Board Evaluations are not an optional extra?

Board Evaluations are not an optional extra?

Why bother having board evaluations?

Simply put, if one does not evaluate the performance of a Board, the organisation has no way of assessing how the board and its members are performing.  If board evaluations are sporadic rather than a regular feature, then there is less chance that there will be a constant focus on improving board performance to the detriment of the organisation it governs.

Performance assessment allows allow the board, its members, committees and the CEO to understand what they’re doing well, identify things that need improvement, develop plans to guide and improve performance, and ultimately add value to the organisation.

Who is assessed?

A board evaluation assesses the overall performance of the board, its individual directors, board committees and that of the CEO.

The starting point?

Boards can start with an initial self-assessment to build confidence, followed the next round by a questionnaire which can be then summarised by a trusted board member, the key points of which are used by the board as a basis for discussion to decide where it needs to improve.  Some board may value getting it done externally as it will be more objective. There are many variations on how it might be done.

Assessing board performance

Board effectiveness can be assessed along several dimensions:

  1. Clarity of roles for the board, committees and the CEO
  2. Board work plan – how is the work planned for the year and what can be devolved to committees
  3. Board structure – is it fit for purpose?
  4. Board culture, behaviors and dynamics
  5. Board responsibilities – who does what?
  6. Board processes – risk, information flows, etc

The CEO should participate in the assessment as he/she will have a broader perspective on the performance of the whole board. Beneficial insights may be gained by comparing the CEO’s and the executive team perceptions with those of the overall board.

Assessing individual directors

Assessment of individual director performance is best initiated as a self-assessment followed by review with the board chair and / or the governance committee.  More forward thinking boards may undertake a 360-degree assessment in which all directors anonymously assess the performance of each director and the board as a whole.

Assessing the CEO

Evaluation of the CEO’s performance should be based on the job description and performance objectives negotiated annually between the board and CEO which should be linked to the strategic and annual operating (business) plans and budgets.

What does a high-performance board look like?

Research suggests that high performance boards are more likely to have:

  • A chair who is a good leader and has the moral authority to help in setting the tone from the top
  • A strong ethos and a set of values
  • Appropriate experience and competencies to support the executive in delivering on the strategic plan
  • Board engagement in strategic plan development, monitoring and evaluation
  • Strong financial oversight
  • Role clarity everywhere
  • A clear line in the sand between the role the board and that of the executive
  • Board independence and objectivity
  • Etc.

If you would like to discuss a board evaluation for your organisation, please contact David W Duffy on + 353 (0)87 2423 046. Click here to download the brochure.

At The Governance Company our ambition is to make corporate governance a topic that is engaging, stimulating and fun for those who need to know.

Join us for topical and practical articles and insights from the world of governance.

Follow us on LinkedIn and Twitter.

David W Duffy

 

 

Leave a Reply