Henri Eliot: Board papers demystified
9:30 AM Monday Sep 8, 2014
Board papers are a critical part of the governance process and are used to describe the business items for a board meeting. They are usually prepared by the organisations CEO and/or senior management team. These papers are treated as business confidential.
Board papers are produced for three purposes:
1. Information only. Financial results would be an example of an information only Board Paper.
2. Discussion. A discussion board paper is provided to introduce a point of discussion for the board, including sufficient facts to support the discussion.
3. Decisions. A decision paper is designed to ask the Board to make a decision.
There are a number of ways to format and structure a Board paper and most organisations may already have a template. There are, however, common elements that should be included in all papers:
1. Board resolution. The resolution you are asking the board to pass (this is the decision you would like them to make).
2. Executive summary. The executive summary should specify the purpose of the Board paper – information only, discussion or seeking a decision and specify the recommendation. The executive summary should be no more than a single paragraph of 4 – 5 lines.
3. Recommendation. As the writer of a Board Paper, it is important you provide a very clear and concise recommendation to the Board. The recommendation should include:
– The recommendation you are making to the Board, essentially that they pass the resolution ( make the decision)
– The reason why the Board should accept the recommendation
– Summary of alternatives (where relevant), and therefore why the recommendation is the best option.
4. Background. The background section should provide enough information to enable a Board member to understand the resolution and to form an opinion on the correct outcome. Board members do not normally work in the organisation on a day-to-day basis and therefore their knowledge of the detailed operation needs to be considered.
The background should also indicate if there are previous Board Papers on similar subjects that Board members can refer to.
If there is more background information than can fit within approximately one page, the information should be summarised in this section and provided as appendices to the Board paper.
5. Issues and Risks. Issues are any general factors that will affect the proposal that the Board should be aware of in making their decision. For example, in deciding to build a new facility an issue may be that the City Council has not approved the car parking area as planned.
Risks, unlike issues are factors that may occur and may have an impact on the intended outcome. Risks if they do occur may have a significant impact and therefore considerable thought should be put into identifying the possible risks and how best to manage these.
6. Consultation. The consultation section should include details of who has been involved in developing the Board paper. This will include other people from within your organisation and may include external people used as advisers. The consultation section should provide the Board with assurance that all key stakeholders have been involved in the development of the Board paper.
When developing a Board paper it is important to recall the purpose of the Board. The Board’s governance role with respect to decision making is to ensure that the decisions are supportive of the strategy of the organisation, adhere to the policies of the organisation and meet the needs of the members or shareholders of the organisation. The Board do not normally work in the organisation on a day-to-day basis and therefore may not be aware of all the factors affecting a particular decision.
Finally, when you have completed your Board Paper ask yourself the following questions:
1. Is this targeted at the right level for the audience?
2. Does it contain all the relevant information for the Board to make a decision?
3. Is it clear and concise?
4. Does it ask for a specific decision to be made?
Henri Eliot is CEO of Board Dynamics