How late reporting kills the CEO

7 min read
Oct 7, 2022 12:17:33 PM

When it comes to your organisation’s Board meetings, how does your team typically prepare? 

Is it an ad hoc rush to get all the documents ready? An overload of concerns about what should be reported? A realisation that it is a mere three days away from the meeting, and the directors have not received pre-reading materials?

If any of these ring true at all, first and foremost, welcome to our BoardPro article. Secondly, you are not alone. 

HBRIn Harvard Business Review, Kenneth W. Freeman recounts his experience serving on several Boards with one organisation standing out. He recalls, “Pre-reading materials were typically provided to board members only one or two days before the meeting. Meetings always started at least 15 minutes late. The agenda failed to note time allocations for specific topics, which led to rambling discussions and critical issues left unaddressed. The purpose of discussion items was not clearly articulated for the board. Certain board members tended to dominate conversation and were condescending to other directors and the CEO. And no one on the board was willing to forthrightly address the situation.”

While the experience of Freeman above does cover a myriad of issues, its starting one begins with the pre-reading of Board materials – a crucial step often underestimated in importance by organisations. While the quality of Board materials is essential, part of that is providing the Board with onbeat and timely reporting. It allows members to read, understand, digest and form their own views and insights into the inner workings of your organisation before congregating for an ideally fruitful and constructive discussion. 

Steven BowmanFor Steven Bowman, seasoned Board advisor and managing director of Conscious Governance, not only is it important for the Board directors to see these reports ahead of time but the CEO and Chair must meet before the papers are released to the rest of the group to ensure that the Board materials are focused on the things they should be focusing on. “This means that the Chair can provide the first set of strategic filters so that time isn't wasted around the Board meeting and Board members' time reading material they don't actually need to read,” Bowman explains.

We spoke to Bowman about his thoughts on timely reporting and how late reporting can hurt an organisation and kill its CEO. 

Q: What is the ideal time to start the reporting process?

Let's work backwards. When should the Board get their Board reports? The answer is five days plus a week before the Board meeting. Then you work back from that. So, when does the organisation need to get the first draft of the reports in? Well, that's probably a week before then. The ideal time is right now because it has to be integrated through the whole organisation, not just a one-off thing for the sake of reporting to the Board. If it's integrated throughout the whole organisation, it would be quite subjective as to when they would need to actually start. But really, it starts every time they have an interaction. 

When do you start reporting on finances? Well now! Then they're progressively collected, and then they'll go into the monthly report, and then the monthly report goes into a projection. 

This requires a mind shift that it's not just a Board report. It's an enterprise-wide collection of useful strategic data through the different elements of the organisation. That needs to be designed by the senior executive team and the staff. Whereas most often, it's done ad hoc.

Q: Why should the CEO and Chair sit down to go through the Board material before release?

Ideally, what would happen is that the CEO would sit down with the authors of the report and make sure they understood what the key issues were that needed to be in the report. And then ideally, although it very seldom happens, the CEO and the Chair should meet up before the Board papers are released. 

This is because 90% of the time, Board reports go up without the Chair seeing them first. But if the Chair provides the first set of strategic filters, time isn't being wasted around the Board meeting.

Q: Who should be doing the main reporting? 

In many cases, it's the CEO and the CFO. 

For the big-picture strategic updates, it should be the CEO. And one of the key elements of the CEO's report should be a heading that writes, “What keeps me awake at night time,” because in that will go risks, things that he or she is thinking about for six months or 12 months down the track, etc. It could be, “I'm getting really concerned with the way the government's going with aged care because that's going to have a big impact on us. I don't have any answers, but that keeps me awake at night.” 

Each Board committee should report to the Board against their relevant responsibilities. And again, they are not reporting on exactly what they've done but reporting on the key discussions. So you've got your governance committee and finance and risk committee and clinical governance, your internal audit, they're all the really important stuff the Board needs to know. The Board committee does all the hard work, and that is synthesised into what could be a one-page or a two-page report to the Board about what that committee wants the Board to focus on. 

Don't tell me, “he said, she said, they did, look at how busy we are.” Tell me the key leading indicators that will tell us whether we're in good shape or not, not just the lagging indicators of what has happened. I want to know what the leading indicators are. What are the things that will tell us what might be in the future based on what we know at the moment? 

And you can develop those into one or two-page dashboards that can, at a glance, give you a great insight into how the organisation is going and where we think things are going. But there should always be a heading under those reports that says “Strategic implications for Board discussion.”

Q: How can the executives work together to ensure timely reporting? 

That's a great question for them to ask themselves. And that should always be asked. It could be once a year or every six months, but it’s important for them to sit down and ask themselves how we can work together to ensure we've got proper, timely reporting. How are things going? How are we getting the information? Is there an easy way for us to do it? Can we collect it? Can we ask the Board to invest in more data collection methodology that would make this a lot easier? 

Now the other thing is also for the executives to check in with directors about what could be better synthesised in the reports the executives are providing. 

For me, I would much rather see a little bit of text describing what's going on as well as a dashboard that summarises the metrics. And really, what I want the Board to be able to do is focus on the things they should be talking about that they should be considering. So it shifts things. Instead of coming on to the Board meeting and an executive saying, “Oh, this is what we really need to focus on.” I want to know that before the Board meeting. So as a director, I can form some views. I can do some of my own research rather than on the fly.

Unfortunately, most Board reports don't provide enough guidance for the directors to actually have a strategic focus on the questions that they should be asking. I think good reports can help them do that. 

Q: What must other executives understand about the CEO’s role in order to assist with this process?

I think an even better question would be, “What do other executives understand about the Board's role in order to assist with this process?” 

It’s important that the executives understand the role of the Board is not to monitor. In fact, our view of the Board is that its role is to make the choices that create the future for the communities we serve. 

So therefore, Board reports need to help the directors know, what the choices might be, how they might create the future, and they've got to take into account the communities that they serve. Therefore, the Board report should address those key issues.

Q: What is the worst thing that can happen to a company due to late reporting?

There's one just recently well-known household name in the health sector. And I was called in not that long ago because their reporting was late. 

Their reporting was late in trends and timeliness. None of the senior executives attended the Board meetings, so they couldn't report, and they found that the CEO was fudging figures, not finances, but activity figures. They immediately sacked the CEO.

The Board had no interaction with senior executives, and they had nothing in place to give them any idea of what the culture of the organisation was like. It was toxic.

And the Board went into disaster recovery mode, called me, and we worked together. We did a review, and I gave them some clear guidelines. They've done it, they've done a fantastic job bringing it back, but it was a total distraction. And the sad thing is not that the organisation could have failed and potentially closed up. The sad thing is that the people who are the recipients of those services would have suffered.

So the two types of late reporting to watch out for are those that are timing related, which is annoying but can be fixed, and those that are existential, which means that you could go out of business.

Watch our recorded webinar on this topic.

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If you are interested in learning more about Conscious Governance, check out the company’s website here. Learn more and connect with Steven Bowman here

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