It goes without saying that board attendance is critical to good governance.
If the organisation cannot rely on its board members to attend meetings and participate in a meaningful manner, it immediately places it at a disadvantage. Poor attendance diminishes the board’s ability to lead by example. It also seeps into the integral, strategic work that the board has been tasked to accomplish.
IMPACTS OF ABSENTEEISM
There are a number of consequences when board attendance issues plague the board. We list some of them below:
Dereliction of Duty
Board members assume fiduciary duties. In essence, this means that directors have an ethical and legal responsibility to put the organisation’s interests above their own, and exercise care, skill, and diligence in their role as a board member. The failure of directors to consistently attend board and committee meetings, as stated in the organisation’s by-laws, can lead to this breach of duty. An absent member simply cannot perform their mandated duties.
There also is the issue of meeting a quorum. Without a quorum, the rest of the board cannot proceed to make substantive decisions. These will not be enforceable.
Lower Engagement Levels
Chronic absenteeism from directors can impact the engagement levels of otherwise high-performing board members. The overall morale of the board is diminished, especially when there is the perception that directors do not share the same burden of responsibility.
Parallel to the issue of lower engagement levels, a perceived disparity in the lack of commitment from other directors can lead to director turnover, leading to gaps in important skillsets, perspectives, and expertise. In addition, the recruitment of highly qualified board members becomes an ongoing, revolving problem.
Erosion of the quality of leadership
The success of a board is predicated on its ability to deliver diverse, thoughtful, creative and strategic insights for the organisation. The presence of members in board and committee meetings is necessary to take advantage of their expertise, experience, and leadership qualities. Absenteeism places the organisation at a disadvantage because it cannot capitalise on those attributes for overall strategic direction. With no one to steer the ship, leadership is compromised.
Good governance continues to be an important topic, and more stringent requirements are in effect to meet that end. On the topic of attendance, corporate governance codes typically contain stipulations around board meeting frequency, quorum or attendance requirements. This lays down the basic, minimum parameters that directors need to comply with, in order to exercise and fulfil their fiduciary duties.
ATTENDANCE AND COMPLIANCE
Tied up to the above, the boards of listed companies in Hong Kong, for instance, have to “meet regularly and board meetings must be held at least four times a year at approximately quarterly intervals.” There must be a quorum as well.
In locations around the world, including the U.K., directors’ attendance records are published in the company’s annual report for transparency and evaluation purposes.
It can be deduced that the attendance record of board members directly correlates with their ability to execute their legal duties of care and fiduciary oversight. It might be of interest to note that when issues of board negligence come to light, and oversight is considered, the immediate factors that are scrutinised involve individual attendance and participation.
Apart from the issue of compliance, accountability is a factor at play.
But absenteeism can be minimised, and engagement levels improved, through a number of incremental, implementable actions, such as the following:
Give board members appropriate notice
- This will allow members to clear out their schedule in advance and adequately prepare for the meeting (including working out necessary logistical requirements for attendance). For publicly-listed companies in the Stock Exchange of Hong Kong (SEHK), for instance, fourteen days advance notice is required.
Enforce an attendance requirement or policy
- Stating an attendance requirement from the onset and enforcing the policy sets the tone for board members. Failing to adhere to the attendance requirements should lead to concrete consequences, such as removal from the position.
Review and evaluate meeting practices
- Are board packs distributed in advance? Does the Chair keep to time, and run meetings efficiently? Are board members encouraged to actively participate? The board should adopt Best Practices for running effective meetings.
Utilise board technologies
- Board technologies make board processes more seamless and convenient. For instance, the use of a board portal allows boards members to actively engage with each other in and out of the board room. This not only keeps members “in the loop” but can also improve their engagement levels and encourage attendance.
THE ROLE OF BOARD PORTALS
To begin with, a board portal is a centralised, online hub designed for the administration and management of all materials and workflows relevant to board of directors’ meetings.
By utilising the platform, board members can go the paperless route for conducting board and committee meetings. It does away with physical board packs. Digital preparation and dissemination ensures that the information delivered to the board is up-to-date, accessible from any device, and highly-secure.
How might this technology help attendance rates for boards?
For Boards of Directors: Remote Attendance
The board portal makes remote attendance a viable option for directors – especially in the midst of a pandemic. Coupled with video-conferencing technologies, attendance is no longer contingent on the inability of directors to access critical board information or connect remotely with fellow board members. Directors should be able to attend and contribute to meetings as they usually do, albeit in an online environment.
For Administrators and/or Company Secretaries: Attendance Tracking and Reporting
Praxonomy enables company secretaries to record meeting attendees/absentees from within the application.
Praxonomy can also generate attendance reports for regular board and committee meetings within a specified time period (e.g. from beginning to the end of the fiscal year). This eliminates the time and effort required to manually track, collate, and summarise individual directors’ attendance records.
With the click of a button, Praxonomy can generate an attendance report to aid compliance, transparency, reporting, and performance evaluation.
Here’s a sample report generated by the application.
It’s true that the measure of a board’s success is not solely determined by attendance metrics. The quality of knowledge exchange and contributions, adequate preparation, respectful dynamics between board members, effectiveness of meetings, etc., all fold into impactful leadership.
However, without the most basic demonstration of commitment, a foundation cannot be laid down. If that is indeed the case, what will there be to build upon?