A long list of forces could quicken change in board meetings – or completely reshape them – in the next two decades. These forces include globalisation, technology, increased regulation, heightened stakeholder activism and changing boardroom expectations.
However, governance change, by its nature, tends to be incremental rather than radical. Those hoping for disruption in the structure, content and timing of board meetings will probably be disappointed.
Also, many Australian boards have already taken steps to improve their meetings in the past decade. These have ranged from changing meeting agendas so there is extra time to discuss strategy, to holding board meetings on site or doing more compliance work at committee level.
Moreover, some boards may have little need to change their board meetings or limited scope to do so because of their organisation’s constitution.
Nevertheless, it is a useful governance exercise to consider what the future of board meetings could look like and how various scenarios might play out. Here are 16 possible changes, some of which could occur in the next few years; others have a much longer horizon.
1. Offshore-based directors
As Australian business globalises, and as boards target a larger pool of director candidates, the need to have offshore-based directors is growing. CSL, BHP Billiton and other companies already have some overseas directors and more are likely to follow. That has implications for board-meeting cycles, given time-zone and logistical challenges for offshore directors to attend meetings held in Australia.
2. Offshore-based meetings
The globalisation of Australian business will also encourage more companies with expanding offshore operations to host at least one or two meetings each year at overseas sites. Their directors should prepare for more international travel – and be prepared to allocate extra time to their board duties, given the time involved in overseas site visits and board meetings.
3. Video-conferencing technology
As more directors are based overseas in coming years and as some board meetings are held offshore at company sites, video attendance at board meetings could become prevalent. Directors, particularly those with multiple board positions, may find it logistically impossible to attend all board meetings overseas. Their boards will need to ensure they have the latest conferencing technology so that directors can make an effective contribution online.
4. Board-meeting cycles
Boards with a rising proportion of offshore directors and offshore-held meetings may have to consider a different board-meeting cycle in coming years. Some governance observers have suggested a longer, quarterly board meeting is easier for offshore or interstate-based directors to attend, with separate main-board compliance and committee meetings held in between. Others say quarterly board meetings reduce director interaction with each other and management, and are too far apart in fast-moving markets.
5. Digital board meetings
If industry disruption intensifies and markets become more volatile, uncertain, complex and ambiguous (VUCA) in coming years, some boards may want the capacity to host full digital board meetings at short notice. This would involve boards working together as digital teams, using online governance or collaboration platforms. Directors will need skills to work in digital teams.
6. Stakeholder feedback in meetings via blockchain
As blockchain (a form of online shared ledger) and other technologies develop, boards may have greater capacity to seek rapid, low-cost feedback from stakeholders in meetings (see the separate story in this edition of the Governance Leadership Centre on blockchain). Although this technology is in its infancy and years from finding its way into boardrooms, it could change the structure of board meetings as directors consider real-time stakeholder feedback – and enhance the visibility of meeting decision-making processes, within reason.
7. Virtual reality (VR)
Through VR technology, directors could one day experience board meetings in an entirely different way. Using a VR headset, they could immerse themselves in their organisation and play the role of a shareholder, customer, employee, regulator or another stakeholder to experience their perspective when making decisions. They could also use VR for digital site visits or to interact with other directors and executives in a digital world.
8. Artificial intelligence (AI)
Hong Kong venture-capital firm Deep Knowledge Ventures famously appointed the world’s first robo director in 2014. The algorithm, named Vital, analyses trends in life-science companies to predict successful investments. As AI technology develops, it’s likely that algorithms will play a larger role in governance decisions in board meetings. Some boards might one day implement robo directors that have full voting power, if the technology develops sufficiently. A likelier outcome is boards using algorithms to aid rather than replace their decision making.
9. Director meeting performance measured digitally
As boards interact more online in coming years, technology may enable companies to assess the performance of directors in a digital team environment. Curtin University in Western Australia, for example, is developing technology to assess individual student performance in digital teams by analysing their communications, interaction, workflows and task completion. The technology could be applied to companies and boards that want to measure performance.
10. Agile board meetings
As industry volatility increases, boards may look to “agile” processes to speed up their governance process. Born in the software industry, agile thinking is based on self-organising, cross-functional teams that experiment, learn and adapt through rapid iteration, based on customer feedback and validation.
However, several aspects of agile thinking appear ill-suited to boards, but the agile approach of self-organising teams, maximising the amount of work not done by boards (to free them up for other tasks) and the focus on regular reflection and evaluation, has some merit for directors.
11. Longer, larger board committee meetings
As board workloads continue to grow, it is likely that key committees such as audit and risk, and remuneration will take on extra tasks and be attended by all the organisation’s directors in coming years. That already occurs on some boards and the next evolution could involve committee meetings being held more frequently and resembling a “mini main-board meeting”.
Extra time will be needed for substantive discussion on committee meetings, to move the focus mostly from compliance to risk management and strategy. In turn, deeper discussion and resolution of issues at committee level will free up the main board.
12. Greater focus on meeting dynamics
Chairs of high-performing boards are skilled at creating an effective environment for group discussions and interactions. In the next decade, expect extra focus on boardroom dynamics, chemistry and group decision making. Regulators in Europe and Australia are showing greater interest in the interaction of psychology and governance and its effect on corporate culture. The upshot is heightened focus on the board’s emotional intelligence (EQ) and the Chair’s ability to maximise the effect of group thinking and discussions.
13. More pre-meeting and post-meeting work
The days of directors communicating with their boardroom peers mostly only at the board meeting are fading. Expect Chairs to spend more time with directors before meetings and extra time after the meeting to expand on matters raised or any meeting-performance issue. That could also involve monthly video conferences between the full board and the CEO, a practice some companies have already adopted.
14. Multi-component board meetings
Effective boards often host several events around their main meeting. For example, a dinner with the board, CEO and key executives the night before. Or a committee meeting the day before the main meeting (particularly if held on site and the board is travelling together) or a site visit. As boards look to spend more time in the field, and discuss issues with a wider group of company executives and managers, board meetings may have extra components in the future.
15. Greater flexbility in meeting formats
Boards typically lock in their meeting cycle well in advance and follow a template for meeting formats. In coming years, expect more boards to experiment on meeting formats; for example, a longer meeting when a “deep-dive” discussion is needed on a complex issue; and a shorter meeting towards the end of the year, after the Annual General Meeting. A homogenous approach to board-meeting planning may be less effective as industry disruption requires boards to have the flexibility to tailor their meeting structure and content to issues at hand.
16. Rigorous focus on issues that matter
Perhaps the most exciting potential change to board meetings in coming years is deeper focus on issues that matter most to stakeholders, and less time spent on compliance and other routine matters in the main meeting. That will require a continued efficiency drive to streamline board meetings and create extra time for directors to have deeper discussions on issues such as corporate culture, organisation values and ethics, and customer needs.