Board Papers

Board papers are a key source of information for board members and then form the official record and audit trail alongside the minutes.

Directors have a duty to keep themselves informed about the matters put before them for decision. It’s not possible to comply with this duty unless they have relevant briefing material upon which to base decisions.

In coming to a decision, a director must act in the way he considers, in good faith, would be most likely to promote the success of the company, trust, the wider public and staff having regard (among other matters) to:

• the likely consequences of any decision in the long term
• the interests of staff
• the need to foster business relationships with suppliers, stakeholders and others
• the impact of trust’s operations on the community and the environment
• the desirability of maintaining a reputation for high standards of business conduct
• the need to act fairly

Some common problems directors face when they review board papers – and which board paper writers should try to avoid – include that the papers:

• are written for management, not the board
• assume the board members all share the writer’s in-depth knowledge
• are poorly written
• are badly structured
• are poorly presented
• are too detailed
• focus on the benefits and gloss over the risks

Writing for the board, especially non-executive directors, is not the same as writing a report for other managers.

Guiding principles

If time and effort is devoted to preparing any paper or report for the board, then it should have a real purpose. A paper may be the principal means by which the board fulfils its oversight responsibilities and makes decisions affecting the trust’s future direction. Writers should consider these questions:

• What do we want to achieve by writing this paper?
• What do we want the board to do in response?
• What do directors need from my paper?

The challenge for board paper writers is not to provide more data or information – a temptation with electronic board packs – but to create better informed directors. So the writer’s focus should be on quality, not quantity. Importantly, writers should be clear which of three types of board papers they are writing:

• papers for decision
• papers for discussion
• papers for assurance

Board papers must clearly present all key information and facts and indicate any actions required. Board papers that don’t include all the necessary information in a form which is easy to read and understand can result in poor decision making.

Here are some further thoughts to keep in mind.

• Keep the length of papers down so they can be easily read and assimilated. Three pages is about right.
• Keep the style clear and consistent. Use house style (corporate branding, template and size of font, preferred layout), include lists and bullet points, write in plain English, explain unfamiliar terms or technical language and decode any acronyms.
• Start with a statement of what is being asked of the directors, together with a description of who else has considered the paper and a short executive summary so the directors can grasp the key issues before studying them in greater detail.
• The level of detail should be determined by the information the director needs to make an informed decision.  Exclude unnecessary detail.
• Include technical information or statistics in an appendix, with key points drawn out in the paper.
• Include relevant key metrics and information. The board should discuss and agree what information it expects when considering major capital investments and subsequent revenue implications, acquisitions and disposals, introducing or withdrawing services, entering into a joint venture, partnership or collaboration etc.
• Include an analysis of the risks of the proposal, especially on quality and patient safety, financials, staff and reputation, but also the environment etc.
• Consider the risks of not taking the action recommended in the paper.
• Give details of any internal sign-offs, approvals, discussions, external advice, views of key stakeholders which have informed the drafting of the paper and the recommendation.
• Give a clear and reasoned recommendation.
• Detail any further approvals required and likely timing – e.g. approval of a regulator, joint venture partner or other related organisation.
• Provide the name of the writer and contact details.

Plain English rules

Using an appropriate level and style of language is a feature of effective business writing. Plain English is the best style for board papers. This is not ‘dumbing down’ but is about being clear and unambiguous.

• Stop, think and plan before you start to write.
• Make a note of the points you want to make in a logical order.
• Keep your sentences short – an average of 15 to 20 words. Try to stick to one main idea in a sentence.
• Choose active verbs – we will do it rather than it will be done.
• Use everyday English whenever possible, choosing shorter, familiar words.
• Avoid jargon and legalistic words and always explain any technical terms you have to use.
• Avoid nominalisations – needlessly changing verbs or other words into nouns: e.g. judgement rather than judge, or development rather than develop.
• Imagine you are talking to your reader. Write sincerely, personally, in a suitable tone of voice. Read through what you have written aloud to yourself – does it flow, make sense and support your argument?

Board Papers and Governance

Board papers are critical part of the governance process and are used to describe the business items for a board meeting.

Board papers are produced for three purposes:

1. Information only.Financial results would be anexample of an information only Board Paper.
2. Discussion. A discussion board paper is provided to introduce a point of discussion for the board, including sufficient facts to support the discussion.
3.  Decisions.  A decision paper is designed to ask the Board to make a decision.

This document focuses on decision papers, but some of the same principles can be applied to other types of board papers.

Contents of a Board Paper

There are a number of ways to format and structure a Board paper and your organisation may already have a template. There are however, common elements that should be included in all papers:

1. Board resolution. The resolution you are asking the board to pass (this is the decision you would like them to make). Officially this is a draft only, but should be written in a way that it can be accepted as it is by the Board.  An example is: “The Board of Sports Organisation resolves to approve the construction of a new sporting facility at 123 The Place, New Town for the purposes of playing sport at an estimated cost of $500,000.”
2. Executive summary. The executive summary should specify the purpose of the Board paper – information only, discussion or seeking a decision and specify the recommendation. The executive summary should be no more than a single paragraph of 4 – 5 lines.
3. Recommendation. As the writer of a Board Paper, it is important you provide a very clear and concise recommendation to the Board. The recommendation should include:
   1. The recommendation you are making to the Board, essentially that they pass the resolution ( make the decision)
   1. The reason why the Board should accept the recommendation
   1. Summary of alternatives (where relevant), and therefore why the recommendation is the best option.
4. Background. The background section should provide enough information to enable a Board member to understand the resolution and to form an opinion on the correct outcome. Board members do not normally work in the organisation on a day-to-day basis and therefore their knowledge of the detailed operation needs to be considered.

The background should also indicate if there are previous Board Papers on similar subjects that Board members can refer to.

If there is more background information than can fit within approximately one page, the information should be summarised in this section and provided as appendices to the Board paper.

• Issues and Risks. Issues are any general factors that will affect the proposal that the Board should be aware of in making their decision. For example, in deciding to build a new facility an issue may be that the City Council has not approved the car parking area as planned.

Risks, unlike issues are factors that MAY occur and MAY have an impact on the intended outcome. Risks if they do occur may have a significant impact and therefore considerable thought should be put into identifying the possible risks and how best to manage these.Click here for further detail on risks.

• Consultation. The consultation section should include details of who has been involved in developing the Board paper. This will include other people from within your organisation and may include external people used as advisers. The consultation section should provide the Board with assurance that all key stakeholders have been involved in the development of the Board paper.

Other elements that could be included, depending on the decision required are:

1.  Financial summary. A financial summary is required if the decision will have any financial impact on the organisation.

Ideally, your organisation will have a standard way to summarise financial information.

The most common is a profit and loss statement. This is useful if the decision is likely to impact the income you receive or your expenses. For example, changing membership fees, taking part in a new competition, or securing a new sponsor.

If the decision requires a significant capital investment then it may be necessary to identify both profit and loss impact and the cash flow impact (the actual money you spend). There are a number of methods for identifying the cash flow impact based on considering the length of time until the money invested is returned to the organisation. These include cost benefit analysis, net present value and internal rate of return. The following link provides more information and guidance on these terms. http://www.mindtools.com/pages/main/newMN_TED.htm#financial

• Alternatives analysis. A key aspect of decision making is considering alternatives or other options. Most decisions are not just a case of yes or no. A good alternatives analysis should demonstrate that there are different ways to achieve the same or similar outcome. For example, if the decision is to seek approval to build a new facility for the organisation, then the alternatives could include an option to lease or purchase an existing facility, instead of building. Click here for further details on consideration of alternatives.

Developing a Board Paper

When developing a Board paper it is important to recall the purpose of the Board. The Board’s governance role with respect to decision making is to ensure that the decisions are supportive of the strategy of the organisation, adhere to the policies of the organisation and meet the needs of the members or shareholders of the organisation. The Board do not normally work in the organisation on a day-to-day basis and therefore may not be aware of all the factors affecting a particular decision. As such it is important to:

1. Include managers and other key people in your organisation in the development of the Board paper. This will ensure you have identified the widest scope of the decision and can confidently present all the required information to the Board.
2. Consider informal discussions with some of the Board members while developing the Board paper. This will help to ensure you capture the information the Board will require and give those spoken to an opportunity BEFORE the Board meeting to consider their views. If the decision is going to be complex for the Board, discussions prior to the Board meeting can be invaluable.

Depending on the Board process, it may be necessary to provide a presentation to the Board as well as the written Board paper. If this is the case the Board paper needs to stand alone as a document with all the information necessary for the Board to make a decision. The presentation is only to provide an opportunity to present a summary of the information and respond to questions. You should not include any new factual information in the presentation, as some Board members may not be able to attend the presentation and the Board paper is an official document of record for the organisation.

When you have completed your Board Paper ask yourself the following questions:

1. Is this targeted at the right level for the audience?
2. Does it contain all the relevant information for the Board to make a decision?
3. Is it clear and concise?
4. Does it ask for a specific decision to be made?