Corporate boards today are expected to be more engaged, more knowledgeable and more effective than in the past. One tool that a growing number of boards are using to examine and improve their effectiveness is the board evaluation.
How can boards make sure that they get the most out of the assessments, so that they really improve board effectiveness?
1. The board agrees on clear objectives for the assessment.
One of the most common mistakes boards can make when embarking on an assessment is failing to agree at the outset on the purpose and objectives of the process. While it may seem obvious, coming to a shared agreement about what directors collectively want to accomplish through the assessment encourages board members to commit time to the process and to provide the candid feedback that is essential to identifying and addressing potential roadblocks to board effectiveness. Without the commitment from the board as a whole and directors individually, an assessment is unlikely to yield the desired results. Clarifying objectives and defining the scope of the assessment also helps to avoid a situation in which the board is using the process as a way to put off dealing more directly with non-performing directors.
Among the questions boards should consider at the outset:
What is the scope of the assessment?
What’s the most appropriate assessment approach for the board?
Should board leaders be assessed?
What areas does the board want to delve into more deeply?
What gaps exist in the current assessment process?
2. A board leader is responsible for driving the process.
Essential to a successful evaluation is having an independent board leader champion the assessment process. The independent board chair, chair of the governance committee or the lead independent director is in a position to drive the process — involve the right people, ask for directors’ time, schedule time on the agenda to discuss the results and ensure that the board follows up on the issues that emerge. And while the CEO should be an integral part of the process, he or she should not be leading it.
3. The process incorporates perspectives beyond the board directors themselves, including those from senior management and best practices from outside the company¸
Another way the board can limit the value of a board assessment is to look only inwardly at its own effectiveness. An emerging best practice among U.S. boards, although still less common in European boards, is to seek input about the board’s effectiveness from the key senior management team members who interface with the board.
4. The assessment process should go beyond compliance issues to examine board effectiveness.
Many boards have relied on director questionnaires to conduct their assessments. This paper-and-pencil approach can provide a sense of how directors are feeling about compliance issues — whether or not the board is involved in strategy discussions or CEO evaluations, for example — but they are less valuable in revealing issues or concerns that are affecting the board’s effectiveness.
5. Directors commit to reviewing the results of the assessment and prepare an action plan for addressing issues that emerged.
Another way assessments can fall short is when boards do not commit the time to review the results and address the issues that are raised. Some boards, for compliance reasons, begin an assessment process, but then spend little or no time on discussing the findings.
Done properly, a board assessment is not a report card for the board as a whole or for individual directors. Furthermore, a board portal should help administrators to set up assessment with some tools as pool or debates… Instead, it should be viewed as a tool for continuous improvement and learning. Successful assessment processes:
Þ Reflect the culture of the organization and its board
Þ Are championed by a chairman or other board leader who participates actively in the process
Þ Have shared support among all directors
Þ Begin with clearly stated objectives for the board assessment process
Þ Include adequate time on the board’s agenda to discuss the results and establish a clear approach for acting on the findings, including developing an action plan with a timeline and milestones
Þ Are characterized by confidentiality throughout the process
This article is an extract from: Improving board effectiveness: Five principles for getting the most out of a board assessment