Board Reports - The Importance of Quality Board Reporting

Practical Tips to Improve the Quality of your Board Reports

Introduction

It is noted that boards perform best when they receive reports that contain sufficient information for them to make well-informed decisions and to develop strategies for the short and longer-term. Good quality board reporting provides timely, accurate, sufficient, and appropriate information to the board to support informed review, challenge, and decision-making.

Based on observed practice, the following common weaknesses in board reporting were identified:

• key messages do not stand out clearly with important information being buried in the detail;

• board packs are too long with individual papers not having an executive summary;

• reports unclear on what action or other input is required from the board – for noting, for information or for decision;

• no standard report templates developed to assist the directors in knowing where to look for key information;

• report writers do not receive formal training on writing board reports;

• feedback is not provided by the board to management on the quality of reports produced;

• late distribution of board packs leaving insufficient time for directors to read the materials in advance of meetings.

Put very simply, a board report (sometimes known as board papers) is a document which is sent to the members of the board before a board meeting, detailing the important information they need to know. Part of the board pack, the board report is a reference document that complements the board agenda and the meeting minutes. The chair, CEO or CFO usually decide on the format and content of the report, with help from the committee members and the secretary, too.

This document pulls together information from the various committee reports and departments and presents them in a manner which makes it easy for the board to digest. The report usually contains information on financial and management performance as well as expected future performance.

What is a Board Report?

The Purpose of Board Reports

Board reports exist to facilitate decision making in board meetings. The members need to know all the relevant details about past and projected future performance in order to make informed decisions on the future of the business. The board report should collect together any relevant information relating to the topics up for discussion in the next board meeting.

One of the key purposes of a board report is to answer the questions that directors will ask as they digest the information on display. You must pre-empt the information that they desire in order to fully understand where the company stands and where it is going. The board report should present the data along with a summary of the key takeaways from that information. The idea is that directors do not have to spend ages mining into the statistics in order to discover the relevant talking points for the meeting.

Five suggestions for drafting effective board reports:

1. Sufficient information

Ensure that reports are concise, easy to read, concise but contain sufficient information for the board's needs.

2. Clear

Use plain English, avoid jargon, and explain acronyms.

3. Executive summaries

Longer papers should have an Executive Summary, summarising the content in the main body of the report, capturing the key points, and setting out any approvals required from the board, followed by the detailed report.

4. Appendices

Additional information, if required, should be attached by way of appendices, which should be clearly labelled and relate to what is being addressed in the main report.

5. Templates

Develop templates for different types of reports and make them available internally.

Key Actions

Board Report Structure

The board report can range in size from a sheet or two to a whole pamphlet. It depends on the report at hand, which may be a short monthly update on a certain committee or a full year’s overview of the whole business. Whatever the size of the report, it should be easy to read and broken up with headers, bullet points, graphs, tables, and images. If it is simply a wall of text, this will make it very difficult for the reader to digest the important points.

Generally, the structure of a board report should be the following:

• Title that tells the reader exactly what to expect.

• Table of contents (if the report is lengthy).

• Introduction to give a clear indication of what is in the report.

• Clear headings to flag up the themes of that section and to allow directors to skip straight to the relevant areas.

• Bullet-pointed key performance indicators (KPIs) so they stand out to the reader.

• Summary to analyse the findings of the report.

The aim of the report guides the content. If you are presenting a situation report, it will read in a completely different way from a report that wants the board to consider acquiring new resources or even a change of strategy.

Provide relevant data to back up the report and explain why it is relevant or meaningful. Look to represent both the positives and negatives. Remember, the board needs to be well informed in order to make the best decisions in the interests of the company.

If you only show the positive sides of the performance of a new factory rather than acknowledging the challenges, for example, that can twist the executive board’s understanding of the running of the business.

Board members are busy people, so ensure you get straight to the point and summarise any external sources that you use to allow them to find the pertinent information quickly.

Content of the Board Report

How to Write a Good Board Report: Tips

Here are the key points you need to consider when writing a good board report in general:

• Know your audience

You know your board members and their background. This means you can judge how much explanation certain points need in the report. If everyone knows the basics of a certain aspect of the business, you do not need to take up their time explaining it to them. Similarly, you know the information that they require, so don’t waste text adding in metrics that have no bearing on the decisions they have to make.

• Use plain language

One of the main reasons for having a board report is to provide a quick reference point to bring members up to speed. Do not slow down the process by using complicated or technical language. Board members need to be able to digest the details quickly.

• Use a mixture of metrics to give context

The financials are the metrics most often associated with the board report, but on their own they do not tell the whole story. You need to balance them with details such as market share to give them context. If the profit is going up, but the market share is slipping, the board needs to know. Giving just the profit information suggests all is going well, but showing the whole picture offers insight into potential problems that they can address.

• Provide full disclosure, both good and bad

The board needs to know the real state of the business, not the rose-tinted version. They must make key decisions based on the information provided, so tell them exactly how it is. No one likes passing on bad news, but you should do that if necessary. Tell them about internal and external pressures that face the business and help them make the best decisions possible.

• Help them find the crucial information

The board report is not a place to hide things away. Make sure you highlight the most important information in graphs, tables, headings, bullet points or any other way that will make it leap off the page.

• Provide clear analysis

It is no good just providing raw data. You need to explain it, too. What are the current issues and risks at play? Spelling it out in analysis means busy board members do not have to take a deep dive themselves.

• Look forwards as well as back

The board needs to know how the business has performed. But they also need to know what the future looks like using credible data. Are you set to meet targets? If not, the earlier the board knows, the sooner they can intervene and change course.

• Keep KPIs in a dashboard

A dashboard is a great way to visualise KPIs so that the board can track them at a glance. This also means you do not need to go into prolonged explanations about the results. You can simply head straight into the analysis, saving the reader time.

• Use board management software

Using board management software cuts the cost of sending out physical reports, which might have to be re-sent if anything needs updating. It also means each board member has access to the most recent version when they log into the app on their computer, tablet, or smartphone. They can also interact with you and each other, leaving comments, notes, and other handy collaborative material. Last but not least, it is easy to search the program for the information they want to find.

Conclusion

A board report is a key tool in helping the board take vital business decisions to keep the company heading in the right direction. It requires skill to know exactly what information is necessary and how to present it in a way that is most simple and effective for the board members ahead of their next meeting. Timely submissions of board reports are of the utmost importance. Establish a board-approved process for submissions.

Join us on the journey! We share tips, trends and insights with our community regularly.