Bank Board Letter December 2014 : Page 2

demands on directors’ time. By 2011, estimates were that half of all institutions were already using a “board portal” system, with another 30 percent predicting adoption would occur within the next year (as reported in KPMG LLC’s Audit Committee Institute, Corporate Secretary Survey , June 2011). At first, these systems were designed primarily to address the basic need of streamlining the creation and delivery of board meeting documents. The growing popularity of board governance software speaks to the widespread need of boards to increase the ef-ficiency of their work. While the implementation of tech-nology alone does not guarantee the board’s performance will improve, board governance software can offer a stable platform that can enhance both the speed and effectiveness of efforts to elevate board performance. In their 2004 book, Governance as Leadership: Reframing the Work of Nonprofit Boards , Richard Chait, William Ryan and Barbara Taylor provided a vocabulary for defining the operating “modes” that set apart high-performing boards. While they primarily fo-cused their commentary on nonprofit boards of directors, their work describes the ways in which all boards Ð including bank boards Ð must function in order to perform at a high level: 1. The “fiduciary” mode, where the board’s focus is on pro-viding fiscal accountability, stewardship of assets, and serves as “sentinels.” 2. The “strategic” mode, where the board’s energy is directed to ensuring the institution has a successful strategy, and serves as a strategic partner to senior management. 3. The “generative” mode, where the board serves in the role of “sense-makers” Ð determining which issues the institution should grapple with, diving deep into research, asking probing questions and framing the problems that need to be addressed. While boards can operate in only the fiduciary mode and fulfill their obligations, Chait’s research showed that institutions with boards functioning regularly in all three modes (and particularly in the generative mode) provide more value to their institutions than those restricted to only the fiduciary mode. In particular, generative boards are more nimble and more proactive Ð but operating in this mode also requires a greater investment of board members’ time and intellect. This, in turn, demands that institu-tions provide tools that optimize collaboration and transparency and minimize distractions for directors. What Impact Does softWare have? Board governance platforms have the potential to help boards operate more effectively in all three modes of governance Ð but only when the software is aligned with an overall focus on board performance. First Federal implemented a board governance platform earlier this year to improve access to critical information Next moNth: Insurance: a Source of Non-interest Income Steps to Successful mobile RDC for directors and senior staff. According to Buckner, “The ease of having access to all policies and procedures, past minutes, past meeting materials have helped the board become more ef-ficient. As questions come up during the meeting, we now have the answer at our fingertips so we can keep moving to the next topic. It’s helped the entire group become better informed.” The Bank of Tampa implemented a board governance plat-form to improve efficiency and help the board focus on the is-sues that demand their attention. “[Now,] management is able to collect all reports and documents in electronic form, easily organize them and make them available to the board members via the board portal in a very secure manner,” said Junkermann. “As a result, [board members] have more time to review and evaluate the information, and the annotation feature enables them to mark up the documents with questions they may want to ask at the meetings or comments they may wish to share.” The best board governance platforms are nimble enough to keep up with evolving board demands, while at the same time helping boards raise their levels of performance in each gov-ernance mode Ð fiduciary, strategic and generative. However, most institutions start simply Ð by seeking a platform that will enhance current processes such as preparing materials for board meetings and providing an archive of minutes and other records. For First Federal’s board, implementing the board governance platform has helped reduce the number of “clarifying questions” directors ask at meetings. Buckner reports, “Being able to de-liver audit reports and policies electronically and highlighting any changes has reduced the number of questions directors raise Ð they can quickly spot what has changed allowing us to move through the meeting more efficiently.” Yet, for a variety of reasons, many bank boards are reluctant to adopt new technology. Buckner found initially there was concern on the staff that the board might be reluctant to use the software. “The initial response from everybody was ‘technology is hard Ð it’s going to be tough to get adoption.’ But we didn’t find that to be the case. Our directors adopted it quickly, far more quickly than we thought would happen. The software has been easy to use and our directors have really taken to it,” said Buckner. As the work of bank directors and senior staff becomes increas-ingly complex, having tools to ensure everyone can stay focused and on track provides an advantage. J.R. Buckner related the im-portance of providing directors with the information they need to be able to frame issues and make decisions quickly: “For example, take the level of education required for directors on issues like cybersecurity Ð there is so much they need to know. With the board governance platform, we can now disseminate that infor-mation quickly and easily so they can stay focused.” The board governance platform makes it easier for boards to operate rou-tinely in the generative mode, reach higher levels of performance and produce better outcomes for the institutions they govern. Dottie Schindlinger is the executive vice president of market devel-opment for BoardEffect, a secure board governance platform used by more than 70,000 board members and staff worldwide. She can be contacted at or 267-385-8465.

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