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How well does your board understand your business?
Author : Miriam Shaviv
Posted : 18 / 01 / 16
The monthly report to the board or senior management team is much more than just one more chore you need to get through. It provides a vital connection between you and the people who can steer your company. It could have a direct effect on the decisions they make. This is why you need to make the most of the opportunity it provides you.
In a 2013 survey by management consulting firm McKinsey, only 34 per cent of directors believed that their board fully understood their companies’ strategies. An even smaller proportion – just 22 per cent – said that their board members were ‘fully aware’ of how they created value.
This can have disastrous results. The board’s roles are to provide oversight and strategic support as you, the management team, build the business. Without a deep understanding of the issues you face, not only can the board not fulfil its core functions, it can push your company towards bad decisions.
One key way to ensure the board is well briefed is to provide relevant, quality information in your board reports.
But how do you decide what to include? And how do you guarantee your report gets read and absorbed?
Here are five steps to help you create an effective board report.
Good writing always starts with a clear picture of who your audience is and what they’re looking for, and corporate board reports are no exception.
Before you sit down to write, make sure you understand the role of the board, and therefore what kind of information its members need from you.
Essentially, the board makes decisions about strategic direction and governance. This requires high-level knowledge about how the company is functioning, where it is heading and problems on the horizon.
Resist providing a run-down of every operational development over the past month – for example, junior personnel changes – unless it has a direct bearing on the company’s strategy.
Some boards may only look for a quick survey of the company’s performance; others will want detailed information. Yet others will want to focus on a particular area of the company’s activity.
Invite regular feedback on your reports, to ensure you are providing the material they want.
If other directors or departments are feeding into your report, make sure that they are privy to this feedback too.
All too often, board reports are written at the last minute, resulting in haphazard copy and sloppy writing (not to mention a monthly panic).
Give yourself enough time to plan your report properly. The following steps will build in the time you need:
Another element of planning is to map out the key points you must get across, and an outline of the paper, before you start writing. This will keep you focused on the most important elements and ensure a logical flow to the information.
Because your board members are short on time and inundated with paperwork, help them find the information they need easily.
Create a standard format for your board report. This is both for your own benefit – it will be far easier to write if you have a consistent structure to follow – and for the benefit of board members, who will soon learn where to find the information they want.
Keep your report as succinct as possible. Some board members will pressure you to include more information. Strike a happy medium by diverting any non-essential facts and figures to an addendum.
Edit your writing down after the first draft. If the report is still longer than five pages, provide a brief summary of the key points at the beginning, so they can’t be missed.
Label or colour-code action points, noting especially where a board decision is needed. To make these even easier to find, consider collating them into a table.
Nowadays, many board members prefer to access the report electronically: with a clickable table of contents, they can skip quickly to the section they need.
Give every section a clear headline, so that readers can tell immediately what it contains.
Your board members probably come from a variety of backgrounds and will not all be equally familiar with your company or industry. In order to judge appropriate language and tone, you need a good sense of just how knowledgeable your board is.
Industry jargon, acronyms and buzzwords can be particular stumbling blocks for external board members. Be very careful to use only jargon that you are certain all board members will understand. As an insider yourself, it is easy to presume knowledge that your readership does not necessarily share. If you think some will know the terms and some won’t, consider including a glossary (or explaining the jargon in brackets where appropriate).
Be guided by your house style guide, and if you don’t have one – develop one!
Facts are not enough: help your board members understand their significance quickly.
Put information into context by spelling out the implications. For example, if a product’s launch is delayed, explain that this is damaging your relationship with a key customer. Be sensitive, again, that some board members may need background information to make sense of developments.
Figures are meaningless without comparative data. Yes, your profitability may be up by five per cent – but how does this compare to forecasts? You’ve made 300 sales online – but how many did your competitors make?
Where possible, show trends over time, so that board members can take a long-term view. Visuals such as graphs or charts help show this at a glance. A good relationship between a board and an organisation’s management is a two-way street. You need to be sure the board has the information it needs to make the right decisions. And the board’s members need to be able to trust that you’re giving them that.
Following the approach described here will ensure you will be providing that information – and making it readable too. And that’s good news for you, the board and the business.
Miriam Shaviv is a content expert. She blogs for Emphasis about how to tailor what you write to specific audiences.
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