Herbert Simon, 1971
We get board books that are 100 pages or more in length. Much of it consists of reports about what committees have done and detailed financial information. Then we get to the meeting and someone tells us about what the committees have done and what the finances look like—in excruciating detail. And because there is so much information, the meetings go on forever. The concept is, we really need to be told everything and we need to be told twice, once in writing and once in the boardroom. We become like the bottomless cup of coffee restaurants used to serve. They just keep filling us up with more and more information. And we are all drowning in knowing too much about a lot that is not really that important.
For example, I was at a board meeting of a large non-profit organization with an operating budget north of $35 million that was operating at a loss. The board was populated with a number of high-level executives. Among the reports we received was a 15 minute presentation about a very minor activity at a community event, the same amount of time allocated to discussing the lagging finances of the organization.
It is time boards stood up to the information monster. Boards need to decide what information they want, how much information they need and how that information will be provided. My experience has been that typically a member of the leadership team or staff makes these information decisions. That should change. The governance committee and chairperson should establish criteria for the amount and type of information that will be delivered to the board.
The test is not what is available. The test is what information is needed for the board to function properly. This starts with recognition that the board needs three very different kinds of data. When the board is evaluating prior performance, it needs high-level data that can allow it to quickly assess the overall performance of the organization. If the board is focusing on a lack of performance in a particular area, it needs detailed information about the problem and possible solutions. When a board is making decisions, it needs information about alternatives. And when the board is focusing on strategic matters, it needs information that is future focused.
In addition to the right type of information, there needs to be enough information, but JUST enough, for the board to function effectively. Too much information is like too much salt. At some point, the information becomes counterproductive. I encourage the chairperson to act as the board’s gatekeeper, scrutinizing not only the agenda, but also the information that will be presented to board members. Boards need to design an information system that works for them. By creating an information filter, they cannot only limit the volume of information they receive; they can make sure they are reviewing the right data. Utilizing this approach, boards can finally tame the information monster.
Michael R. Vanderpool is a principal in Signature Success, LLC, a board consulting company. He is also a business attorney and an adjunct professor in the School of Management at George Mason University. He will be presenting a session titled “Beyond the Dashboard – Designing a New System to Tame the Information Monster” at BLF2014.