Technology shifts that enhance board governance in the hybrid era
They can boost connectivity, communications, provide real-time intelligence, enhance board dynamics and offer broader perspectives.
By SHAI GANU
The Business Times, 8 March 2021
THE year 2020 was a challenging one. Covid-19 forced companies to accelerate their digital transformation plans. Across the board, new ways of working were implemented almost overnight: video conferencing, online board and committee meetings, virtual shareholder engagement and even virtual conferences are now the norm.
How much of this will have a long-lasting impact on how boards are governed? Among the plethora of changes, at least three technology shifts will endure.
Unified collaboration platforms
Video-conferencing platforms allow participants to see each other up close during board and committee meetings. They allow chairs and board members access to physical cues, such as body language and tone of voice. Already, the next generation of collaboration platforms provides greater interactivity in the form of messaging, document sharing, polling, voting, whiteboarding and collaboration functionalities.
Virtual meetings conducted using such unified collaboration platforms can lead to healthier board dynamics. The platforms allow directors to message each other, ask questions without interrupting the meeting flow, conduct anonymous polls, and search and access additional information relevant for the discussion.
Progressive chairs can harness these new tools and adjust their meetings accordingly; for example, splitting what used to be a full-day board meeting into two or three half-day sessions. This would allow directors to ask for additional information in the first meeting, and use the subsequent meetings for deliberation and more considered decision making.
Eventually, companies will likely adopt a blend of in-person and virtual meetings. Even during in-person meetings, directors can continue to use virtual collaboration platforms in the background.
Data lakes and artificial intelligence
Technology will allow directors access to real-time insights. The new cadence of shorter, more-frequent meetings will require that directors have access to additional information that may not have been included in board papers, and which may be difficult to query during virtual meetings.
Progressive companies can invest in interactive reporting and dynamic dashboarding solutions. These business intelligence platforms and visualisation software will allow boards and management teams to slice and dice information, run queries, analyse correlations, conduct scenario testing, and glean insights from an expanded pool of data.
Artificial intelligence (AI) will emerge as a board resource, offering improved access to historical information, market developments and what-if scenarios. Boards can obtain background and context more easily before decisions are made, and accordingly make more informed, well-rounded decisions.
For example, an AI function could use speech recognition and natural-language processing to draft comprehensive meeting minutes. Wearables and biosensors could assess directors' receptiveness and the tone and mood of the meeting and send prompts to the chair to curate the discussion, amend the agenda and capture dissenting opinions; thus, helping to improve board effectiveness.
Indeed, some investment management firms have appointed bespoke AI algorithms into their investment committees and boards.
For such deep-learning algorithms to be credible as de-facto directors, however, their thought processes would need to be defensible to shareholders and regulators - which may prove challenging.
Companies in Singapore had to conduct their 2020 annual general meetings (AGMs) virtually. For the most part, the process was smooth and efficient. CEOs shared management presentations, and chairs put forth resolutions (for which shareholder votes were cast and counted prior to the meeting) and presented the voting outcomes.
Shareholders were generally required to send questions in advance, and companies responded to the questions prior to or at the AGM. There are concerns, however, that pre-cast votes and proxies do not allow for robust engagement with retail shareholders.
While in-person meetings will resume someday, the benefits of remote voting are likely to continue. Hybrid meetings will combine the best of both options - in-person attendance and voting for those who prefer to join live, with simultaneous video streaming and voting for shareholders who attend remotely. Shareholders could ask questions electronically and spur stronger participation from retail investors.
Further, blockchain technology could overcome data security concerns related to decentralised and remote voting. Companies might be able to put forth resolutions well in advance, and invite and answer shareholders' questions electronically during a consultation period - leaving more time for in-person interaction and hybrid voting during the AGM. Records would be immutable and irrefutable, leading to more transparent and real-time decision making.
Improved board governance
These technologies will strengthen connectivity and communications, improve meeting efficiency, provide real-time intelligence, enhance board dynamics, increase engagement with stakeholders and offer broader perspectives for better decision making.
Technology shifts might also prompt a refresh of skills and experiences on the board, and goad veteran directors to embrace technology. This, in turn, might make directors more attuned to issues related to cyber security, data privacy, digitalisation, new economy business models, and ecosystem approaches to engaging with customers and stakeholders - skills that will be critical for boards of the future.
In the evolution of corporate governance practices, the next step will be the hybrid era, where technology will augment, but not replace, directors' experiences and judgement.
The writer is a council member of the Singapore Institute of Directors.