Director and officer (D&O) questionnaires and board evaluations aren't required by every corporation, including those that otherwise practice good corporate governance. In fact, only about 21% of boards require D&O questionnaires and board evaluations. Boards that perform these duties for corporations that don't require them prove that they are staying ahead of requirements and priming themselves for good governance. Investors are sure to take notice of boards that go above and beyond what they need to, in order to run a reputable company. As regulations for for-profit corporations increase, non-profit boards are also starting to feel the pressure to complete D&O questionnaires and board evaluations.
Timeliness matters with D&O questionnaires, as corporate secretaries have deadlines for submitting reports to comply with disclosure regulations.
Corporate secretaries who take a positive approach, reminding board directors of the importance of the questionnaires and evaluations, and how they will be used to better the board's work, will likely get a positive and engaged response back from board members. The tone of board discussions around the topic of the evaluations is also an important factor in getting the board directors to do their best on the evaluations.
Board directors have their reasons for not getting excited about evaluations. Some of them feel that if they were honest about them, it would alienate certain directors. Others just don't believe that the information they gain from evaluations is enough to justify the time that they spend completing them.
The reality is that evaluations may point to board director weakness. When it does, making changes in board director composition will be a good thing, albeit a bit uncomfortable at first. When board directors don't feel that they are getting enough out of the evaluations, it's a signal to the board to have a more detailed discussion about what they need to get from the evaluations. Such a discussion is valuable for board secretaries, who will want to change the questions on the evaluations so that the questions correspond with the answers that the board needs.
The process for setting up and analyzing board evaluations doesn't have to be a complicated one. Board software, like products that Diligent offers, makes things much easier for board secretaries.
Board secretaries have the option to use various formats for asking questions. Some of the questions can be pre-filled on individual applications or pre-filled for the entire group, which saves time. Secretaries also have the ability to add links and reference information to expedite the evaluation process. Board software is intuitive, which makes the process fluid and easy to navigate.
Board software lets secretaries give each director the answers to the previous years' questions. This helps board directors to learn if they've made the progress that they'd hoped for over the last year. It also gets them thinking about what they need to change over the next year. Software programs will usually store current, past and future questions, so the secretary can pull from them as necessary.
Board secretaries can set up the same questions year after year, modifying and updating them as necessary. Software programs also let secretaries regulate permissions by individual or by group to protect confidentiality. Board software for D&O questionnaires and board evaluations helps secretaries to monitor the processes to completion. Secretaries can set up the evaluation questionnaires with a beginning date for the assessment, as well as a closing date so they can oversee the process. They can see which directors opened the evaluation, and who started or completed them. Board software also allows users to apply a digital signature as an added convenience.
Board directors will surely appreciate the security features of board evaluation software, including giving controlled access rights to certain devices. The right software ensures that sensitive information won't get into the wrong hands.
Using board software for evaluations takes away some of the inconvenience that frustrates board directors because it gives them the freedom of mobility. Board directors and officers can access their evaluation forms and questionnaires from any electronic device, including their home computer or laptop, tablet or cellular phone. Despite being out of town for work or other reasons, it is still possible to complete board business.
In some cases, board evaluations may indicate that questionnaires are not enough on their own to provide pertinent information. In such situations, the evaluations may lead board directors to the conclusion that interviews between board directors and key managers will provide a more comprehensive picture of the effectiveness of the board.
The new regulatory reporting requirements have caused board directors to focus more heavily on compliance demands rather than oversight. This shift is creating new tensions between board members and managers. Board directors need to stand behind the CEO and the management team so that they can make the bold decisions that they need to make with both parties being keenly aware of measuring associated risks. The completed evaluation process should leave board directors and managers feeling like they've conquered any groupthink problems while still maintaining harmony among the ranks and strong support for their management teams.
Finally, board software helps secretaries to keep D&O questionnaires timely and relevant in order to keep corporations in constant compliance.
The Corporate Secretary's Mindset Sets the Tone for Board Director Participation
As with anything that is difficult or time-consuming, the way that you approach it makes all the difference in motivating others to take it seriously and to see enough value in it to do a top-notch job on their part of it.Timeliness matters with D&O questionnaires, as corporate secretaries have deadlines for submitting reports to comply with disclosure regulations.
Corporate secretaries who take a positive approach, reminding board directors of the importance of the questionnaires and evaluations, and how they will be used to better the board's work, will likely get a positive and engaged response back from board members. The tone of board discussions around the topic of the evaluations is also an important factor in getting the board directors to do their best on the evaluations.
Board directors have their reasons for not getting excited about evaluations. Some of them feel that if they were honest about them, it would alienate certain directors. Others just don't believe that the information they gain from evaluations is enough to justify the time that they spend completing them.
The reality is that evaluations may point to board director weakness. When it does, making changes in board director composition will be a good thing, albeit a bit uncomfortable at first. When board directors don't feel that they are getting enough out of the evaluations, it's a signal to the board to have a more detailed discussion about what they need to get from the evaluations. Such a discussion is valuable for board secretaries, who will want to change the questions on the evaluations so that the questions correspond with the answers that the board needs.
Evaluations Get Some Help from Board Software Applications
Board software applications can help corporate secretaries to get questionnaires out early and monitor them so that they can get their reports in on time.The process for setting up and analyzing board evaluations doesn't have to be a complicated one. Board software, like products that Diligent offers, makes things much easier for board secretaries.
Board secretaries have the option to use various formats for asking questions. Some of the questions can be pre-filled on individual applications or pre-filled for the entire group, which saves time. Secretaries also have the ability to add links and reference information to expedite the evaluation process. Board software is intuitive, which makes the process fluid and easy to navigate.
Board software lets secretaries give each director the answers to the previous years' questions. This helps board directors to learn if they've made the progress that they'd hoped for over the last year. It also gets them thinking about what they need to change over the next year. Software programs will usually store current, past and future questions, so the secretary can pull from them as necessary.
Board secretaries can set up the same questions year after year, modifying and updating them as necessary. Software programs also let secretaries regulate permissions by individual or by group to protect confidentiality. Board software for D&O questionnaires and board evaluations helps secretaries to monitor the processes to completion. Secretaries can set up the evaluation questionnaires with a beginning date for the assessment, as well as a closing date so they can oversee the process. They can see which directors opened the evaluation, and who started or completed them. Board software also allows users to apply a digital signature as an added convenience.
Board directors will surely appreciate the security features of board evaluation software, including giving controlled access rights to certain devices. The right software ensures that sensitive information won't get into the wrong hands.
Using board software for evaluations takes away some of the inconvenience that frustrates board directors because it gives them the freedom of mobility. Board directors and officers can access their evaluation forms and questionnaires from any electronic device, including their home computer or laptop, tablet or cellular phone. Despite being out of town for work or other reasons, it is still possible to complete board business.
Generating Reports that Are Useful and Constructive
Using board software also makes the task of analyzing data much easier for corporate secretaries. Software programs have built-in analysis tools that let secretaries view the information in various formats. This allows secretaries to select the formats that their boards can easily understand and use them for discussions. An added benefit is that board directors can use the existing reports or change them to make them suitable for public presentations.D&O Questionnaires and Board Evaluations: Using the Data to Improve Effectiveness
When boards take a positive approach toward evaluations, with the goal of learning more about their strengths and weaknesses, individually and collectively, they will learn more about issues they need to address and how to improve their performance. If best practices or governance issues come to light, it gives them a chance to confront them and to make effective change.In some cases, board evaluations may indicate that questionnaires are not enough on their own to provide pertinent information. In such situations, the evaluations may lead board directors to the conclusion that interviews between board directors and key managers will provide a more comprehensive picture of the effectiveness of the board.
The new regulatory reporting requirements have caused board directors to focus more heavily on compliance demands rather than oversight. This shift is creating new tensions between board members and managers. Board directors need to stand behind the CEO and the management team so that they can make the bold decisions that they need to make with both parties being keenly aware of measuring associated risks. The completed evaluation process should leave board directors and managers feeling like they've conquered any groupthink problems while still maintaining harmony among the ranks and strong support for their management teams.
Finally, board software helps secretaries to keep D&O questionnaires timely and relevant in order to keep corporations in constant compliance.
