Director’s diary: The keys to a good CEO report

Director’s Diary: top governance insights designed to get you thinking as part of your corporate governance education – brought to you by the Corporate Governance Institute’s co-founder David Duffy.

The most important document in the board pack is the CEO report. This report is the key communication tool between the board of directors and the executive. It provides critical insight into the business’s heartbeat and performance at a given point in time. If you are a non-executive director (NED) with limited exposure to what’s going on inside this business, this will be a critical source of information.

Developing the CEO report requires a blend of strategic insight, analytical prowess, effective presentation and communication skills. The key challenge for a CEO is to develop a report that is concise, easy to digest and understandable. The report should make the best use of graphics such as tables, pie charts, Gantt charts, trend information, and exception reporting to support the narrative if it is produced in physical form. It could also include videos and interactive charts if produced in digital format.

The report typically includes financial highlights, operational updates, and key performance indicators (KPIs), offering a comprehensive view of the company’s current status and its trajectory.

The summary paragraph outlines the business’s current state, trajectory, and key issues (2 or 3) the CEO would like the board to comment on.

Key components of the business plan include: 

• Performance against key milestones (current vs actual & YTD)
• Commentary on which milestones have not been achieved. This is crucial for a full analysis of the business. This section should include explanations as to why achievements have not been met, what has been done so far to address it, and what will be done in future.

• Revenue (current vs. budget vs. previous period)
• Net profit margins by market, product, distribution partner etc
• Cash flow (current vs. budget vs previous period)
• Debtors outside agreed credit terms

• Production output (metrics or production levels)
• Quality control (defect rates or improvement measures)
• Inventory management (inventory turnover, stock levels)
• Major complaints and how they were resolved

• Market share (company’s position vs. competitors by market)
• Customer acquisition (costs by lead and sale by market)
• Customer retention (customer churn rates by key market segments)
• Trustpilot feedback

• Workforce productivity (metrics or performance Indicators)
• Employee satisfaction (survey results, exit interviews etc)
• Talent Development (training initiatives, promotions, retention rates)

Watch out for the next Directors Diary, which will outline how to develop a director’s report.