Governance Bites #70: board workplans, with Dauniika Maclean

In this episode, Mark Banicevich asks Dauniika Maclean about board workplans. He asks what they are, and what key elements they contain. He asks how far in advance they are created, who is involved in creating them, and how they are reviewed and adjusted through the year. He also asks what tools or platforms are used to manage and track them, and how to manage accountability and completion of workplan activities. Dauniika also talks about two major trends that directors should be following. 
Dauniika Maclean is a professional company secretary, and a Chartered Member of the Institute of Directors, with her own business called Board Administration Services Ltd. She is company secretary for NZ Health Group, Unitec and Auckland Grammar School. She also has experience as a director. 
Visit: https://boardadministrationservices.com/
#governance, #governancebites, #director, #boardroom, #boardcraft, #boardsecretary, #boardworkplan, #workplan

Transcript

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Kia ora koutou everyone, I'm Dauniika Maclean from Board Administration Services. We're a company that provides bespoke governance support for boards. Specialists in minute taking. We have a team of board secretaries that will come and help shape up your board processes. From anything from software implementation to how to write better board papers, developing board charters, work plans, really anything that you might need to make your life easier as directors or a board. I'm a company secretary by trade and I've been a board secretary before that. I'm a chartered member of the Institute of Directors. I've done my company director's course with them. And I'm an affiliate member of the Chartered Governance Institute of New Zealand. I sit on a local school board myself. One of the things you mentioned in that little intro was board work plans, so let's dig into that a bit more. Okay. Hi, welcome to Governance Bites. My name is Mark Banicevich, and I love spending time with Dauniika Maclean. It's great to have you back, Dauniika. Thank you. Thank you for your time. Thank you for having me. Board work plans. Let's start, well, actually a broad question: what is a board work plan? A board work plan, at a simple level, is a, normally you do a calendar year of all of the board meetings that you have coming up, and what's going to be discussed at each meeting throughout the year. Right, so the regular events like strategy, risk management, policy reviews, those sorts of things, all fit into the work plan. Yes, yeah. And just even having the standing agenda items. You know, so that people know what needs to be done and by when. Okay. What are the key elements of an effective board plan? So, like I've just mentioned, having the actual dates of the meetings that are coming up. Having standing agenda items on there, so you know what's going to be repeated and what's required each time. And then having any items that will need to fall into that board reporting process. Like you've just touched on: those policies, budget sign-off, anything that's relevant to your company that'll come up within that kind of time frame. Right. And it doesn't just need to be within the year. You might kind of go,"We know we need to do this every three years," and so you'd put that on. Right. And there'll be some things, I take it, that, when you're producing a board plan for the following year, you will take the board plan from the previous year and make some changes and things to it, because there'll be some regular events that will happen around the same time each year. Yes, absolutely. It's also really helpful to keep space on the work plan, kind of use it as a living document, and put down what was actually discussed at board meetings, so anything that might have come up that wasn't on the work plan, actually note that down so that you can look and say,"Well, is this going to come up again in the future?" And if it is, "Should we plan for it?" We would put it on the work plan. So, kind of looking retrospectively, as well as forward-looking. Right. You mentioned having one-year work plans, three-year work plans. How far in advance do you typically start planning the next work plan? Normally, well, you can do it two ways. You can have a rolling work plan that's just updated every meeting, so it's kind of got a 12-month look-forward but moves forward. Or you can have that calendar year or financial year work plan. I wouldn't have a three-year work plan, but I would have a note to say that in 2026 this needs to happen. Or this - Succession for the chair, for example. - Exactly. You might have an appendix to the board work plan which is your policy review schedule. That can be quite helpful, certainly as an administrator, to see what board-owned policies are going to be coming up for review and when, and some of those can be in a three-year review cycle. Right, okay. So if you were, let's take the example of a calendar year work plan. At what point, if they were not using a rolling work plan, they were using a calendar year, when would you start preparing the one for the following year? Sorry, that's what you asked me. I'd normally do that six months out, kind of September, kind of at the latest for the January start of the calendar year. Yes, yeah. I think I'd start drafting it kind of mid-year, around June or July, and then put that up for approval at the August or September meeting, whichever kind of comes up first. But I think having that at least that far out is quite helpful. Right, absolutely. Who's involved in developing the work plan and how's it created? Oh, good question. Normally, you absolutely have the board secretary involved. They would do that in conjunction with the chair, and normally the CEO or CFO would be involved as well. Right. Yeah. Once you have a board work plan you can kind of leave it to the board secretary to draft the following year's one, and they can then sense check it with the management team and bring it to the board for approval. The board can then say, "Oh, you know, what about this? Or this?" Or, "Our insurance renewal comes up, we need to put that on." Right. But the bones of it can be kind of owned by the board secretary. If you have a template from the previous year, well, not, template is the wrong word, but if you've got the previous year's work plan and you're creating the first draft of a work plan for the following year, how long would it tend to take you to create that draft? Well, not long if it's pretty like-for-like. Certainly, it takes a little bit of time in establishing the board calendar, so that needs to happen first, before you can kind of do the work plan, because you need to know when the meetings are going to happen. Yes. I actually find that that's more complex sometimes than doing the work plan itself because you're managing - Diaries of a lot of busy people. - diaries of a lot of busy people. Right. So those two things kind of go hand-in-hand. Which is probably part and parcel of why you do the work plan so early, is because you need that board calendar done well in advance so that directors can get those meetings in their calendars for the following year. Right. And then you can feed through that to the work plan, get the work plan approved, and then you can socialise that with the executive team and say,"Here's the plan for the year. These are the papers that need to come through." If you're a helpful board secretary, you'll put reminders in all of their calendars to say,"This is what we need from you and when." Right. In the work that you do, you're often involved in establishing good board practices with companies. How long would it then, or how would you go about creating a work plan for a company that hasn't had one before? Yeah, so I would start with the basics and say,"What reports, what are you expecting as a board?" So, I'd have that conversation probably at the board table. Give them a 'starter-for-ten' in terms of, you know, you have your management report, your finance report, your health and safety, your risk register, when do you sign off on your budget, when do you do your draft budget, when do you do insurance renewals, do you have board-owned policies that need approval, what else? Right. Yeah. Right. And then you'd be working through, potentially from a template that you've got, or a shopping list that you have of all those things to make sure that nothing gets missed off. Yeah. Right. What processes do you have in place for reviewing and adjusting the work plan throughout the year? So, like I kind of touched on, just having that retrospective look of what's been discussed at a board meeting or papers that have come through that weren't included on the board work plan, capturing those as you go, and then at the end of the year when you do the draft for the following year, looking at any of those and talking with the board chair and management team to say,"Are these likely to come up again? Should we plan for them?" Right. Put them through. The board should sign off on the work plan, it should come to the board meeting for approval by the board. Yeah, I was just going to ask about that, in terms of, you know, if you're establishing a work plan and saying, you know, "Can we get sign off for this?" But as you're updating them during the year and reviewing it, do you get sign off on those updates, or is that just something, you know, you're just making notes and things on the work plan? No, I generally just make notes on the work plan. If you were changing anything materially, you know, like taking things off, moving things around that have quite a lot of substance, - Yes. - then I would take that, absolutely, to the board and say,"We've made these changes, are you happy with that?" Right. And how does sign off work in a rolling work plan? You were talking before about keeping it, you know, twelve rolling months. How do you get sign off? How does sign off work in that sort of process? You would have an annual review process, so to make sure that the look-forward for the next twelve months is what the board approve, - Okay. - is what's on their board work plan, and then as it moves, I would include it in the board pack at every meeting so that they can see what's coming up. Right. So for noting, not for approval, but they've got visibility of that. Right. So as they have each board meeting, if it's, for example, if it's monthly, you've got an extra month on the work plan that's just for information at this stage, and then there'll be one point of the year where you say, okay, it's time to sign off the work plan for the next twelve months. Yeah. And that's a good sense check to make sure that everything's there, that we haven't copied things from last year assuming they're going to happen, or getting them in appropriately. Yeah, yeah. Right. What tools or platforms do you use to manage and track progress? So, process is, I think, just including it in the board pack like I've just discussed. There isn't a software I've come across yet that magically runs a work plan. It's something that I generally have just as a document. I like to have it as a table - Yes. - on a one-page with all of the dates of the meeting and the columns and the items - The rows for the different action items. Yeah. Yeah. It's interesting that the board software doesn't actually do that. Yeah, I mean, I may be wrong, but I haven't come across it yet. Right, well, there we go. There's an opportunity for enhancement for the major board software. To whom are tasks assigned and how do you assure accountability and completion? So, I think by tasks you mean what's going to be on the agenda. The things on the work plan, the various items. They should all have an owner attached to them, so you know who's going to be responsible for creating that paper. They're all papers, essentially, - Right. - that are going to be coming to the board. That should be communicated to them when the work plan is approved. Created. Yeah. Once it's approved by the board. And then they should have access to all of the calendar invites for that year. I would normally give them a follow-up a few weeks before that meeting to say, "Hey, just a reminder that these papers are expected from you."Can you have them to me by this date." Right, so all of the papers in the work plan, or all the projects that will have papers off the back of them, will have an owner assigned to them, and then it's a matter of making sure that they happen. Making sure that they happen. Exactly. And that's down to the board secretary to follow up, really. If they haven't done it, then that's the board secretary's role to remind them and get it done. Okay. Well, one final question for you then, Dauniika. What trends do you see are the sorts of things that a director should really be on top of right now, or be looking to get on top of? Ah, certainly ESG [environmental, social and governance] is a hot topic at the moment, and I think all directors need to be aware of that and what it involves. Whether you need to be doing climate- related disclosures in your company.

Just understanding what it means: 11:25

what the E, the S, and the G are - Environmental, social, governance, by the way. - Environmental, social, governance. But what does that mean? What does environmental mean for your company? What does social mean for your company? What does governance mean for your company? It's different things for a service- based company versus a B2B [business to business] company, for example, especially in that social space. I think the other one's obviously AI [artificial intelligence]. That's the kind of big one that's out there at the moment that's fast evolving, and directors need to be aware of that and understand their role as directors in governing that. It's probably one of the big ones that's coming about more recently. Right, yes, certainly. And the environmental, social, and governance space is a big risk around greenwashing, with companies that are out there saying,"Yes, yes, we're doing everything right," But they haven't really dug in. The sources of all the labour and physical inputs that you have in your business. Where are they coming from? Are all of your providers doing everything the right way? Third party providers, yeah. There's a whole lot to that, isn't there? The climate change thing, as you suggested - I had a really interesting conversation with Lloyd Kavanagh about this earlier in the year [episode #41] and talking about some examples of where companies have analysed what the risks are of flood events or other significant events on their businesses, and pre-emptively prepared their businesses for those events, and then saved hundreds of thousands of dollars when we had flooding at the start of 2023. Wow, yeah. So, yes, that's a really important space. There's a whole lot of work, as you say, around governance, the climate change reporting, as you've suggested. And then, yes, artificial intelligence, as you say, is moving very, very quickly. Very quickly. There are so many different elements of artificial intelligence, so many different tools that are around. With the generative GPTs [Generative Pre-training Transformers] that we've talked about earlier. With image generators, video generators, song generators. Copilot from Microsoft software. I was reading earlier in the week, an article around a robo-advice company in the United States that is doing everything using an AI backend. So, yes, it's moving so quickly, isn't it? You definitely got to get your head around that space. It really is. You do, you do. And deep fakes that are out there, as well. That Hong Kong case of the person that was on a phone call, a video call with their CFO [Chief Financial Officer], and signed over a US$26 million cheque that turned out to be a deep fake. It's so scary. Just even being aware of what scams are out there at the moment. On a personal level, trying to avoid those things. Yeah. But as a director, what might happen within the company. Like, your CFO, trying to target you. Yes. Fraud. And it kind of, it means that things like board software that we've spoken about become even more important, right? Because, as you've mentioned in an earlier conversation, the idea about emailing your board packs around is quite risky. Email is not overly secure. It's not. I read just today, Mark, we've had Microsoft be hacked. Everyone is susceptible to it, so introducing, the more security enhancements you can make, especially around that confidential governance information, I think is really important. I think if you're not using confidential board software, you should be. There are not really many excuses not to be using something like that in today's age. Right. Well, Dauniika, again, thank you very much for your time. You're welcome. I love catching up with you. Look forward to seeing you soon. Yeah. And see you next episode. Bye.