asking for new things to be added – this is a sign that either the KPIs are wrong or there is a lack of trust in the information provided
- the way data is presented changes each month to present the business in a flattering light (e.g. metrics or the basis for comparison changes) – this can quickly lead to a lack of faith in the numbers which will create all sorts of problems if the business ever hits a sticky patch. Not to dwell on this point, but if a company is even half way successful everything will be much easier if the board understands the business properly, warts and all.
A final thought
Done well a board pack builds trust between the executive and their NEDs and leads to shorter and more productive board meetings. That is something worth working for.