Gone are the days of board members meeting just four times a year to discuss a company's financial performance. Instead, increasing pressures are prompting the need to make sure everyone is well prepared and handling any issues effectively.
That new reality is what drove the launch of New York-based Diligent Corporation's newest product. The company, which already provides board collaboration and communication tools to more than 4,700 organizations and 140,000 users, including 40 per cent of Fortune 1000 companies, has introduced Diligent Evaluations to make board evaluations easy to administer and analyze for both administrators and directors.
The tool provides a new approach to self-assessments, peer assessments and board evaluations, said Diligent CEO Brian Stafford, combining an intuitive user design and detailed reporting with full integration with Diligent Boards integration.
Stafford said Diligent Evaluations reduces the need for organizations to pay for costly evaluation consultancies, or risk security with manual or consumer evaluation tools. Boards can put together an assessment using a vast library of questions that Diligent mined from its customer base, as well the ability to create custom questions, as well as easily generate a variety of report types using an export wizard.
Diligent, which used to be a public company but was recently taken private by Insight Venture Partners, has built its business on providing digital governance solutions for board members, which Stafford said are fairly unique as they are not employees behind the firewall but have a great deal of responsibility and require access to corporate information and intellectual property. 'It really is a unique business case,' he said. 'The reality is the bar keeps going up for board members. It's pretty tough.'
It used to be a board member had to prepare for one meeting every quarter, but over the last 10 or 15 years, just meeting on a quarterly basis is no longer enough as corporate boards must grapple with cyber security, demanding shareholders, government regulations and activist board members. 'Just four meetings a year is a rarity,' Stafford said.
Diligent Evaluations is designed to help boards do better by evaluating their effectiveness, either in a general sense or on a specific initiative, such as the selection of a new CEO. Boards can evaluate themselves over time, said Stafford. Some might only do it annually, others more often, and even take into account reshuffling of members. It provides a 'litmus test' for a chairperson or independent director of the board. 'It can provide benchmarks for companies to compare with other companies of similar size or industry.' It can also be used by subcommittees, he added.
And it's not just geared towards evaluating past performance; Diligent Evaluations can be used to measure how prepared a board may be for certain scenarios that are playing out in the media, such as a customer data breach at a major retailer, said Stafford. It could be used to gauge the culture of the board: Is it open to hearing bad news from the CEO, and if not, might that prevent from hearing what it needs to hear to be properly prepared? 'There are a ton of pressures around board rooms these days,' he said.
Diligent has customers around the world, including Canada, which Stafford said is quite open to board evaluations and further along than the United States in terms of asking for tools. 'We think that's best practice.'