11. Does the board receive timely, quality, reliable, current, and useful information to advise on strategy, monitor executive performance, and function effectively?
Survey after survey, including Bridging Board Gaps, have identified the flow of timely, complete, and useful information to the board as one of the greatest challenges to effective governance. Richard Beattie, in that report, is quoted as saying “Boards only know what the CEO and CFO tell them. Nothing more. This is a significant problem.” Olivia Kirtley commented that “Information is the lifeblood of effective governance.”
Striking to the heart of the problem is this quote from Bridging Board Gaps:
“Many governance problems have arisen from poor management decisions, hidden and often compounded through inadequate information disclosure to the board….. However, if the board relies solely on management reports, the risk is that information may be incomplete, filtered, or edited, even in good-faith ways.”
Best practice is for transparency and trust between the board and executive management. Management does not hold anything back, nor wait for perfect information to inform the board. The board has established and management understands expectations for what should be provided to the directors, when, and how.
In the question, I included a number of adjectives to describe the information that the board should receive if it is to effectively advise on strategy and monitor performance:
Timely – is the information provided to the board promptly? This is especially important when events escalate quickly and timely responses are vital
Quality – does the board receive sufficient, relevant information?
Reliable – is the information complete, accurate, and unvarnished?
Current – is the information up-to-date?
Useful – is the information in a form that is clear and easy to use? Does it enable the directors to understand not only the symptoms but the causes of any issue? Are they able to get information in sufficient detail, and is the information delivered to them where they need it (e.g., using mobile technology)?