5 Tips for Better Board Reporting
As a finance leader, you’re intimately familiar with your company’s data and KPIs. But guess what? Most of your board members aren’t—and they don’t want or need that level of detail. What do they want? Like your CEO, board members are searching for trusted, strategic deputies who can provide high-level, holistic insight that helps them navigate the swirling currents of today’s business world.
Luckily, top finance executives have a great vantage point from which to fill this role. Here are five tips to ensure you make the most of your time at the front of the room.
Tip one: put yourself in their shoes
Who are the members? Typically, they’re not financial experts and aren’t involved with your company’s day-to-day operations. They may serve on as many as four or five other boards. Moreover, since the 2008 crash, they’ve come under increasing scrutiny and are held to ever-higher standards, even as the pace and complexity of business increases.
The reality is, board members are busy. They likely show up to a meeting once a quarter. They often sit on multiple boards. And they have jam-packed lives and careers. Bottom line: The last thing they need is to suffer through your 60-slide PowerPoint deck.
As you craft your presentation, keep this vantage point in mind. Your board doesn’t need to know every last detail of your financials. In fact, less is more. You want to shift from obsessing over “What do I want to tell them?” to focusing on “What do they need to know?”
PRESENTATION TIP: Avoid the temptation to give too much information, but be ready for questions! Less is more.
Tip two: be transparent
As a finance leader, your most valuable asset to the board is your objectivity. You have no ax to grind; you’re not spinning anything; you’re certainly not making the sales forecast look rosier than it is.
When it comes to transparency, remember the old maxim: “Bad news is not like fine wine. It does not get better with age.” If there’s bad news, get it out there so the board knows what it’s dealing with.
Conversely, if performance is improving, the board needs to see updated forecasts ASAP, too. Skip the impulse to leave the forecast where it is and present numbers you think the company can beat. The board is always happiest with the most updated, most honest and most objective data available.
Transparency is also about presenting financial information in a way that gets to the real story of what’s happening—and its impact on your company. So instead of simply showing that sales declined 25% last quarter, offer insight on what drove the change.
On a higher level, transparency also relates to the crispness of the overall message you present. Delivering a message informed by a single source of truth, rather than an overwhelming ream of data, stops the debate over whose numbers are correct and refocuses the discussion on insights and action. In short, it speeds and improves decision-making.
If there’s a cardinal sin related to boardroom transparency, it’s serving up a surprise. It never ends well. Besides chewing into your credibility, it can blindside your CEO—something we all want to avoid. Make it a habit to share pre-read materials that highlight any issue that may prove problematic or stir debate.
PRESENTATION TIP: Pre-read primer
- Give your board enough time to digest the pre-read.
- Limit pre-read to one to two pages, no smaller than size 12 font.
- Keep the format consistent so board members can easily navigate information.
- Separate content by subject matter. For instance: finance update, sales update, marketing update.
Read CFO.University’s 3 part series, What the Board Expects from a Chief Financial Officer. We interviewed 4 four seasoned public company directors to discover what they expect from CFOs.
Tip three: provide context
Board members need to quickly grasp your company’s big picture, rather than a snapshot of performance at a moment in time.
Providing context is probably the most neglected aspect of board financial reports. Yet it’s through context that trusted strategists separate themselves from the mundane number crunchers.
Numbers alone provide only a static snapshot. Meanwhile, context paints a clear picture of what those numbers mean and how they impact broader issues and opportunities facing your company.
Think of context as the insights that knit the narrative together, providing much-needed perspective that helps your board better grasp your business.
You can help them get there by covering where the company has been, how it’s performing now and where it’s going in the future. Consider showing them four to eight quarters of past performance, the current quarter’s numbers and four quarters of your latest forecast. That context will give your board members the ability to quickly and comprehensively understand how the company is doing.
PRESENTATION TIP: Create a context cheat sheet
When considering context, ask yourself these key questions to craft a board-friendly narrative.
- Where have we been?
- How are we performing now?
- Where do we expect to go in the near-term and farther into the future?
Three Steps to Compelling Context
- Show, don’t tell: Visuals such as bar charts, waterfall charts, and compelling images help board members see the story behind the numbers.
- Comparisons add clarity: Help board members see how your data compares to established benchmarks, such as how the company is doing versus plan or stacked against the competition. In the Adaptive Insights CFO Indicator Q1 2017 report, nearly 60%* of CFOs reported that their boards ask how company performance stacks up against benchmark companies.
- Think color commentary, not play-by-play: Too often slides become a script with the presenter simply rattling off numbers on the slides. News flash: Your board members can read. Instead, they want to know: “What do you think happened, and what might happen next?”
PRESENTATION TIP: Leverage dashboards to generate engaging visuals that help your board grasp a lot of information in context.
Tip four: be consistent
Your presentation’s format and approach should help them easily navigate a well-worn path through the information. Make sure your team understands the importance of creating reports that will be consistent and easy to digest. Continue building on your reporting and presenting capabilities but be selective. Take your board members through familiar territory before offering up information in a new format.
Nothing annoys the board more than when your presentation’s data points change from one meeting to the next. Winnow down the key performance indicators you choose to share the same way, every time. Say you monitor about 250 KPIs internally, ranging from sales metrics to marketing productivity, before you even get to the financial details. When you present to the board, cut the KPIs you share to about 20. Make sure you choose ones that are clearly defined and meaningful to the specific areas you’re covering.
PRESENTATION TIP: An easy-to-understand graphic like the example below is a good “go-to” for board presentations and allows you to provide commentary on the performance highlighted.
One trick to ensure consistency is to identify the most relevant KPIs for your board, and then frame every quarter’s presentation around them. This can be easier said than done, particularly for some high-growth software-as-a-service companies that may be tracking hundreds of metrics.
Again, think like a board member, considering which KPIs best tell your story. Edit the list down to a manageable number—depending on your company, that could be anywhere from 10 to 20. Then categorize the KPIs for easier consumption by your
Tip five: Ramp up your credibility
It’s easy to dismiss design as an afterthought or flourish. Don’t. Streamlined, uncluttered slides can actually bolster credibility.
In one classic study that pitted a strong speaker against a less compelling one using no slides, well-designed, or ugly slides, researchers found that well-designed slides significantly influenced the audience—regardless of the speaker’s skill.
Why? Well-presented information evokes an emotion. When the audience members saw crisp, professional slides, they were more likely to rate the speaker’s idea as credible and worthwhile.
So in the run-up to your board meeting, avoid focusing all of your time on picking out data points.
Remember: The way you present the information can sway everything—from the conversation that follows to the board’s view of the finance function!
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For more details on items italicized above and the eBook Plan to Win click on the bullet point links below:
- finance executives
- craft your presentation
- sales forecast
- single source of truth
- big picture
- key performance indicators
- Plan to Win
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