Board Package Series – Business Reporting

In our continuing series of creating effective board packages, we now turn to business reporting.  Chris, you have the floor…

This is the stuff that most CEOs think of when they think of board reporting packages—financials, departmental overviews, etc. And this stuff is indeed a core component of any good board package, because the more you include this in a board package, the less time you need to spend “reporting” on it and the more time you can spend discussing the implications of it on the business.

Examples of typical monthly board reporting include:

Company financials – I like to see prior month, quarter to date and year to date actual financials (as well as comparisons to your budget) along with a rolling 13 month P&L by month and an A/R aging summary. I also like to get company financials in Excel format (in addition to what’s included in the board package) since that lets me reformat and play with the numbers to get a better sense of what’s going on;

Financial performance guidance – for the next month/quarter/remainder of year. Being able to project your company’s financial performance obviously requires a certain level of maturity in your business, but this is a good way to make sure that financial reporting isn’t only about looking in the rear-view mirror;

Key operating metrics – i.e. the non-financial metrics you and your executive team use to judge how the business is doing;

Sales/biz dev pipeline report – including accompanying narrative on what deals were won, what deals were lost (and why), where sales efforts seem to be stalling out, what progress has been made on key deals, etc.;

Product/technology development updates;

Administrative and HR updates – current headcount by department, hiring plans for the upcoming month/quarter/year; and

Current Capitalization Table – (with sufficient shareholder detail for it to be meaningful). It may seem redundant to include a cap table in each board package when a company’s capitalization typically doesn’t change frequently, but remember that many of your board members sit on multiple boards and work with a lot of companies. Since capitalization often plays an important role in a lot of early stage company discussions (such as upcoming financing discussions, option grants, etc.), it’s helpful to just get in the habit of including it in every board package.

Depending on the stage of your company, this “reporting” section may be more product/technology oriented (as it would be in an earlier stage company) or may be skewed more towards sales and business development (if your company is at the critical go-to-market stage) or may emphasize financial reporting (for a more mature company). Most board reports should include departmental updates for all of your company’s departments, but the granularity/depth of those updates will vary depending on what’s going on in your business.

All of these types of reporting are very important, but to reinforce something that Chris brings up the “why” is just as important (and sometimes more) than the “what.”  Be sensitive that these reports aren’t just history, but lessons learned and that the executives who head up the functional areas understand and agree with the board on the metrics that are used to judge success. 

  • I find it interesting that you refer to select metrics “that management decides” it will report on. I’ve always tried to have the boards I work with (public and private) sit down and, on an annual basis, collectively decide on what the key metrics the board will review to assess: (a) execution of the business plan by management, and (b) the evolution of the market in which the business operates. I guess I’ve seen board involvement in setting the metrics as a key part of their oversight responsibilities (how can you be discharging your fiduciary duty to provide oversight if you are not actively engaged in determining what you will review?)

  • Chris Wand

    I agree that the appropriate metrics for measuring a business and its progress usually result from an ongoing discussion between the management team and the board. But I can’t emphasize enough that it’s important to view identifying a business’ key metrics (as with most other board-related issues) as a *discussion* rather than a board member trying to impose “oversight” in an effort to discharge his “fiduciary duty”.
    An outside board member can bring an important perspective on what metrics may be meaningful to measuring the success (or failure) of a business, but the management team is going to be deeper in the business (unless the board is of the micromanaging variety–but that’s a topic for another day ) and should, by definition, have a more intimate understanding of the business and its key metrics. One should not necessarily trump the other.
    In the ideal world, a management team isn’t going to be reporting on stuff they think is unimportant to the business just because a board member asked for it, and a board member isn’t going to have to ask a company to report on stuff that truly is meaningful to the business simply because the executive team doesn’t understand what is important.
    If you’re an executive whose board has asked for metrics that you don’t think are important, I’d recommend you step back and try to understand if your thought process is missing something and whether those metrics are indeed meaningful (rather than dismissing it as a clueless board member asking for yet more information).
    And if you’re a board member greeted by a quizzical look and head scratching when you ask your executive team for more information, I’d encourage you to pause and figure out whether what you’re asking for is just a reporting exercise or an important perspective on the business. In either case, these disconnects provide good opportunities to deepen everyone’s understanding of the business and what really matters to it.
    From my perspective, all of this starts with a board’s single most important role: making sure the company has smart, thoughtful executives who know the business deeply, can think about it critically, and are willing to engage in true discussion about the business. If I focus my efforts on making sure the company has the right executive talent, I find that the company usually isn’t focused on the wrong metrics. (If they are focused on the wrong things, then go back and re-read the first sentence of this paragraph.) Then we can all turn our attention to understanding what the metrics mean…

  • Chris,
    brilliant article, we provide a web based business planning tool help businesses collaboratively set and execute their plan and report to everyone along the way, particularly the board and investors.
    I’ve got an investor and board now, and I along with the rest of the management team at a previous business used to spend a lot of time pulling together board reports every month, and while highly important, it took a lot of management time, and I knew there had to be a better way. Providing visibility to the board is key and I’m going to try and build PlanHQ around your concept here of a board package.
    An informed board is a happy board, and when the board and management are in sync with the key information you can spend your time together working on taking the business forward.