“Employees Must Wash Hands Before Returning to Work” signs are standard in restaurant bathrooms. Yet, some restaurants are no longer willing to simply assume that employees will comply with the suggestion. Instead, these restaurants have begun installing what is essentially the equivalent of an electronic lie detector for employees who prepare or serve food. Using light fluorescence spectroscopy, a hospital-grade scanner that is typically installed next to employee handwashing stations, the restaurants can tell within two seconds whether an individual’s hands have residual contaminants on them. Technology’s reach knows no bounds and is impacting even the most unlikely of industries. Faced with its ever-increasing importance and the rapid pace of its advancements, many businesses have come to realize that their focus on technology cannot be limited solely to the IT department but must also be embedded at the board level to help drive strategic decisionsThe Rise of Board Tech CommitteesAssessing tech strategy at the board level is not a new idea, but it has long been something where boards have focused primarily on issues such as digitization and security, leaving the bulk of decision making to IT specialists. Realizing that this type of approach can mean missing out on opportunities created by new technology and scientific advancements, many companies have started creating board technology committees charged with keeping on top of advancements in these areas and seeking opportunities for their organizations to benefit from. According to the National Association of Corporate Directors, 36% of Fortune 100 boards now have technology committees, up from 7% a decade ago. Also, research from McKinsey & Co. from 2020 and 2021 shows that Global Fortune 500 companies with board technology committees benefited from operating margins between 100bp and 600bp higher than competitors without them. However, the benefits of such committees are not limited to bulge bracket companies and are something that community financial institutions (CFIs) should consider as well. In fact, Bank Director’s 2020 Technology Survey revealed that 35% of banks already had board technology committees, as of that point in time. Why a Tech Committee is a Good IdeaOne of the biggest problems organizations face regarding technology is a major disconnect between management and board members on what initiatives to pursue. It is also not uncommon for board members to lack the deep technical expertise and knowledge necessary to make informed decisions on this front. Adding a standing board technology committee and ensuring that its members have adequate expertise can help organizations broaden and prioritize their decision making. A standing committee can also help board members better understand the intricacies of bigger tech initiatives and how they can impact all areas of an organization, from risk metrics to talent needs and everything in between. Tips for Forming a Tech CommitteeIf your organization does not yet have a dedicated board technology committee, the following are a few things to consider before adding one:
- Establish guidelines. Charters for committees need to clearly outline the expectations for the committee and the extent that they are expected to evaluate technology decisions that impact the overall corporate strategy. It is also important to identify the cadence of meetings as well as how often formal updates will be provided to the full board of directors.
- Specify duties. Responsibilities of a technology committee should include ongoing monitoring and evaluation of a CFI’s technology, from planning to development and execution, as well as assessment of both the risks and benefits of any relevant projects.
- Collaborate on critical processes. Continuity and disaster recovery plans should also fall within the purview of the technology committee.
- Allow access to employees. Beyond the board, the technology committee should regularly interact with the officers and managers responsible for technology — from the chief information security officer and chief technology officer, to chief information officer and even the chief operating officer.
The importance of staying up to date on technology — whether for security reasons or keeping on top of the latest advancements — is not lost on most boards of directors. However, ensuring that your organization doesn’t miss out on opportunities created by new advancements may necessitate creating a dedicated technology committee at the board level. Before heading down this road, however, CFIs should take the time to educate themselves about the benefits of this approach and the best practices that have already been established by organizations that have already created such committees.
