Clearly, any decision can only be as good as the assumptions on which it is based. Directors need drill-down access to a whole range of information, much more than can be either supplied to them in a timely manner or searched by them in paper format. Some paper board books today can consist of upwards of 2,000 pages and are delivered in boxes. It’s not realistic to expect anyone to wade through more than 2,000 pages of dense reports to find the figures they want.
A board portal liberates the directors from requiring dedicated staff to prepare reports for them. And, with global Internet access, board work can now continue outside of formal board meetings, according to the demands of the business.
Events are unpredictable. They can range from unsolicited takeover attempts (such as Microsoft’s offer to buy Yahoo), environmental accidents (like BP’s Alaska spills) and litigation (like the U.S. Justice Department’s investigation into BAE). In these cases, the board has to assemble immediately to review the situation. A physical meeting is usually out of the question due to the dispersed geographical nature of most boards. Attempts to use insecure infrastructure such as e-mail and faxes can lead to both a breakdown in communications as well as information leaks. Hotel staff, for example, can hardly help but read an incoming fax, if only to identify the recipient.
Depending on the content, such information leaks could have substantial financial effect in the markets, or lead to severe legal complications. Board portals, with their secure, closed-system e-mail, alerts and secure Web conferencing, remove these concerns and support ad hoc board meetings with zero notice.
Taken out of context, the private deliberations of board members could have significant consequences. For the same reasons that attorney-client privilege and medical records privacy are both considered sacrosanct, boards need to be able to deliberate in private. This requires systems that do not in any way audit directors’ access and private notes, as well as prevent any internal systems staff from seeing the portal content. As you may imagine, this does create substantial challenges in support, since, by definition, support staff can never actually see the screens or content that’s causing the problem.
While deliberations must remain private, it’s equally important that a formal, auditable record of final decisions is made. Using a board portal, the General Counsel can enforce the preferred policy for a retention period with rules that will stand up to external scrutiny. This supports any requirement for discovery in a professional and time-sensitive manner. Further, the latest generation of board portals is able to extend the document retention policies to documents stored locally on the board members’ laptops-an essential but sometimes ignored part of the puzzle.
Effective corporate governance requires effective and efficient process. Fundamentally, board portals, like all software, are there to help enforce and institutionalize that process.
Joe holds a B.S. in Engineering from Oregon State University, and an MBA from Santa Clara University. He can be reached at [email protected].