All of the new pressures hammering corporate governance lately boil down to one simple (if brutal) operational equation -- less time, plus more oversight, plus more information, plus fewer qualified directors must somehow equal better governance.
Yet we've seen business in general doing far more, far faster, and with less over the last decade. How? Smart use of new communications technology. But only now are boards beginning to join the high-tech move to light-speed info flow and decision making. How are boards using technology to supercharge their governance?
A couple of years ago, I reported how the board at Compaq was heading into the tech age by putting all the board's info mailings on an encrypted CD-ROM. All board members are issued a Compaq laptop with a software suite that includes a reader for the CD.
According to Sherry Walker, legal assistant to the VP for compliance at Compaq, directors are enthusiastic about the ease and speed of CD board books, but concerns about security have stalled a move to put board info online or wall off a special board-only Web site. "We keep hoping to find a process that allows us to move files onto a secure server, so directors can get in via the Internet past our firewall," Walker says. Also, some board members still prefer hard copies -- "not all directors use the technology."
At one of the world's foremost data processing companies, the corporate secretary tells me that her office is at the moment working on a confidential "intranet Web site created for the directors." The site will be "loaded with as much info as the directors might want to see" including financials, agendas, news, and strategic info.
Security is the paramount concern. "We're in the business of security, so we're designing it very carefully," she says. Walker plans to offer a prototype at the company's next board meeting, with full implementation "by the end of the summer," but she still expects that the board won't go 100% electronic anytime soon. "Some of the directors are technical, some not; I think there will always be a need for board mailings."
One of America's biggest flooring makers is also a key innovator when it comes to board info technology. The corporate legal counsel tells me that they have "a beta site up for directors, where we put up minutes, reference materials, the charter, bylaws, items from the director's manual, and telephone contacts." The board Web site also serves as an intranet with secure e-mail service between directors. "Through this site, directors can have a conversation among themselves, or if, say, the chair of the governance committee wants to send a message only to committee members, he can."
The company above tried an intriguing e-board Web site strategy. "We're going through our outside legal counsel; they host it. They've already tackled all the security issues, so 90% of those headaches are lifted." Such a strategy offers a couple of benefits: Law firms tend to be strict about keeping their sites safe; the board creates its own electronic presence away from management.
Downsides to the e-board? Most tie into the human factor. "You can build in security," notes the corporate counsel above, "but some weaknesses relate to the people who have access." Boards already have a problem with members who leave confidential papers behind on airplanes or hotels rooms, and e-boards make things worse. Look at the recent cases of government laptops with top-secret files being misplaced. Also, as all the cases noted above show, directors are still sluggish in making good use of current info technology.
Copyright © 2000 Ralph Ward's Boardroom INSIDER