The article below was published on 16 September 2014 in THISDAY LAWYER, the weekly pull-out section, for lawyers, in THISDAY NEWPAPER in Nigeria.
Using Technology to improve the Efficiency of Company Secretaries
The global financial crisis a few years ago has led to an increase in the amount of information directors are required to review, in order to ensure a better informed decision-making process. The increased scrutiny of directors has also challenged them to be more effective in their governance role, and technology is increasingly taking centre stage in driving this improvement.
An important component of this governance function is the information received by directors, when it is received, and the ease of access to historic information. For company secretaries, the seemingly straightforward task of collating information and issuing papers can often be quite daunting, with the need to print several pages for board packs to be issued to directors who may be geographically dispersed. Approaching the end of this process, it is not uncommon to experience a feeling of trepidation, with the expectation that there will be a late paper or last minute update, which may disrupt a tight schedule of collation and delivery of papers. Any delay in issuing papers in turn adversely impacts directors’ ability to perform their governance function effectively.
This article identifies the drawbacks of a manual system of meeting preparation and its impact on the efficiency of company secretaries and the ability of the board to fulfil its role effectively. It also highlights how the technology-driven BoardPacks governance solution addresses these drawbacks, improving the efficiency of company secretaries and enhancing the governance process.
Drawbacks of the manual system of organising board meetings
Most company secretaries will attest to the challenges faced in ensuring that the Board has the right information when it requires it and that it is kept confidential. In order to provide a vivid picture of the challenges faced by company secretaries and directors using a manual system, an outline of these challenges is provided below:
Using technology to address the challenges faced by company secretaries and board members
In order to streamline the communication process, and enhance the effectiveness of the board, an increasing number of companies are adopting technology-driven tools to improve efficiency, while giving the board a means to collaborate and communicate in a secure electronic environment.
Highlighting the increasing use of technology in the boardroom, the introduction to an article by Fay Feeney, a risk management professional, noted that technology had become a part of the boardroom and had been reshaping the parameters of corporate governance. This view appears to have been shared in an article written for the Financial Times in August 2014 by Saul Klein, an entrepreneur, where he said that, across the world, companies and governments were now using their mastery of technology to reimagine the role they can play.
Nigerian companies should not be left behind in the application of technology to enhance governance and a technology-based tool that can be adopted for this purpose is the electronic BoardPacks governance solution. This is a secure web-based platform that moves meeting papers online, encrypting all information. It simplifies the process of issuing papers and drives the move to a paperless boardroom. BoardPacks provides real-time access to other relevant documents and a number of useful tools, such as risk management tools, which all enhance the governance process. The availability of BoardPacks through a tablet app, such as an ipad, or web browser on a laptop, without any software or hardware installation, makes it easy to use and ensures the portability of meeting papers. Other benefits of this governance solution are outlined below.
Benefits of the electronic BoardPacks governance solution
These benefits result in a board that is better informed with adequate meeting preparation time, and real-time access to updates. Also, proper and timely information leads to further insight into a company’s activities, which improves decision-making, resulting in more effective governance. This position was supported by Ram Charan, the renowned corporate governance expert, in his book “Boards That Deliver” when he stated that “how boards get what information, and in what form, is vital to how the board operates.” He has also highlighted that “boards need the right information, in the right format, at the right time.”
Furthermore, the benefits of portability, and fast and secure access to meeting papers, outweigh any concerns that may be lurking in the background. Also, the use of this technology does not require directors to be technologically savvy, as it is easy to use.
Drawbacks of other technology-based systems
It is pertinent to highlight that the use of other inappropriate online solutions such as email and document sharing sites like Dropbox are fraught with risks, which could pose a serious threat to the confidentiality and accessibility of board papers. This includes the possibility of emails being hacked easily and the risk of inadvertently sending confidential documents to the wrong recipient. The size limits imposed by email also make it inappropriate. Other solutions, such as the Dropbox service and PDF documents, are prone to security breaches and lead to a loss of control.
Also, in-house systems accessed via the intranet will not be as advanced and reliable as a system developed by a specialist software development firm.
With this mind, it is important that company secretaries adopt the right technology, as highlighted in this article, in order not to be left with more problems than solutions.
The increasing adoption of appropriate technology in the boardroom attests to the confidence in its security and acknowledgement of its benefits. This reliance on technology continues to increase, having been used in the UK, Europe and the US, in the last 8 to 9 years, and has become more widespread in recent years with the introduction of tablet devices such as the ipad.
This increasing adoption of technology in the boardroom was confirmed in the 2012 Board Practices Report from Deloitte & Touche, the global accounting and professional services firm, which revealed that there was an increase in company boards using technology for organising meetings and issuing board papers. Two-thirds of public companies surveyed at the time of the report, confirmed that their boards were using technology.
In a survey conducted a few years ago by the Audit Committee Institute of KPMG, another global accounting and professional services firm, and Corporate Secretary magazine in the US, half of the corporate secretaries, general counsel and directors polled, confirmed their use of technology in organising board meetings, and collating and issuing board papers. Of the remaining 50%, 20% expected to use technology for these tasks in the next 6 to 12 months. A majority of respondents also confirmed that technology had improved their board’s efficiency, while 36% said the board had ‘adapted easily’ to technology.
Also, a governance survey conducted in the UK in 2013, by eShare, a provider of governance and meeting management software, revealed that 96% of those surveyed said technology played an important role in good governance.
Lastly, a board adopting appropriate technology will be seen to be more progressive and forward-looking, and its “green” credentials will be enhanced. There are numerous benefits for being in this company of leaders and organisations, and the need to mitigate the pitfalls inherent in a manual system of meeting preparation and board papers collation has never been greater.
Perhaps company secretaries should now start to give serious consideration to how they can avail themselves and their boards of the benefits of technology to increase their efficiency and enhance the governance process for which the board has ultimate responsibility.
- Ram Charan