Helping the board make better decisions

High-performing boards are an essential part of a high-performing company, but a strong board does not come about by accident. For boards to function at their best – essentially to ensure the biggest decisions facing the company are made correctly – it is vital to have the requisite infrastructure and processes in place. Without this, boards may not be aligned with the strategic needs of the business, and board members may not be supported with the right information at the right time.

This three-part guide details the key elements that enable boards to perform to the highest standard. Specifically, it covers what foundations need to be in place for a strong board, the best practices to adopt for board meetings and how to support board members outside of the boardroom.

A diverse board drives high corporate performance

One of the first elements in ensuring high board performance comes from reviewing board composition. The boardroom should be a place of healthy debate and challenge, but all too often boards can fall into the trap of groupthink. In many instances, this happens when board members are all drawn from similar backgrounds and/or from professional experience in similar companies, sectors or parts of the world – all of which have the potential to turn board meetings into rubber-stamping exercises. To avoid this, it is key to ensure there is a high degree of diversity in the board make-up. 

Kate Graham, Deputy Group Company Secretary at Aviva, explains the approach taken towards board composition at the UK insurer: “There should be healthy tension in the boardroom and a lot of that comes from diversity of the board. We spend a lot of time looking at the diversity of our board in terms of skill sets, gender or ethnicity, but we’re really starting to focus on diversity of thought and considering what each director brings.” 

Research conducted by BoardReady in the US on the relationship between board diversity and company performance demonstrates the positive impact that a diverse board can have. It found that companies with a diverse group of board members experienced less downside and were more likely to grow during the COVID-19 pandemic. 

Three steps will help a company establish a diverse board. First, conduct a diversity audit to compare the composition of the company’s workforce with the composition of the board, and identify the biggest gaps. This comparison will then serve as a baseline against which to measure future progress. 

Second, ensure sufficient turnover of board members to keep the board fresh, as low turnover can inhibit recruitment of new, more diverse members. Companies could also consider the possibility of adding one or more extra seats to the board. However you bring in new talent, it’s vital to look beyond the traditional sources of board candidates.

Third, consider the idea of quotas for the make-up of the board. Depending on where you operate, certain quotas may be mandated. The EU, for instance, has agreed the new Gender Balance on Corporate Boards Directive to be implemented from 2026. Quotas are proven tools for driving up representation of particular groups but are less effective for ensuring more nuanced diversity – especially around neurodiversity – so it is best they are not used in isolation. 

Effective use of sub-committees allows boards to focus their attention where it matters most

Boards are required to make numerous decisions and to do so they normally have to digest a lot of information. However, not all decisions are equal, and it is important to have in place the right infrastructure to allow boards to focus their attention where it is most needed. Research by McKinsey shows that high-impact boards differ from low-impact ones in that they adopt more rigorous practices about how to prioritise their activities. 

Broadly, the key types of decisions made by boards fall into one of four categories: Strategy, Performance, People and Governance.

“From a board perspective, the strategy should be the part that the board actually spends most time on. The strategy informs the performance, people and governance aspects on the agenda, because that is how the strategy is being implemented,” states John Odada, Group Company Secretary at Royal London. 

To facilitate the board’s focus on strategy, for most companies the key is to make full use of sub-committees to ensure other areas are covered in appropriate detail before coming to the full board.

“We rely on delegation into appropriately constituted committees that have the right people with the right skills or the right advisors to go into sufficient detail on topics such as regulatory governance or risk management,” says Odada. “So the long and detailed work actually goes on in those committees and by the time it comes to the main board, it’s more a question of what does the board need to know?”

According to BoardSource, the average number of standing committees is four. The most common are the Nomination, Remuneration, Risk and Audit committees, and there may also be a call for ad-hoc committees to focus on specific projects. The precise structure will vary according to the company, its size and sector, and particularly whether it is regulated or not. Regardless of the structure in place, it is important that it is reviewed regularly to ensure that each sub-committee has a clear purpose and role that supports the full board. Some companies go to the extent of adopting a “zero-based” committee structure and start each year by recreating only those committees that are still needed.

An annual plan helps companies establish the best board meeting timetable for the company’s needs

How often board meetings are held varies considerably and is strongly determined by the size and maturity of the company. External factors also play a role in determining board meeting frequency. For instance, many boards reported that they met more often – albeit remotely – as they navigated the COVID-19 pandemic. However, it is clear that high-performing boards are prepared to put in the time commitment required, though the ultimate key to success lies in using that time effectively to focus on the most important matters and getting to know the business.

Assuming a normal working environment, it is best practice to put in place an annual plan for board meetings. This plan should take into consideration key strategic dates for the business that meetings need to align with – this in turn helps to ensure clarity of purpose for each meeting. In larger companies, the activities of other boards and committees also need to be factored in so that the activities of each dovetail. 

Graham says: “It’s important to get the right cadence of board meetings to support the business. Whether that relates to the external reporting timetable or whether it’s the strategic timetable, it’s about being really clear on when decisions need to be made to run the business. It sounds very basic, but by having that forward planning, it makes it very clear what the purpose of each meeting is and what needs to be prepared in advance.”

Advance preparation is essential to ensure that board members are primed and ready for meetings

For board members to get the most out of each board meeting, advance preparation by the secretariat is key. Board members need to be primed for the key topics to be discussed on the agenda and provided with supporting information. This puts them in a much stronger position to scrutinise the information presented by management and fosters that desired culture of healthy debate. 

Odada states: “The annual plan (or it may be to other timescales) drives the programme agenda. To support this, you need a well thought through process map of what happens when, and that is all underpinned by a robust content standard, which is how the board expects to receive information upon which decision-making is based.”

Aleen Gulvanessian, Business Partner at Eversheds Sutherland adds: “To aid good decision-making it is important to make sure that executives have provided the non-executive with sufficient detail, so that they can think about the issue before coming to the meeting and have questions prepared. They need to provide all the relevant information and full disclosure of the pros and cons.”

The key steps that need to be undertaken in advance are:

1. Provide the right structure to the agenda: The agenda will be informed by the annual plan, as well as any standing items that need to be discussed. The structure of the agenda is fundamental to the success of the meeting. Strategy items need to be discussed first, as these often influence the decisions that follow. Energy levels are also highest at the start of the meetings, so putting the key strategic decisions up front ensures they are given the necessary attention.
2. Draw appropriate attendees from all levels, not just the most senior: Aside from board members, reports will be required from elsewhere in the business and external experts brought in to provide a perspective on emerging trends or possible risks to the business. These additional people do not need to be the most senior, but rather the most appropriate people for the discussion at hand. Making full use of internal and external experts also helps to contribute to the diversity of thinking underpinning board decisions.
3. Prioritise metrics and visuals for board materials: When preparing board papers, finding the right balance of information is key. NEDs, in particular, do not live and breathe the business in the same way as the executive management team. They need sufficient information to highlight the key issues and priorities, and explain the context and trade-offs involved in any decision they need to make. It is imperative, however, to remove extraneous detail as otherwise it can overwhelm. Consider how you present the information and cater to different learning styles. Visual dashboards and key metrics are often better received rather than solely relying on text-heavy documents. Being responsive to board feedback on the information reported and adjusting it accordingly will also help to improve the quality of information provided. 
4. Engage with directors on key topics in advance: For some board papers, it is also helpful to engage with directors that have a particular interest in the topic throughout the preparatory process. Working with them as a coach to prepare the paper will help get appropriate buy-in in advance, focus the discussion when it comes to the meeting and drive actual decision-making. 
5. Don’t distribute information too early: Board packs should be made available around five to seven days before the meeting. This ensures the information is up to date but that the board has time to read and digest everything fully – many NEDs hold executive roles in other organisations and will often do board work over the weekend. For security and collaboration purposes, online board portals are best used to disseminate information.

There are a number of practical considerations for effectively managing meetings to ensure they run efficiently

When it comes to the actual board meetings, the management of the meeting will vary according to the format. Fully virtual or fully in-person meetings are easier to manage than hybrid ones, where there is a mix of people both inside the room and joining remotely. Nonetheless, it is important to be prepared for the possibility of hybrid meetings and there are certain techniques that can help these run more smoothly. 

Graham explains: “Hybrid meetings are a particular challenge that we all have to deal with now. So, when we’re structuring the meeting, we think very carefully about how we can get the right level of engagement for people that are not in the room. We make sure that the chair is appropriately involving people that are on the screen. One of our chairs likes the people that are in the boardroom to dial in on the device as well. The people at home can then see everyone’s face. It actually works really well.”

There are also some practical tips that can be adopted to ensure the meeting itself runs smoothly. Graham says: “There is a lot of running around behind the scenes. Before the meeting we check in with everybody and remind them of their slots. We also set up a group chat for presenters, so we can keep everyone updated as to the timings and if we are running early or late.”

Facilitating healthy debate and discussion during meetings is central to strong decision-making

Board meetings should be environments where there is a culture of healthy debate and dialogue. Key decisions should be discussed fully, with board members feeling that they can ask probing questions and challenge assumptions. Equally, executive management should feel comfortable in reporting bad or difficult news. It should not simply be an exercise in reviewing and rubber-stamping decisions. 

The make-up of the board (see part one) plays an important role in creating this culture. Also as discussed in the section on advance planning, external experts or other individuals in the organisation will help inform and spark discussion.

To ensure that big, high-stakes decisions are discussed fully, several conversations are likely to be required over the course of a number of meetings. There are also multiple approaches that boards can adopt to encourage debate in a managed fashion. For example, one individual can be appointed to play devil’s advocate. Or the board can be split into teams, with each team assigned an opposing side of the debate. Even if team members don’t agree with the side their team has been assigned to take, they have to participate and argue as if they do for the duration of the exercise. This allows people to explore different perspectives and can lead to surprising results. Online resources provide plenty of examples for improving group decision-making at a wide range of organisations.

It is also important to consider how to manage decision-making for small items. There may be quick items that need to be presented and the opportunity given for questions to be asked, but strict time management is needed to ensure that time is not lost. For items that may need approval, but not necessarily debate, a consent agenda can work. Using this approach, the agenda is provided in advance, then during the meeting it is presented by the chair, who asks if there is any disagreement. If not, approval is given.

Lastly, consider how to make board meetings accessible for all, including those that are neurodivergent. Graham says: “We’re doing a lot of thinking around neurodivergence and how you can ensure that you appropriately involve everybody in the room. Some directors may find it harder to speak up in certain situations. So, in the same way that we need to make our papers accessible, we need to make the board meetings accessible as well. For instance, by removing potential distractions and ensuring they are brought into the discussion.”

A robust process framework aids follow-through on decisions

Tracking the decisions made during meetings and the resulting action items is key to ensuring effective follow-through. Decision logs are also useful audit and review tools for understanding why certain courses of action have been taken.

Depending on location, companies may be obligated to log and report the key decisions made across the year and demonstrate that they have considered the impact on stakeholders, employees and the community in those decisions. For instance, in the UK this is the case for Section 172 reporting as part of the Companies Act 2006. As such, the key information behind any decisions made should therefore be captured for reporting purposes.

As with the dissemination of board papers, the action points should be logged on a board portal. This is more secure than email, provides greater oversight on the status of action points and can aid compliance with any governance obligations. 

While board portals have notable advantages, it is also important not to forget the human touch. Graham explains: “Following each board meeting, I try to get the actions out straight afterwards. I also follow up directly with the relevant action owner who may or may not have been in the boardroom. This helps to provide context to that person and means there is a discussion to make sure of the spirit and the letter of the action.”

Cultivating a high-performing board is just as dependent on what happens outside of the boardroom as in it. NEDs are not part of the day-to-day running of the business, so it is therefore important to onboard them properly to give them a strong base for understanding the company and to build on this with further training, site visits and opportunities to learn more about the business. 

Putting in place strong induction programs for new NEDs sets a good foundation. This should be followed up with ongoing training and development. “We run an annual board skills matrix, where we work with each individual director on what else they need from us in terms of professional development,” says Graham. “We ask NEDs what else they would like to understand in terms of getting to know the business. It’s not the case of just doing the induction as a one-time activity, it’s about what sort of continuous induction they need and whether that can be carried out collectively or individually.”

It is also good practice to hold annual NED performance reviews. Graham states: “Our chairman holds one-to-one NED performance reviews each year. This also offers us the opportunity to monitor and discuss the time commitment of NEDs, because many of them sit on multiple boards and we want to check that they have enough time to commit to our board as well as others.”

Arranging site visits for NEDs is beneficial by providing an insight into the day-to-day workings and challenges of the business, which cannot be gleaned by attending board meetings alone. “Make sure you give your NEDs a chance to visit,” says Gulvanessian. “This is really important to help them understand the business. For instance, I’m about to visit a supplier of one of the businesses of which I am board director, which will give me another angle on the business. This is key because non-executives miss out on the day-to-day.” 

Other possibilities include looking for opportunities for directors to mentor or work more closely with management to help build better working relationships. In particular, it is useful to find opportunities for the board to interact with management beside the CEO and CFO. “Mission planning is a good opportunity to give other senior management members more exposure to the board. This is important to do, because these people are likely to be the future leaders, so you want to start building these relationships,” says Graham.

Lastly, don’t forget the social side. Arranging lunches, dinners and other social events helps the board members and senior management get to know each other better and helps foster a culture of trust and understanding, which carries through to the actual board meetings and decision-making process itself. “A bit of social interaction is a good thing, it lightens the mood,” says Gulvanessian. “And sometimes the informal discussions that take place during these events are still business discussions and can be very informative in terms of building up your knowledge of the business.”