By Russell Maher, President of QDiligence
As president of QDiligence, I meet with hundreds of governance professionals every year to discuss migrating their D&O questionnaires online. “We need a better way to handle our Directors and Officers (D&O) questionnaires every year. Our current process takes everyone way too much time,” is the universal D&O questionnaire challenge.
Preparation, chasing down missing responses and reviewing responses can be time-consuming tasks. Since 2007, the team at QDiligence has migrated hundreds of D&O questionnaires and board evaluations online, hosted more than 10,000 questionnaires and assessments for organisations from global brands to private trusts, and has configured almost 30,000 questions online. Our broad experience with online D&O questionnaires provides us with a unique perspective and two conclusions are certain. First, moving D&O questionnaires online is the only way to dramatically improve the D&O questionnaire process. Second, it is only a matter of time before a director asks you: “Why aren’t we doing these online?”
Five reasons to move your D&O questionnaires online
Reason 1: You will improve your D&O questionnaire
Standard D&O questionnaire operating procedure is as follows: retrieve last year’s questionnaire, change the dates, update questions as directed by outside counsel, pre-populate responses and then distribute via email or courier service. Given the compressed time period most companies have to collect responses from their respondents, it’s easy to understand why questionnaires rarely get full rewrites. Migrating questionnaires online means every question will be evaluated. “Is this question still needed?”…“Are we asking for the correct information?”…“Do we already have this information elsewhere?” Online D&O questionnaires are always more efficient, more concise and more relevant than their paper originals.
Reason 2: Annual prep time can be reduced from weeks to days or even hours
Online D&O questionnaires can be superb at reducing manual effort. Every year, each governance team creates anywhere from eight to 68 individual questionnaires, each averaging 35 pages in length. Opportunities to reduce manual effort abound. Need a new question in all questionnaires? Online questionnaires can be changed in minutes. Need to fix that typo in Question22 (d) on 17 questionnaires right before distribution online? D&O questionnaires apply global updates instantly. Want to automatically pre-populate some (or all) responses from last year into this year’s questionnaires? Done. Want to stop distributing multiple versions (i.e. one for directors, one for officers, another for the CEO) and maintain a single questionnaire?
Online D&O questionnaires automatically display the right questions to the right respondents at the right time so a single questionnaire can work for all respondents. We typically see companies reduce their prep time by at least 50 per cent. Questionnaire prep can start later and is completed sooner than ever before. Late night at the office or dinner at home? Your choice.
Reason 3: Directors and officers respond faster
When D&O questionnaires are online, respondents can access questionnaires immediately and the governance team has ‘live’ access to responses. No snail mail, courier, printing or scanning required. Respondents often complete questionnaires immediately simply because they can do it online. They’re at their computer or have their mobile device handy – so why not do it now? Respondents can complete online D&O questionnaires more quickly. Directors see director questions; officers don’t. Audit committee members see audit committee questions; others don’t.
Displaying the right questions to the right people means fewer questions to read. Answered ‘No’? Good, you’re done. Answered ‘Yes’? Now we need some explanation. Convenience is key to getting responses back quickly. An online questionnaire accessible 24/7 from around the globe is very convenient; a printed questionnaire back in the office is not.
Reason 4: Response analysis is easier
Once responses are received, the governance team is confronted with the laborious tasks of reviewing and analysing. Through simple reporting mechanisms, online D&O questionnaires can dramatically reduce the time required to analyse responses. How? First, no more chasing down missing responses. Online questionnaires can require that all appropriate responses be fully completed. Next, no more deciphering handwriting. Automatic redlining functionality highlights changes in biographies or qualifications, while easy spreadsheet exporting makes cross-checking a snap. Need hard copies? A D&O questionnaire system can easily produce printable PDF versions. Online D&O questionnaires mean faster analysis and faster analysis means getting to those filings even sooner.
Reason 5: Online D&O questionnaires are a ‘win’
Imagine the smiles on directors’ faces when you tell them they will not be receiving a huge, printed questionnaire. Imagine the smile on your corporate secretary’s face when a director says: “Thank you for making the D&O questionnaires easier.” Imagine the smiles on governance team faces when their D&O questionnaires are ready earlier, easier and faster this year. Moving to online D&O questionnaires is a win ‘across the board’.
What is driving the move to online D&O questionnaires today?
New technology, lower costs and high demand for directors’ time are driving the rapid adoption of online D&O questionnaires. In 2010, Apple released the iPad. In 2011, board portal sales began rising dramatically. That is not a coincidence – easy-to-use technology drives adoption. Respondents are busy and their time is valuable. Directors and officers on leading boards today are technically savvy and they embrace technology in any way that enables them to be more productive. New web technology and cloud computing have also paved the way for creating powerfully customised, easy-to-use, secure solutions at very reasonable costs. Busy people. Easy technology. Cost savings. It just makes sense to move your D&O questionnaires online.
What about security?
Ensuring the security of any information placed online is paramount. When it comes to online D&O questionnaire security, remember these two terms: security reviews and encryption. When you decide to move your D&O questionnaires or board evaluations online, you will not be determining if the questionnaires will be secure online. You have people for that. Your IT Security will evaluate the operational maturity of the organisation storing the data and the security mechanisms used to protect the data online. After their sign-off, you can trust that the system is secure.
Next, encryption. Simply stated, encryption means that data is scrambled so that only the person with the encryption key can read the data. The gold standard for securing questionnaires is known as ‘end-to-end encryption’, which means the responses are always encrypted when a questionnaire is accessed over the internet, when a questionnaire is in storage or in backups and when a questionnaire is transmitted between servers. Combining operational security with encrypted data means that you and your board can be confident that your D&O questionnaires are protected online.
“New web technology and cloud computing have paved the way for creating powerfully customised, easy-to-use, secure solutions at very reasonable costs”
Improved questionnaires reduce prep time and lead to faster responses, easier analysis, more convenience and the win factor. The advantages of moving to online D&O questionnaires are compelling and it’s easy to see why the number of companies moving to online D&O questionnaire systems is growing even faster than board portals did just a few years ago. It’s time to get moving!
About the author:
Russell Maher is President at QDiligence. QDiligence created the online system for Directors and Officers (D&O) Questionnaires and Board Evaluations in 2007 which allows respondents to review, edit and submit responses using an iPad, PC or Mac, and allows Governance professionals to reduce annual questionnaire preparation time by up to 80%. QDiligence securely hosts questionnaires for public and private companies in the United States, Canada, the United Kingdom, Israel and Bermuda.