Information overload: effective boards and committees in financial services
ICAEW provides practical recommendations to reduce the size of board packs and make them more effective for boards. Our proposals will enable board chairs, management, executives and non-executives to improve their own papers, ensure that responsibilities are clearly defined and make certain that non-executives do not have to deal with information overload. The proposals we provide work in the context of three overarching principles.
What are the three principles for effective board packs?
- Boards need to define their needs and communicate and pursue those persistently
- Responsibilities for board packs must be well defined
- Non-executives need to be vocal about their need for good board papers
In recent years the length of board packs has increased significantly. In our report we investigate what information board members currently receive and how board packs are prepared. We have come to the conclusion that boards need to build on both individual and collective responsibility and stay diverse and inclusive, making sure that decision-making is a true team effort. We have come up with two detailed lists of proposed actions that need to be considered in the context of the three overarching principles.
How did we gather evidence?
ICAEW interviewed non-executive directors, company secretaries and executive management responsible for preparing board and committee packs, as well as companies providing services to boards for the electronic management of board information. A desktop review of existing research gave further context to our interviews. This report focuses on the preparation, provision and use of board and board committee packs within the financial services industry. However, boards in other, especially highly regulated, industries can learn from the experience of banks, insurers and investment managers.
It has become clear that change is needed. This report investigates the current state of board pack information and preparation. It also highlights the intellectual and practical challenges of information overload, as well as explores solutions. Our proposals will aid the provision of effective board packs for all those involved.
For further information on each proposal below please read the full report.
Proposals for board chairs and non-executives
|A contents page will give the pack a coherent order and provide better context for non-executives.|
|A time plan should be included with the contents page.|
|Proportionality is important.|
|Minutes should reflect their purpose of capturing the wisdom of the board, without superfluous detail.|
|Educational papers should be provided separately.|
|Escalation needs to be carefully considered.|
|Expectations should be clearly set out to place responsibility on specific people for the required papers.|
|Feedback should be encouraged by the chair.|
|Deadlines are of critical importance.|
|Pre-meetings are helpful for NEDs as they allow discussion of the issues without the presence of executives.|
Proposals for executives and management
|Papers should have a clear purpose.|
|Greater focus is needed.|
|Perspectives and priorities of the board must be understood by preparers.|
|Emphasise future events, exposures and high risk areas like IT and cyber risk.|
|Quality of writing is important.|
|Rules and deadlines are helpful.|
|Templates increase efficiency.|
|Exception reporting is sufficient for routine matters.|
|Electronic packages are a good way of using digitalisation.|
|NEDs should be provided with briefing papers.|
|Presentations promote discussion.|
|Executive committee meetings can act as an efficient filter.|
|Presentation of the board packs can make a huge difference.|