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GRC Professional : GRC Spring 2011
34 grc professional • Spring 2011 34 grc professional • Spring 2011 in the oFFiCe The quality of corporate governance has never been more crucial with the increasing demands placed on businesses by globalisation and complex financial reporting requirements. written for management, not governance. One of the main problems with many Board papers is that they are written for management rather than directors. A reason sometimes given for this fault is that many writers have not received training about the distinction between management and governance. As a result, Boards often receive a lot of unnecessary and irrelevant information about day-to-day management issues that can distract them from their governance role. Assumptions based on shared knowledge Many writers of Board papers are so familiar with the material they are writing about they make assumptions that everyone else shares their knowledge. They do not appreciate that although they are writing for an intelligent audience, their readers will not have their depth of understanding on the topic. drowned in detail Many managers are so steeped in a wealth of information they lose the ability to extract the key messages. It is all important to them. They are writing for themselves; not directors. Such writers do not pre-sort their writing into ‘must know’ and ‘nice to know’ information. This makes it difficult for directors to identify the key messages and can lead to tortuous discussions about minor issues. information massaged to ‘look good’ Sometimes management tries to do a ‘sell’ job on the Board. It’s human nature to want to do well and be praised. And there’s a temptation to show the Board what a good job everyone is doing rather than concentrating on financial and strategic issues and risks. One of the problems with an overly positive ‘spin’ is that directors can become lulled into a false sense of security about the company’s position. It is hard for directors to ask pertinent questions when they don’t have access to the information they ‘need to know’. so how can writers of Board papers improve their writing? Purpose: If writers are clear in their own mind about why they are writing a Board paper it will help them structure their material appropriately. For example, if their purpose is to recommend a capital expenditure, their recommendation will come first, followed by the supporting information. If their purpose is to inform, they may start off with some background information about the issue. Audience: If writers write with their audience firmly in mind their papers will be more relevant. They will find it easier to decide what information is relevant and what they can safely leave out. They will be less likely to deluge directors with dross. Often writers find it difficult to leave material out, especially if it is interesting. But if they ask themselves ‘Is this relevant for the directors?’ or ‘So what?’, the decision will be easier. They will find the balance between essential and unnecessary detail. As well as not making assumptions about directors’ knowledge, writers also need to remember that directors are busy people and often only receive the Board papers 48 hours ahead of the meeting. Context: As Boards have financial and strategic responsibilities, papers need to address both these areas. So, in a nutshell, a paper could say: ‘We want to do X because..., the financial implications and risks of doing X are Y, and this is how it relates to our strategy’. If a proposal is outside the company’s strategy or policies, this needs to be highlighted so the Board can discuss it. key messages: Key messages are the main high- level ideas in a paper. There is only room for a few key messages in a Board paper (sometimes only one and seldom more than three). They are the sort of ideas that we share with someone in a lift when we only have a few minutes to get our point of view across. If writers clarify their key messages before writing, they will spell them out simply and clearly at the beginning of the paper so everyone understands the same message. outcome: If writers think about how they want their readers to respond, they will make sure the material is written from the readers’ perspective; not theirs. Kiel and Nicholson recommend that papers be numbered and cross-referenced and clearly marked for ‘information only’, ‘discussion’ or ‘decision’. This distinction is vital as while Boards need to be abreast of a company’s per formance they should not become involved in minor or operational matters that are best left to management. A Board performing to its full potential needs sufficient, timely, accurate and relevant information, and in your role as compliance and risk professionals, you can help to support the Board in making its strategic decisions. ••• mary morel from the m Factor is author of the book Write to Govern. she works with companies to improve the quality of their written communications, including Board papers. she is delivering a workshop on ‘how to write effective Board papers’ at aci’s 15th annual conference in Brisbane on 20-21 october. how to write effective Board papers Your Board papers will be better understood if you remember to write for governance, not management. here are some tips on making your Board papers easier to read. By MAry MOrEl frOM COnsulTAnCy ThE M fACTOr
GRC Summer 2012