While Facebook’s CEO Mark Zuckerberg faces calls to step down as chairman over accusations of possible conflicts of interest, and Sports Direct’s embattled CEO Mike Ashley gets a roasting from Standard Life Investments for a lack of corporate governance, boardroom behaviour and accountability has never been higher up the agenda.
What these high-profile examples have shown is that no matter how big the business, shareholders of all sizes have the right to be represented fairly and openly and that boardroom performance is quite rightly subject to increasingly regular analysis.
Times have certainly changed. The internet age has to a large extent democratised business information. Accountability is no longer expected but demanded and this is leading to a potential impasse, as old attitudes and practices meet new thinking and expectation.
Boardrooms, rather than being held over a barrel, have a choice: to react, to adapt and meet the challenges of modern business head-on—or do nothing. They can embrace new technologies designed to improve communication or persist with the old methods.
You can hear the members now—if it isn’t broken don’t fix it. The trouble is that the old way of working on boards, certainly the old methods of communication are, according to me, very broken. The traditional quarterly meetings are no longer sufficient. Board members, especially non-executives, have to be more involved, be more transparent and accountable.
Maintaining a regular and open channel of communication between the business and all board members will, we believe, become a fundamental requirement. As regulation of boards has expanded so has the need for regular and secure communications but how do boards meet this challenge without exposing sensitive documents to potential theft? How can company secretaries ensure board members adhere to responsibilities on an ongoing basis?
There is no doubt that boards need to evolve and the place to start would be to consign paper-based communication models to history. The days of printing large board packs to distribute via post should be over. How can board members expect to be kept up to date with rapidly changing business strategy if they only receive a paper report once a quarter?
While businesses grapple with the idea that less paper means greater efficiencies—a recent study by printer firm Kyocera revealed that the average office worker in the UK uses up to 45 pieces of paper per day, of which two-thirds is considered waste—boards too should be able to see both communication and financial benefits. There is also the security issue. How secure is a paper report and can all board members be relied on to keep reports safe?
Reputational risk increasingly hits shareholder value, so how do boards minimise risk? With momentum moving towards reform—the government’s corporate governance green paper released last November reflects the mood for redefining boardroom rules—boardroom information has to be safely and securely communicated through controlled channels.
Only digital communications can truly provide the most effective administration and security required to improve boardroom information distribution.
Let’s get engaged
There are naturally additional benefits to deploying a digital approach to boardrooms. As well as security and efficiency it is quite simply the ability to connect with the company between board meetings, to understand the ongoing strategy of the business and its performance relative to defined goals.
As a McKinsey report into boardroom engagement revealed, “boosting effectiveness isn’t just about spending more time; it’s also about changing the nature of the engagement between directors and the executive teams they work with”.
This is difficult to achieve if you only receive a board report once a quarter and have no means or reason to contact others members outside of official boardroom time. How can board members fulfil their duty effectively if they only have old information to hand?
Members should be forming strategy, developing the business plan through informed decision-making that is forward-looking and not reactive. Increasingly this will require technology to collate and disseminate information. Communication technology advances will only make this more engaging.
As we enter an age of automation with increased machine-to-machine communication, access to data analysis will begin to drive decision-making. Chatbots will become the frontline of business communication, while augmented and virtual reality will help to transform understanding of business functions no matter how complex, in real time. Perhaps we may even see virtual boards where remote members can attend as holograms?
It may sound a little too Hollywood but as more millennials enter the workplace, the demand for technology-based communications will only increase, and that’s a reality all boardrooms will have to face sooner or later.
Blake Stephenson is principal product manager – Board & Leadership Solutions, Nasdaq Corporate Solutions.
This article has been prepared in collaboration with Nasdaq Corporate Solutions, a supporter of Board Agenda.