Data-driven decision-making by board members has been saved
Analysis
Data-driven decision-making by board members
Technology infrastructure is key to the family office
The world is awash in data, so how can family enterprises use it effectively to help with decision-making? Board members have traditionally focused on strategy and financial performance, but recent events have prompted boards to spend more time on cyber risk, talent, and ESG concerns. Advanced analytics is becoming key to data-driven decision-making.
Finance leaders are in an optimal position to assist
The challenge is that with so much data available it can be difficult to separate the signal from the noise. Often, boards are inundated with too much information or starved by not enough, and there’s no easy way to calibrate how much information they can digest. Data-driven decision-making requires having the right information at the right time and in the right format, and finance organizations are in a prime position to deliver it.
This is where advanced analytics comes in, as it can help family enterprises prioritize relevant data and metrics, turn data into information and insights, and provide a broader and deeper perspective on financial and other operations while allowing for improved speed and accuracy.
Finance leaders are in an optimal position to assist—they have a deep understanding of not only the business but also the financial and operational data that drives the business. Providing the relevant information in a way that the board can easily understand and converting that information and related data into insights are important parts of helping board members fulfill their roles in a governing body.
But seizing this opportunity may require a change in the way finance has historically collected and shared information with the board, with potential implications on the technology infrastructure they deploy and the capabilities and roles within the finance organization.
Transforming data into insights for board decision-making
Shifting on information sharing
In a survey, Deloitte asked more than 150 public and private companies how their board meeting practices had changed since the pandemic arrived. Our survey found that a sizable portion of the respondents (24%) adapted their agendas to allow for more discussion on strategic priorities, while another 16% adjusted to focus more discussion on company-specific risks.
This ongoing shift has changed the way companies share information to drive those conversations—nearly a fifth of the companies polled said they now publish pre-read materials on a portal or send it to board members directly, while a slightly smaller proportion said they’re moving more information to an appendix or supplement book so that the primary focus of pre-read materials is more prominent.
But it’s also clear that many companies are lagging in this respect, with more than half saying they haven’t implemented any changes to their board meeting agendas or pre-read materials. With so much information out there today, finance leaders might not have even started thinking about this new level of support they can provide. It’s about embracing the art of the possible—through a platform that can give them real-time information and expand the activities they can do to help drive growth in the business by enabling better decisions. Today, customized dashboards can take board members through their company’s recent results and allow them to quickly compare the current period actuals against the plan, forecast, and prior years. They can even click through to segment information by customer, individual product, or sales channel. In other words, it’s a whole new ballgame.
The analytics journey
It might be helpful for private company finance organizations to think about their preparation for board meetings as a five-step “analytics journey,” which starts by asking what specific business problem or opportunity the business is looking to data to help solve.
In search of constant improvement
The analytics journey isn’t just rinse and repeat—it’s important for finance organizations to learn and strengthen the process over time. This is where a strong data governance framework—supported by people, technology, and the process—can help strengthen the quality of the data and reporting. Some private companies, for instance, have a council or dedicated team focused on data governance. Each organization is different; the key is ensuring data quality, which takes constant improvement.
But the important part is to get started. Boards can’t act on information they don’t have, and for those operating in the relative dark, the list of things they don’t know is getting longer by the day. Advanced data analytics that helps capture what’s relevant and focuses attention where it needs to be can invariably shine a light on the opportunities available to their businesses—and keep them well ahead of the competition.
Get in touch
Wendy Diamond
Office Tax Managing Partner, Chicago | Deloitte Private US Family Enterprise Leader
Carey Oven
Enterprise Leader Development & Succession | Deloitte & Touche LLP
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