Most boards will recognise that digitally transformed board governance is a when, not an if. But a majority of boards have fallen into the trap of thinking that ‘random acts of digital’ equates to a digital strategy. In fact, it could make things worse by introducing more information silos and avenues for cyber attacks.
The phrase ‘digital transformation’ has become so common that the Wall Street Journal has declared that “every company is now a tech company”. Indeed, although pension trustee boards are often accused of being laggard in their adoption of the latest digital processes, there are very few board activities which do not interface with technology.
Meeting packs now reside in repositories on iPads. Decisions are minuted in docs saved on the cloud. Actuarial valuations are displayed in new online dashboards and offer an up-to-the- minute views of funding and more, with whizz-bang sliders and charts.
Boards should avoid random acts of digital
However, most trustees accept that their current use of technology has been implemented piecemeal, with no overarching strategy. Boards “rarely benefit from random acts of digital…” states Deloitte’s Center for Board Effectiveness. “As a board member, it is important to question whether or not there is a digital strategy, and understand how digital fits into the overall strategy for long-term success”.
At Knowa we suggest assessing four key enablers for a digital strategy that can be used by all boards to digitally transform their governance.
1/ Boards should consolidated their knowledge
“We are drowning in data, but starved of wisdom.” – Arianna Huffington
A typical trustee receives and triages more information in a single year than their scheme generated in the first forty years of its existence. Today’s boards possess more data than ever but this growing volume of information, from decisions and past papers to adviser updates and investment performance, is rarely in their control or at their fingertips. Instead it is dispersed across inboxes, dashboards, meeting apps and portals, and results in no single audit trail or method by which wisdom can be derived.
Worse still, when trustees and advisers depart, it causes future ‘board amnesia’. Ahead of a change to a board’s Chair or advisers, nearly all trustees state a concern is the loss of historical information or at minimum, added difficulty accessing it. As Robert Lynn, former SVP of the Lilly Endowment states, “an institution whose leaders are out of touch with its movement through time is often in serious difficulty. Historical amnesia is always debilitating and occasionally fatal”.
By consolidating past and capturing new information, in a structured way, both today’s and tomorrow’s trustees and advisers will greatly benefit their scheme’s beneficiaries. Technology is well suited to this task and forgoing the ‘sunk cost fallacy’, which supports the status quo, boards should be asking ‘when’ this is going to happen, not ‘if’ it will.
2/ Boards should integrate their systems
Trustees can benefit from user-friendly and well signposted technology.
A key enabler for the consolidation process as well as a facilitator for an enjoyable digital user experience, is the integration of tools and processes.
Board communication, meeting packs, adviser papers and decisions are carried out on a disparate set of platforms with little integration between them.
Inboxes, board pack apps, document portals and secure messaging tools result in information silos and lack of context. Transitioning between them results in a poor experience and is frequently cited by trustees and scheme secretaries as a reason for the hesitancy to further adopt technology.
However, technology is now particularly good at uniting tools, either by offering combined functionality within a single user-friendly interface or by connecting different systems. A combination of both approaches is achievable for most boards and should be seen as low-hanging fruit for their long-term digital strategy.
3/. Boards should connect & collaborate efficiently
The Pensions Regulator calls for improved collaboration, which can be aided by the right technology.
A third key digital enabler, and perhaps most relevant to a board’s very nature, is the underlying activity that all trustees and stakeholders perform – collaboration. By their very existence a board’s trustees are required to connect and important discussions no longer only happen at quarterly meetings.
To effectively collaborate remotely, boards need good connectivity – a seamless, structured and compliant flow of information between data and systems, and between all stakeholders within and outside the board.
However, for the avoidance of doubt, the solution is not email. Whilst email is currently the main artery that connects individuals, it is no longer the best or only option. Purpose built tools now deliver efficient, secure and user- friendly collaboration that can reflect governance rules and provide users with a secure and compliant way to connect with relevant parties.
So next time you ‘reply all’ to a trustee board email thread, count how many email addresses are Gmail, Yahoo, BTinternet, or the myriad of other personal email domains. Use of personal email complicates audit trails and undermines governance – how can you stop the email being forwarded, track that file, or retrieve that information in the future?
4/ Boards must ensure their cyber safety
Boards are an easy target but have plenty of options to reduce their risk.
Perhaps the most obvious digital enabler is that of cyber security – ironic given its own technological heritage. But in recent years it has become increasingly critical for boards to acknowledge.
Trustees are dayglo-wearing targets for cyber attacks and boards are only as safe as their weakest link. Our recent survey of trustees discovered many using breached email and password combinations and over half clicking on a scam email in the past twelve months. As gatekeepers of personal data, payrolls in the £thousands and £millions, and individuals with authoritative powers, there is little to dissuade an even basic targeted attack.
Indeed, as former Cisco CEO John Chambers says “there are two kinds of companies: those who have been breached and those who don’t know they’ve been breached”. It should not be viewed as the responsibility of one professional trustee or scheme secretary, or simply of ‘others’, but seen by all trustees, who each represent a potential weak link, as their own priority.
However, with the right technology, individual weaknesses can be removed by bringing all trustees onto a single, secure and accessible platform.
By Will Henderson
Co-Founder and Chief Product Officer – Knowa