Board reporting is time-consuming. But exactly how much time does it use up? And, when time is money, what does it cost? Board Intelligence and ICSA joined forces to undertake a piece of research that would get under the skin of these questions, exploring the end-to-end process and shining a light on the often-hidden cost of board reporting.
With the help of ICSA members, Board Intelligence and ICSA held a series of focused interviews and workshops, pooling the experiences of large listed multinationals, small not-for-profits, and everything in between. What has emerged is a peer-reviewed model structured around the key stages of board reporting, and a set of user-inputs which train the model on the specific context of your organisation. Underneath this are a set of robustly challenged assumptions that power the final calculator. This page explains the workings of the calculations.
The Key Stages of Board Reporting
The Board Reporting Calculator is built around the three key stages that define any board reporting process:
- Writing board and committee papers, including the briefing and review process;
- Compiling & distributing those papers; and
- Reading those papers
The time and cost involved in board reporting varies greatly depending on certain characteristics of your organisation and the nature of your boards and committees. There is no “one-size-fits-all” and so the model adapts to reflect the context of your organisation, powered by a set of inputs that you control. These user-inputs are:
- The number of boards and committees and the frequency with which they meet, which affects all three stages of the reporting process;
- The size of the boards and committees, which affects the time and cost of distributing and reading papers;
- The size of the organisations, which correlates to the number of people (and thus the time) involved in the drafting, reviewing and approving of each paper, the proportion of papers in a board pack that are deemed ‘more complex’ and thus time consuming to prepare, and the average salary levels of each participant, impacting the cost
- Whether the organisation is heavily regulated, which has a similar impact to that of size;
- Whether an organisation is a corporate, public sector organisation, or a charity, which (along with the organisation’s size) impacts the salary and associated costs of the people involved in the process; and
- The method by which the papers are distributed, which affects the costs of that component
The assumptions underlying each stage of the model are explained in more detail below. These assumptions are the product of the research programme conducted by Board Intelligence and ICSA, and have been thoroughly tested, but they are inevitably simplified and do not cover all the possible variations. The numbers you have received, therefore, represent an average for those organisations that share the characteristics you described.
Writing board papers
The length of time taken to write a board paper varies considerably, and the model attempts to reflect this by distinguishing between simple and complex papers. This classification does not just reflect the relative complexity of the subject matter, but also of the processes required for briefing the writers of the papers, gathering and visualising data (if data is required), reviewing drafts, and signing off the paper. Other classifications were tested during the development stage (for example, standing items vs non-standing items and financial vs non-financial information) but were found to be less robust.
Data was collected from company secretaries and others on:
- The time spent on complex papers versus simpler papers;
- The number of pages in a typical complex paper versus a typical simple paper; and
- The ratio of complex to simple papers in a typical board pack
Analysis of this data showed that, in each case, the resulting numbers were influenced by the size of the company and whether it was heavily regulated. Larger or more heavily regulated organisations typically have longer board packs containing more individual papers than smaller or more lightly regulated organisations, with a greater proportion of the papers being complex ones. In addition, all papers produced in larger or more heavily regulated organisations take longer than in others, because there tends to be a greater number of people involved in the process and a greater number of review cycles.
Using this analysis, scales were developed giving typical figures for each of the three data points by size of organisation. The model includes numbers for the ‘time per page’ that differentiate by type or paper and the characteristics of the organisation (size, sector and level of regulation). It also uses those characteristics to set different ratios of simple to complex papers.
To calculate the time taken to write board packs, the calculator starts with the typical length of the board pack, applies the relevant ratio to determine how many of the pages in the board pack are ‘simple’ or ‘complex’. It then multiplies those two numbers by the time taken per page typical for that size of organisation and type of paper, and then again by the number of meetings, to give the total time spent on writing board papers.
To work out the costs to the organisation of the time taken to write board papers, the model draws on data on remuneration and employment costs from a number of different published sources to set an hourly rate for each person involved in the process. The model contains different rates for the different roles — such as the chairman, CEO, CFO, and company secretary (or equivalent) — and for different sectors and sizes. These rates are also used for calculating costs of the other components.
The size of an organisation impacts on the total cost figure for this component in two ways. First, the hourly rate for a person’s time is higher in a large organisation than for a small one in the same sector, reflecting the fact that remuneration typically tends to be higher in larger organisations. Second, the model assumes that the time invested per page of a board pack is greater in a larger (and heavily regulated) organisations than in others, reflecting the more extensive review processes that are typically required in those organisations.
Compiling & distributing the board pack
There are two factors used to determine this component: the time taken by the company secretary or equivalent chasing and compiling the board pack, and the cost of distribution.
The calculation of the time taken by the company secretary is determined primarily by the number of meetings for which board packs are required, but also by the number of papers required. The associated costs are in turn determined by the size and sector of the organisation, as explained above.
The cost of distribution is obviously linked to the method (or methods) of distribution. The model assumes zero costs for emailing papers, other than the cost of the company secretary’s time. The typical cost of printing a page of paper and couriering a package are included in the model, and in each case the total cost will be multiplied by the number of meetings and the number of people receiving the papers (and, for printing, the total number of pages in all board packs), For board portals, the model includes figures for the cost per user, which have ben scaled by size of organisation to reflect the likelihood that larger organisations are likely to use more complex portals.
Reading the board pack
This component covers only the time taken by board members to read the papers in preparation for the board meeting, and not the time taken at the actual meetings.
Board Intelligence has carried out a lot of research on this issue over the years, including a study delivered in conjunction with Cambridge University, and consistently found that, irrespective of the length of a board pack, the time directors allocate to reading their papers is 3–4 hours. Nothing in this research implied that this was affected by either the size or sector of the organisation. This figure has therefore been used as the basis of the calculations for all organisations.
The assessment of time taken and the associated cost will depend on the number of meetings and number of members, and the cost will also be affected by the size and sector of the organisation (for example, while non-executive directors of listed companies will usually receive fees — for which an average adjusted for size has been used — members of boards of charities will typically not).
The structure of the model and the assumptions underpinning it will be subject to further review and revision, and we would welcome any feedback that you have to inform this process, just use the form below. All the responses we receive will be collated and we will email you about future updates and content related to the Board Reporting Calculator.