Essay: Governance in Real Time
President and CEO Zachary Nelson says when board members have independent, immediate access to key metrics, everybody wins.
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E-mailYou can’t manage what you can’t measure. You also can’t get a management job of any importance unless you believe in that sentiment. Yet we rely on corporate board members to perform their duties without anywhere near the level of insight and analysis they would expect from even middle managers. With corporate boards being expected to deliver governance and oversight like never before, this is an obvious omission. Fortunately, it’s easily corrected.
NetSuite Inc.’s (N) board members have had access to real-time dashboard analytics through features built into NetSuite product offerings since 2002. At the time, we were still a private company, and our board members and primary shareholders were largely interested in one thing: revenue figures. Even so, before creating real-time dashboards it took a considerable amount of executive time to cull and present those numbers in the preferred format for each individual. Data in a fast-growing company has a habit of growing stale quickly, so the entire exercise left a great deal to be desired.
Today, as we are a public company, the financial world judges us on a wider range of criteria. We now make a multitude of topics available in our director-level dashboards, including cash-balance and cash-flow indicators, profitability tallies and sales-trend activity. Because our governance requirements are more complex, board members’ interests are both more diverse and more specialized. For example, the head of our audit committee receives additional at-a-glance financial activities data, while the head of our compensation committee sees metrics tied to executive targets.
I believe there is no reason why our successful experiment should not be replicated throughout the business world. The advantage to board members is obvious: Instead of relying on information filtered by executives into a few charts and presentation slides, directors can directly observe the business as it happens and without the sins of omission and exaggeration that can characterize a quarterly board report. And the mere fact that the company’s activities could be under board supervision at any time makes everyone that much more aware of the need for precision, accuracy and timeliness in day-to-day dealings. It truly changes people’s behavior when they realize that their business conduct can and will be observed, possibly even in real time.
The advantages for executives are not quite so obvious at first glance. There is, after all, considerable power and freedom in telling one’s story to the board on one’s own terms. At the most basic level, giving board members constant insight and the ability to run their own analysis and reach their own conclusions can save a great deal of time usually spent recapping and reviewing basic operational facts and figures every time managers and directors meet. By giving the board access to data, executives can feel more comfortable that they are accurately and consistently being held to the performance metrics agreed to by the board.
But think about the advantages to truly collaborating with directors rather than simply maneuvering around them and hoping they never ask difficult questions. These are intelligent, experienced people with their own business and life experiences and successes. When they have access to pertinent trends and data, they can offer more relevant and helpful suggestions and insights. Rather than provide occasional arm’s-length oversight, board members can contribute to ongoing success. Bringing directors closer to the business through real-time access to performance data isn’t a revolutionary concept — it’s just solid governance.
Founded in 1998, NetSuite provides hosted customer-relationship-management, enterprise-resource-planning and e-commerce software to small and mid-size companies and divisions of large enterprises.
