The typical board of directors' "communication system" rarely gets beyond simple email systems. Faxes are still used, as are messengers, telephones, face to face meetings, and large board books sent by overnight delivery a week before a board meeting. While there is nothing wrong with big board books, or even face to face meetings, the new addition of outside, independent directors to many boards strongly suggests that new communication and collaboration systems will need to be deployed to bring the "outsider" into the "inside." As more and more boards are starting to realize how uninformed they are about key facts and information essential for proper organizational governance, boards are starting to realize that they need new communication systems to keep board members up to date with important information so they can help govern the organization in an informed, timely manner. This article addresses some of the new features of "virtual office" now available to assist boards of directors communicate effectively and efficiently in each area of governance. Our research here at Growth Strategies, Inc. confirms that improved communication systems are needed for boards of directors in both the for-profit sector and in the non-profit sector.
Independent Board Members
Well before Sarbanes-Oxley, the nonprofit world had many independent board members (people who were not part of the paid management of the organization). However, often many of these independent board members of nonprofits have not been well informed about many of the activities of the organization, including the financial compensation to the senior staff. Recently, due to recent scandals implicating boards of directors, many for-profit organizations have been adding substantial numbers of independent board members. Both "the law" and shareholders are becoming much more demanding on boards to actually govern, control and intelligently direct the companies and nonprofit organizations where they serve on the board.
Old communication patterns, even when they were supplemented with regular emails and big board books, have never been, and certainly are not now, adequate to meet the need for:
In addition, just adding email to an old board pattern of communication can compromise the security and confidentiality a board of directors requires.
Fortunately, there are now coming onto the market software products that can address these critical communication issues. These software packages require some training, especially with technologically challenged board members and staff. However, our experience is that the software on the market are packages that every board member and staff member can learn easily and can use effectively to become a better board member.
The Role of the Board of Directors
Boards of Directors are collective decision makers. They vote, they discuss, they analyze, they conduct research on key issues, they divide their tasks among committees, they govern, and they are supposed to direct the major activities of every company, educational institution, and nonprofit organization they serve. The days are long gone when a CEO/Chairman can or should come into a board meeting and just tell everyone what should be done. The companies where this is still true are being severely challenged by the new demands put on boards of directors in both the for-profit and nonprofit sectors.
Given the significant legal and financial responsibility that members of boards of directors have, and the growing legal personal liability each faces when they do not ensure they are properly informed, it is no accident that boards are looking for ways to stay on top of all of the key information and activities of their organizations. Modern software can give board members:
By minimizing the irrelevant information and better organizing how information flows to just the right people, these new communication software systems help board members to minimize clutter and maximize their participation as board and committee members.
Currently scheduling face to face, or conference calls, or any "synchronous" activity among board members usually requires a staff person or one board member's secretary emailing or phoning other board members' staff or secretaries to find a slot that each person on the board currently has open. Recently, one organization's staff prepared an excel spreadsheet with 69 options for the next "conference call" board meeting. The staff then sent each person on the board (about 12) the spreadsheet and asked the board members to note their preferences on the spreadsheet. The dozen board members then sent the annotated spreadsheets back to the staff and the staff tallied the responses. Then, the staff sent out a notice to the board members informing them as to the next date and time for the conference call.
This took hours of staff time and days of calendar time to pull off. Yet, since board members are on different scheduling systems -- this scenario represents the current state of the art in meeting scheduling. The challenge is that members of boards come from many other organizations and they use whichever scheduling software their primary employer provides them. Their computers are not networked, except for the web, and this gives us the first clue as to the major advantage of the new communication software systems -- they are web based and can transcend the integration challenges that people face trying to use disparate technologies across multiple companies or platforms.
This scheduling nightmare is taking place in every city in the US today. New communication and collaboration software handles multi-source scheduling situations quite easily and efficiently and ends the phone tag, email tag, and wasted staff time now inherent in scheduling board and committee meetings.
The "board book," is another relic of the old style board communication system. The board book is expensive to produce, especially when you take into account all of the staff time necessary to get it into final form and overnight it out to the board a few days or a week in advance of the board meeting. More importantly, it can fail in its essential mission since information, data, and events now can easily overtake a board book in the week right before the board meeting.
Recently, in a nonprofit organization with annual revenue in excess of $110 million, key financial reports were not placed in the board book or sent to the board in advance because the data could not be completely verified twenty days before the board meeting, the cutoff date set for the CFO to submit information for the board book. Modern communication software systems like HyperOffice, (www.hyperoffice.com), or similar software allow such documents to be posted and available to all board members via a secure "shared documents" or "shared workplaces" section that is web based. These documents can be posted whenever they are properly verified and, therefore, the arbitrary cut off date for the production and physical transfer of a "book" to board members is completely eliminated.
Shared documents or shared workplaces, using the web as the backbone or access medium, allow people located in different geographical locations the opportunity to join in the creation and collaboration regarding documents in real-time. Documents can be put into secure "folders" accessible by only members of a designated group. A board could have as many separate groups as it likes, with overlapping memberships. For each group, the communication software system can organize all relevant documents, all scheduled events, all relevant email, and list all assignments (completed and pending). One can view the status of all of these activities on a secure online workplace only accessible by those given special permission.
One of the products currently used by our firm is HyperOffice. We use it to interface with staff and board members from other organizations where we are working on common projects but do not share a virtual private network or other common work platform. This software represents the state-of-the-art in communication software that can improve board communication and productivity. HyperOffice creates a secure online workplace dedicated to the operations of a given board of directors. Each committee, task force, or group can invite its own members to view real-time information and interact with other members efficiently.
One growing technology company that relies heavily on its board of directors uses HyperOffice to maximize participation by the board. The system provides a transparent model for accountability, and ensures initiatives are executed on time. The company has found that it needs fewer scheduled meetings by board members since there are ongoing discussions and voting takes place on a regular basis online. Members can access all relevant information created by others and can author new information and share it with other board members, on their own schedule. One board member said, "we find our conference calls and in-person meetings are much more productive now as many issues are carefully studied and analyzed prior to the meetings." Recently, another board member was overseas when he needed a document for a last-minute conference call. He used the software when he went to an internet café, pulled up the latest version of the document, and joined the call just minutes after having carefully analyzed the document.
HyperOffice type of software is useful for:
Ultimately, these new communication software systems will help boards' effectiveness by increasing effective participation, accountability, transparency, and improving the ability of the boards of directors to be more effective in the governance and direction of an organization.
Too Much and Too Little Information
As you think about your board(s) of directors, the first question to ask yourself is:
"What is the communication and collaboration system for our board of directors?"
Most boards communicate, but do not have an organized system that directs its communication. It is like having a community with lots of cars, but with no road system, no traffic lights, speed limits or rules of the road.
This causes three things to happen in the board setting. Board members get so much information, they cannot differentiate between what is important information and what is not. Emails with the little "urgent" or "top priority" icons don't cut it anymore. Even spammers use them. Second, board members do not get all of the information they need in a timely manner. Third, board members become overwhelmed with huge volumes of information and often have too little time to sort out what they really need to know to make informed, intelligent decisions.
Software based communication and collaboration systems with shared document capabilities can also prioritize documents. Most importantly, they can be accessed from any computer with internet access and do not need to be lugged around by the board member from city to city, from home to work and from airport to airport.
In the near future, some communication software systems will be able to create executive summaries of documents automatically. Even now, this software can collect and tally votes of board members who can vote at any time on any issue presented to them.
Small and medium sized businesses and nonprofits are now beginning to assign a staff member to the board of directors to assist board members in collecting needed information, and supporting board members in carrying out their duties. This is expensive. Today, new communication software packages can tremendously reduce the need for substantial staff support to aid the board as a whole and individual members in fulfilling their duties. We admit, that when an organization installs new communication software, boards of directors will still need some staff support to do be able to do their jobs well.
However, with the new scheduling systems, email systems, board book replacement systems, e-voting, opinion polling systems, and other features, more can be done today by boards than ever before, with less staff support than was needed just two years ago. For small and medium sized organizations, the savings from reallocating staff time from Boards of Directors to activities with greater ROI, can be very significant.
The communications software systems identified in this article have been in place for almost two full years, but are just being noticed in the marketplace. The current versions have many bells and whistles they did not have just a year ago. In the near future, the following additional features will become available as part of the basic software:
The time has come for boards of directors to demand from their organizations new communications software technology to help them carry out their missions. Increased board liability and continued unsatisfactory board performance is directly related to the quality of the communication and information the board receives in a timely manner. These new communications software systems, including Hyperoffice and others, are relatively inexpensive compared to the financial cost of potential failures by boards of directors.
Becoming a "2004 Board" requires ramping up to meet the demands of 2003 legislation and 2004 shareholder, member and stakeholder demands. Becoming a "2004 Board" also requires a 2004 communication and collaboration system so board members can function as a team and can learn what they need to know to fulfill their mission - the control, governance and direction of the organization. Shareholders, members, and stakeholders will demand nothing less. Judges and juries will punish those boards and board members that continue to use 1990's communications patterns when they are supposed to be "2004 Boards." Not only do independent directors need this, all board members need this type of software to do their jobs. Today, it is just as inconceivable for an air traffic controller to do his/her job without software, as it is for a "2004 Board" to try to do its job without up to date communication and "virtual office" software.
As President of Growth Strategies, Herb Rubenstein has worked with technology companies (Nextel), large nonprofits (Conservation International, NFL Alumni Association, LifeNet, Inc., The Best Friends Foundation, Inc.) and financial institutions on strategic goals and business planning. In addition Growth Strategies helps companies reinvent their board of directors using sophisticated board of director software evaluation tools. Visit www.growth-strategies.com for additional information.
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