One of the most critical skills for any board director is the ability to effectively read and understand board papers. This process is far more than a routine task—it’s an essential part of fulfilling your fiduciary responsibilities and ensuring good governance. Board papers are your dashboard of information—your key to understanding the health, strategy, and financial standing of the business.
Preparation is Key
In an ideal setting, you’ll receive the board papers well in advance of the meeting, allowing ample time to prepare your thoughts and formulate questions. Often, board packs are extensive, with financial reports making up a significant portion. It’s essential to grasp the full scope of the business’s position: cash flow, net assets, and any potential risks or opportunities.
Personally, I like to take a two-step approach:
- First Reading: The Overview My first read-through is quick, providing an overall sense of the key topics and agenda items. I skim the papers, allowing myself to identify potential hotspots or areas requiring deeper attention. This process is about getting a general understanding of where the business stands, and typically takes around 30-45 minutes, depending on the size of the pack. At this stage, I’m not delving deeply into the details—I’m simply scanning to get a feel for the issues at hand.
- Second Reading: The Deep Dive After a break, I go back for a more formal and detailed read. This time, I focus on making notes and identifying key questions. It’s also helpful to go through the financials first, as understanding the company’s financial position is paramount. Knowing where the business is making or losing money, cash flow status, and areas of concern allows me to walk into the board meeting with a solid understanding of where decisions need to be made.
Financials: The Heart of Board Papers
The financials are the cornerstone of any board pack. As a board director, you need to understand the true financial position of the company. If the financial reports aren’t clear, don’t hesitate to follow up with the CFO or financial director for clarification. Misinterpretations can happen, especially when dealing with complex accounting practices like accruals.
If there are loss-making units or areas where the business is underperforming, it’s critical to be proactive. In my experience, it can take several board meetings to arrive at a solution, and any delay can lead to missed opportunities or prolonged underperformance.
Strategy and Board Papers
Once I’ve reviewed the financials, I turn my attention to the business strategy and other board papers. This is where I look for input from fellow board members and consider how their opinions align with the overall direction of the business.
It’s important not to hesitate in reaching out to colleagues to discuss their papers prior to the meeting. Gaining further context or understanding why certain recommendations have been made can provide invaluable insight—especially if you disagree with the approach being proposed. A quick chat with the paper’s author can help clarify their thought process and provide anecdotal feedback that often isn’t included in the formal documents.
The Importance of Accuracy
Remember, board papers are the record of the business—and your decision-making. It’s crucial that every board director does their due diligence to catch mistakes or inconsistencies before they’re signed off. Mistakes can and do happen, and it’s our job to ensure that we uphold good governance by identifying them early.
Having a strong company secretary is also key, as they ensure that the board papers are collated and presented accurately. Going into a board meeting with the correct and complete information makes all the difference.
Final Thoughts
The bulk of the board’s work happens before the meeting itself. Effective preparation, especially in reviewing board papers, is a non-negotiable aspect of being a responsible and informed director. It’s your job to ensure that you have the dashboard of information needed to make sound decisions.
Board papers provide a detailed snapshot of the business’s health, strategy, and risks. Taking the time to thoroughly understand these documents—and following up with your colleagues when necessary—is essential to good governance and effective decision-making.
