When your bank has the opportunity to gather industry veterans with centuries of experience between them into a single room to make decisions that affect its future, every moment counts. Working fast should never be a goal when “fast” comes at the expense of making well-informed decisions. However, streamlining aspects of your board meetings leaves more time for directors to deliberate on important topics. There are, of course, many ways to streamline your board meetings. Today, however, we’re going to focus on just one: navigating your governance technology.
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Managing a Large Board of Directors
Directorpoint recently took a closer look at Deloitte’s Board Best Practices Report. While our deep dive focused in on the financial services industry, a few of our findings have may prove to be universally valuable. Deloitte’s 2017 survey found that the average board of directors is made up of between nine and eleven members. We compared those numbers to the responses from 2014 to learn that boards, at least within the financial services industry, are growing. As we know, a board’s decision-making decreases as the size of the board increases. This knowledge may help smaller boards but reducing the size of a larger board is often unrealistic. So what’s the best way to make sure a larger board of directors is maximizing its decision-making effectiveness? Let’s find out.
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One Quality Banks Must Demand of Board Software
At Directorpoint, we don’t like the phrase “less is more”. “Less is more” sounds like an excuse to deliver less. Good board management software delivers more while making it feel like less. Sometimes, making it feel like less means making it look like less. That’s minimalism; little more than an aesthetic choice. What we’re talking about here is seamlessness. When bank boards choose software for their directors, they need to find a portal that offers seamless design in support of seamless functionality. Here’s why that matters.
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What Does Good Corporate Governance Look Like?
It’s easy to talk about strengthening your board of directors, but how do you know when you’ve reached a high-functioning level of corporate governance?
In this day and age, building and maintaining a successful board means checking off many different boxes. As the role of the corporate director continues to expand and technology keeps leaping forward, board members should take the time to reflect on their impact as individuals and as a group.
Here are some signs that your board is thriving:
Directors have a firm understanding of their responsibilities
Board Software Communication Vs. Emailing Board Documents
These days, most boards are making the choice to go paperless. While some opt for centralized communication through the use of board software, others have simply stuck to email for their needs.
In fact, according to a 2014 Thomson-Reuters study, approximately 43% of boards were still emailing their sensitive board documents.
While email prevents added costs to board operations, it also poses many potential downfalls and risks.
Email isn’t secure.
You’ve seen the headlines. Email hacks are a dime a dozen these days. Not long ago, we wrote a blog about the infamous Salesforce leak, which originated with an email from Colin Powell.
Because they sent their board documents via email, their hypothetical plans for 14 different company acquisitions became public knowledge.
Why Board Members Need to Understand ESG Standards
On Tuesday morning, January 16, Laurence Fink—founder and CEO of the investment firm BlackRock—sent an important letter to the CEOs of the world’s largest companies. In that letter, he explained, “Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”
BlackRock is the largest investor in the world—thereby giving Fink’s voice a great deal of power and influence. But what exactly do his statements mean?
Put simply, Fink’s letter advocates for Environmental, Social and Governance criteria, which is commonly referred to as ESG. Investopedia defines esg standards as “a set of standards for a company’s operations that socially conscious investors use to screen investments.”
The environmental element examines how a company is handling their impact on the natural environment.
The social portion of the criteria scrutinizes how the company handles its relationships—with employees, partners, customers, its local communities, and more.
The governance component analyzes exactly what you’d expect: executive leadership as well as pay, auditing processes, shareholders rights, etc.
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What Is Directors and Officers Insurance?
Insurance is pivotal to the existence of any private organization. Companies often have to purchase a variety of coverage options to ensure their business is completely safeguarded: property insurance, liability protection, loss control assurance, and more. Directors and Officers Insurance (D&O) is one more type of specialty coverage that companies with boards of directors should consider purchasing.
According to Investopedia, “Directors and officers (D&O) liability insurance is insurance coverage intended to protect individuals from personal losses if they are sued as a result of serving as a director or an officer of a business or other type of organization.
It can also cover the legal fees and other costs the organization may incur as a result of such a suit.”
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Fighting Boardroom Apathy: What to Do When Your Board Gets Bored
At times, board service can be exciting, engaging, and groundbreaking. Board members might have the opportunity to lead the revitalization of a struggling company or discover new avenues for growth.
Board service will occasionally feel tedious or rote, though. The truth is that being on a board involves some repetitive practices, but that doesn’t mean that directors’ eyes have to glaze over during meetings.
So how can you keep things fresh and focused on a strategic future? Here are some of our suggestions on fighting boardroom apathy:
Don’t let the agenda become an afterthought
We’ve shared our thoughts on creating better board agendas here, but this topic is important when it comes to keeping board meetings fresh, too. The agenda-building process should be interactive, and board members need to think critically about how to structure them from month to month.
Rather than adopting a system that just rolls over after every meeting, challenge your board to create agendas that will spark new conversations.
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Best Websites for Board Member Education
Let’s face it, these days the board landscape is shifting and evolving at lightning speed. It can be difficult to stay up-to-date on all the latest trends in corporate governance.
At Directorpoint, we do our best to help keep you knowledgeable with our weekly newsletter, but where should you go looking for information when questions arise?
We’ve compiled this helpful guide to tell you about some of the most useful board member education and resource websites.
NACD has been providing directors with news and educational information for more than 40 years. Although it takes a paid membership to access all of their materials, they also share articles and information frequently via social media. Their monthly magazine, Directorship, is always chock-full of valuable guidance and news-related activity in the board sphere.
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The First-Time Board Member Checklist
Board membership is an adventure in leadership unlike any other. Individuals who are new to the role of director will be challenged in new and unique ways.
In order to meet this challenge head-on, they’ll need to continually develop their expertise while adjusting to a system of checks and balances that is meant to help bring the best decisions forward.
An experienced CEO or CFO may jump into a first-time board member position with a lot of confidence, and that’s a good thing! But they also need to understand the ways in which their role will differ from the internal positions they’ve held in the past.
Here are some tips for making a smooth transition from business leader to board member extraordinaire.
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