In our experience nothing elicits more eyeball rolling than talking about board papers with arts managers. They’re vital, but sometimes it’s hard to know why, or how to make them relevant and not a total chore to produce. But help is at hand …
Why nobody loves board papers
Trust us – we asked around some arts organisations and this is what we heard:
“If it’s board papers time – you can forget talking to the CEO or CFO about anything. They’re incommunicado and on the war path for about a week prior to distribution.”
“I get told that the papers aren’t good enough or providing the right information. But nobody can give me clear guidance about how to improve them and what they actually want.”
And it cuts both ways – board members told us they also feel the pain:
“I get two inches of reportage (usually a day or two before the meeting) which I suppose is to show me how hard everyone is working. But I have no idea what they want me to focus on.”
“We spend so much time on routine reports and things best handled by management, we never have time to discuss the issues of material importance.”
These scenarios are not good for anybody – least of all for the organisation the structures are meant to support.
Whether you’re creating them or receiving them: you don’t need to dread board papers if they’re done well. But how can arts organisations produce genuinely valuable decision tools? We asked an expert.
What’s the purpose of board papers?
Susan Oliver is a professional non-executive director, director of the Melbourne Chamber Orchestra and teacher of strategy and risk modules with the Australian Institute of Company Directors.
Susan says board papers should provide the information and context for directors to make the decisions they are delegated to make.
Boards first need to know that the organisation is ticking over and the things laid out in your strategy, budget and business plan are being performed on time, on budget and as expected.
Then they need to provide critical context and evidence for important decisions. So any items for decision need to be clearly marked ‘for decision’ (but remember not everything needs to be an item for decision).
What directors need from board papers
Susan suggests thinking about board papers as a tool to move directors from the unfamiliar to the familiar and help them focus on the most important things.
“If you can get your board keyed into your most important business drivers, and thoroughly briefed on big decisions with plenty of lead time, you stop wasting time on routine matters and those best dealt with by management.”
When she receives a board pack from one of her own organisations she says she is looking for intelligence from the CEO and senior team.
“I’m looking for indicators of the organisation’s performance and insights into what is changing and how it will affect the future,” Susan says.
She expects the CEO to be able to discuss the critical events and changes that have happened since the last meeting, and these should be formally reported in the CEO’s risk report.
Quality not quantity
Many organisations find preparing board papers onerous and they spend far too long on them. This diverts attention from day-to-day business and the opportunity cost can be very high.
Susan says when organisations take a disproportionate amount of time preparing papers, the Chair and CEO probably haven’t agreed what the board papers are for – and what kind of tool they should be for managing the organisation. It also means that directors are unlikely to have the set of papers they need.
“The best governed organisations are producing smaller sets of papers because they’re spending the time making them highly relevant,” Susan says. “They’re after quality not quantity – and preparing them should be just a normal part of doing business.”
Board papers should follow the agenda
Arts organisations are often unsure how meetings should be structured, who decides the agenda and how organic it can be.
When chairing organisations, Susan catches up with the CEO at least two weeks prior to the meeting. Here the agenda is discussed, agreed and disseminated and the requirements for supporting papers are laid out.
“The Chair has to be actively involved in setting the agenda and identifying the critical things to spend time on,” Susan says. “The Chair also needs to work with the CEO to make sure they get the right information in front of the board so it has the best chance of making a good decision’.
What information should board papers include?
Board packs should have five sections:
1. A business dashboard
“When a dashboard does the heavy lifting on business as usual, it becomes easier to spend time on decisions and matters of highest importance,” Susan says.
A one or two-page dashboard gives a quick snapshot of how the business is going and makes lengthy operational reports from all your departments redundant (which is good for you and excellent for directors).
A dashboard should be a set of indicators covering the fundamental drivers of performance and distinctive excellence. Because they’re indicators, you can use visual signals such as traffic lights, speed dials or even emoticons. Always include:
- Do-or-die KPIs
Consider artistic feedback (positive, neutral, negative), revenue, expenses, working capital, sales (subscriptions and single tickets), grants, sponsorship, philanthropy, staff turnover, OH&S – and others directly relevant to your success.
- Forward looking metrics
These include capturing trends and insights that provide confidence about the future of the organisation (or otherwise).
2. Financial reports
Including profit and loss and current balance sheets is standard. However, not every organisation includes the cash flow statement. But as Susan explains they should, because boards need to ensure the organisation can pay the bills and meet payroll.
3. Strategy and strategic projects
The company’s progress against its strategic plan needs to be monitored and reviewed at every meeting. Susan suggests sequencing discussions about discrete components of the plan throughout the annual board timetable to ensure that areas are covered in depth and with due consideration.
4. Items for decision (or discussion)
Any items for decision or discussion should be clearly marked as such and it is important to ensure you have allowed time (for pre-reading and in the agenda) to move directors from the unfamiliar to the familiar.
The paper should be succinct and include relevant supporting data to inform a good decision. Susan recommends that each paper include:
– The author
– Timeframe for decision (ensure adequate time to move directors from unfamiliar to familiar)
– Process for decision
– Business context and case
5. Risk Register
Both Susan and the Australian Institute of Company Directors note that risk should be a dynamic part of the board pack and discussed at every meeting.
“Revisiting your risk matrix only every now and then is not managing risk,” Susan argues. “What you’re asking management to do is keep it alive and keep it considered”.
To keep the conversation about risk alive, CEOs should speak to changes in risk profiles – improvements, worsening – in every set of papers, and in every meeting.
And to get it really right, risk should be a standing item at management team meetings too. Done well, it cuts across organisations and brings teams together.
“Managing risk is a social thing that needs to be embedded in each part of the organisation,” Susan says. “Not a piece of paper with ticks on a chart”.
Nobody needs more papers in their life
Finally, to make board papers easier for your staff and your board, spend some time with your Chair and design the board paper format, the dashboard, and the information exchange that will help your organisation achieve the quality of governance it deserves.
Australian Institute of Company Directors: Good Governance Principles & Guidance for NFPs