Eight Keys of a Comprehensive CEO Report

While many boards focus almost exclusively on the financial reports, I would argue that the most important report in the board pack is the CEO (or MD) report.

Commonly known as the “CEO Report” or “Management Report”, it is a report prepared by the CEO (Chief Executive Officer) or MD (Managing Director) for presentation in a meeting of the board of directors. It is critical that this report is complete, factual and ‘pulls no punches’, for two main reasons: Firstly, it is designed to provide a high-level update on the challenges and opportunities that the business is experiencing from an operational perspective, and secondly, it is the non-executive directors’ main source of information about what is really going on in the company. 

Fundamentals

Developing the CEO report requires a blend of strategic insight, analytical prowess, as well as effective presentation and communication skills. 

The CEO must be candid and not gloss over the difficulties that the organisation is having, or that he/she is personally experiencing. It is also important to balance the report by including information on the achievements that have been made during the reporting period so that the board can celebrate these “wins” with the executive team.

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.

A Strategic Report Framework

The Sirdar Governance Compass provides a strategic framework essential for annual board considerations. Complementing this, the Sirdar Management Compass outlines key operational areas which we advise using as the foundation for a CEO report, ensuring comprehensive coverage of crucial aspects:

It considers the following:

• Identifying the Market: The elements that fall under this section are market research, innovation (including R&D initiatives) and any updates on the development of, or changes to, customer segmentation. Unless they obviously fit into another category, this is where updates on ‘new markets’ or opportunities would also be reported. Knowing and understanding what is in the pipeline of new products and services is particularly important for the board’s non-executive directors (NEDs) as they are not close enough to operations to know what the latest thinking is. Seeing the high-level overview in the CEO report puts them in a much better position to provide input on other possible areas of innovation, or new regions that have not been considered. This is a key element of the value that NEDs can offer.
• Getting the Message to the Market: This is one of the easier sections to complete because most CEOs have a good idea of what their current initiatives are regarding branding, marketing and sales. However, it is critical that the information provided is timely, accurate and complete because these are the parts of the business that will most likely move the needle on future revenue growth and the data will lead to potential changes to strategy and financial forecasts. To quickly convey your message, highlight the impact of these initiatives – both good and bad – through visuals. Use charts and graphs to show actual results compared to targets, avoiding lengthy text explanations.
• Building Effective Teams: Keeping track of what is happening regarding the recruitment of new team members and performance enhancement initiatives for existing team members, can be difficult as the organisation grows, so it is important to receive regular updates from department heads, or the HR team. Having this section in the CEO report prompts the collection and review of that data. Insights, achievements and challenges can then be reviewed, considered and commented on in the report and may lead to an important board paper or a change to a policy being needed. Keeping an eye on cultural integration can easily be missed too, and can have disastrous consequences as a result. The famous quote from Ernest Hemingway’s book, ‘The Sun Also Rises’ comes to mind:

“How did you go bankrupt?” Bill asked.

“Two ways,” Mike said. “Gradually and then suddenly.”

• Leveraging Through Market Connections: Another key component of business success is to build networks and relationships with as many of the stakeholders and potential market partners that either have an impact on the business, or are impacted by the business, as possible. It is our recommendation, for example, that the board draws up a stakeholder engagement matrix and formally reviews it every year. In terms of the CEO report, the focus needs to be on providing updates on current initiatives to develop networks and relationships, and highlighting any positive or negative changes to existing relationships that may affect the business. A great example that came up with one of our clients recently, was an opportunity to build a distribution network through a partner in a new region. This is absolutely something that needs to be discussed at board level. Business networking in general can sometimes take a back seat when things get busy, so having the prompt to provide an update in this report is very useful.
• Delivering to Expectations: NEDs do not often have the benefit of being able to ‘walk the floor’ of a business, hear the gossip around the water cooler (pre-Slack and Teams channels, for the younger members of the audience), or receive calls from customers, so it is vitally important that the reporting in this section is open and transparent. The board needs to know what is going right and wrong in terms of customer retention and operations management. It also needs to be made aware of whether the projected market development is happening as expected, in case they need to invest more to catch a wave, or to pivot because the market has suddenly crashed.  
• Managing Risk and Compliance: Governance is typically only seen to be concerned with risk and compliance, but as businesses are starting to realise, the topic is now much wider and all encompassing. Part of the board’s responsibility is to develop a risk matrix for the organisation and to then focus on ways to mitigate the top three to five highest priority items at any given time. The annual board calendar should also reference during which meeting specifically the matrix is going to be reviewed. In between times, information on the current highest priority risks needs to be captured in this section of the CEO report. For example, ESG metrics would fall under this category. Specific risks that need to be documented should include any issue that has been identified during external and internal compliance scans, or issues with product and service quality – the latter being one of the most common areas where directors end up in court. Good examples being the 2.6 million cans of meat that Conagra in the US had to recall in 2023, and closer to home, the Tiger Brands “Killer Polony” listeriosis scandal that is still being played out in the courts seven years later!!
• Optimising Financial Results: We recommend that a more detailed ‘CFO Report’ is included separately in the board papers, so that this section of the CEO report is more focused on operational achievement, or challenges that have impacted the financial results. Mention should also be made on any requirements for, or changes to, investment activities and capital structuring – not just financial performance. This would exclude detailed references to the income statement, balance sheet, ratios, cash flow projections, and solvency and liquidity declarations, which should be included in the CFO report. 
• Perfecting the System: Achievements and challenges related to IT systems, the management of the company’s intellectual property and knowledge base, and any initiatives related to business modelling would appear here. While cyber security is an important aspect, it will most likely be reported under ‘Managing Risk and Compliance’.

The True Value 

While covering all of these areas provides a thorough overview of the organisation for the rest of the board, it is often a very useful process for the CEO too, because they hear of, or are made aware of, things that they might not otherwise know. Ideally this report should add so much value to the CEO that it is prepared monthly, whether a board meeting is being held or not.

An additional benefit is that the report can be used as the basis for a report to external stakeholders, especially shareholders and potential investors.

Image: © JLGutierrez via Canva.com