Nowadays, Boards face unprecedented challenges, alongside new opportunities, regardless of their size or sector.
So, how do these Boards manage and improve their efficiency and effectiveness? How do they ensure communication with management is clear and constructive, and the Board is able to be both stable and flexible in the face of change?
Board evaluations have become a significant development for corporate governance, providing a mechanism for measuring and refining the Board’s performance. Originating in the UK as a response to corporate scandals and mitigating future failings, in today’s world they feature in the regulation of companies across the globe.
Board evaluations are not restricted to large, listed companies. Any organisation can benefit from a regular Board review that encourages healthy Board dynamics and enables improvement.
What is a Board Evaluation?
A Board Evaluation is a method for scrutinising the actions and efficacy of the Board. This helps improve transparency and accountability of Board Members. It can also highlight areas or practices that need improvement. All of this improves Board governance and ensures that potential issues amongst the Board are dealt with.
A Board evaluation examines not just the Board but its effectiveness, the quality of its decision making and strategy, and its relationship with executive management.
It is important not to wait for a crisis before having a Board evaluation. There needs to be standards that are continuously upheld no matter what. These standards are:
- Clearly defined roles and responsibilities.
- The Chairman and Executive Committee playing active roles.
- A Code of Governance determining corporate governance that is effective for the organisation.
- An outlined strategic vision for the future.
The most effective way to do this is using a combination of employee surveys, peer evaluation and interviews or self-assessments. This will allow you to gain a candid and detailed understanding of how the Board operates.
You should be performing regular but not too frequent Board Evaluations, perhaps once every quarter. You want to make sure that you are engaging your Board members and encouraging them to reflect rather than it becoming a tedious part of the Board meeting process.
Before starting a Board Evaluation you should figure out your main scope of investigation. This could be Board management, Board development, the goals and objectives of the Board, the strategies of the Board or the actions of individual directors.
Then, like for any evaluation process, you should carry out the investigation, using appropriate methods. Following this, you should analyse the results and determine the necessary steps for improvement. Finally, you should implement the results and review them in the next evaluation.
Why are Board Evaluations important?
The role of the Board has undergone a transformation over the years, with more of a focus on transparency, Board dynamics and governance processes.
Boards today are expected to fulfil their previous responsibilities, alongside maintaining engagement in strategy, risk management, ESG and other issues.
An effective Board is one that contains a diversity of thought, perspective, experience and expertise that can help the leadership team navigate the challenges of the modern corporate world.
They are instrumental in shaping the strategic vision of their organisation, as well as enabling good governance and fostering accountability. They act as a link connecting stakeholders and the management team, providing direction and support in order to help the company achieve its long-term goals.
The effectiveness of any Board is a critical driver in a company’s success, as well as a demonstration of its governance capabilities.
Board evaluations are a well-structured mechanism for assessing the Board’s effectiveness and identifying areas of improvement. They offer a platform for evaluating board performance, structure, succession planning, organisational culture, governance procedures, and communication with the executive team.
The evaluative process encourages a culture of continuous development and improvement, meaning that the Board can maintain its success amid the many changes of the business landscape.
An evaluation helps to reinforce the Board’s commitment to good governance, enabling them to understand the Board’s strengths and weaknesses and develop a plan to ensure improvement.
Board evaluations can help establish effective succession planning while identifying opportunities to enhance diversity and ensure compliance.
Board members often express concerns about insufficient time for discussing future strategies and value creation, with a majority of meeting time typically devoted to reviewing previous developments. Conducting a Board evaluation provides a valuable opportunity to identify and implement necessary changes for the future.
A Board evaluation as a process should set out clearly what the Board wants to achieve in the long-term, establishing expected behaviours and tone for the entire organisation.
To be effective, Board’s need to be able to embrace the findings and recommendations of an evaluation, as well as ensure any evaluation is objective and accurate.
Objectivity in Board Evaluations
One of the most important factors in Board evaluations is objectivity. Objectivity in Board evaluations refers to the practice of assessing a Board performance based on factual criteria and standards, without allowing personal biases, opinions, or relationships to influence the evaluative process.
Maintaining objectivity is crucial in ensuring a fair and impartial assessment of the Board’s effectiveness, which in turns means both the Board and the organisation to thrive. It ensures that Boards can make the best possible decisions and improvements for the organisation as a whole.
There are some key aspects of objectivity that can be important to consider in the Board evaluation process. Boards should consider:
Using clear criteria: Well-defined, measurable criteria for evaluation that is relevant to the Board’s responsibilities and the organisation’s goals is critical in ensuring objective, accurate assessments.
Utilising independent facilitators: An external facilitator with no personal ties to Board members can help lead the evaluation process and mitigate potential bias.
Fostering diverse perspectives: Incorporating feedback from various stakeholders including management, shareholders, and other Board members is important in gaining a comprehensive view.
Establishing a data-driven approach: Concrete data such as meeting minutes, financial reports, and performance metrics can really help in supporting evaluation findings.
Maintaining confidentiality: Confidentiality in regards to individual feedback will encourage honest self-assessment and peer reviews, ensuring more effective and objective Board evaluations.
Objectivity is important in Board evaluations because it ensures accurate assessments, and that the evaluation reliably reflects the Board’s strengths and weaknesses.
By removing personal bias, evaluations can provide more constructive feedback to individual board members and the board as a whole.
A transparent and objective evaluation process also builds trust among stakeholders and enhances the board’s credibility.
In order to promote objectivity in Board evaluations, your organisation should:
- Develop a robust evaluation framework.
- Train Board members on the evaluation process.
- Regularly review and reassess the evaluation process.
- Invest in technology that enables clear, unbiased and data-driven evaluations.
How Convene can help your Board
The Board evaluation process needs to be an organised and collaborative effort. Using Board evaluation tools like Board portals to conduct surveys or confidential one-on-one helps keep this process secure, structured and objective.
Board portals offer valuable features you can use to perform an evaluation or internal board audit. For example, these platforms enable you to:
- Send survey and evaluation forms
- Organise quick virtual meetings
- View analytical data and activities of each user
- Store evaluation reports in a secure document repository
- Analyse and visualise reports and survey results
- Assign action items and create annotations
- Create and distribute board packs or documents
Leveraging a Board management platform like Convene can significantly streamline the Board evaluation process, making it more efficient and effective. By automating tasks and centralising information, Convene empowers Boards to focus on strategic decision-making while ensuring rigorous evaluation practices.
We here at Convene are dedicated to bringing you the best possible assistance in your governance practices. Our Board portal is designed to ensure that before, during and after your Board meetings, your workflow is streamlined and seamless.
However, Convene is more than just a Board portal. With our partnership with GovernWith we are bringing you the next step in Board technology.
Convene and GovernWith have joined forces to provide a cutting-edge governance solution, bringing together award-winning board management, compliance and contemporary governance review capabilities. We’re offering you a unified platform for all of your board governance needs.
For our new Governance Review module, GovernWith is bringing their expert knowledge on contemporary governance and review capabilities to aid in the evaluative process.
GovernWith specialises in online Contemporary Governance Review & Development programs, each tailored to meet sector-specific regulatory obligations. The platform supports Boards, Executives and Subcommittees in achieving high-performance governance teams.
With this new module, you can access essential content and tools to manage regulatory compliance obligations and enhance contemporary governance organisation-wide, year after year.
Our Board management software is the all-in-one governance system your Board needs, ensuring both effectiveness, and compliance.
Transform your Board governance experience, with Convene and GovernWith.
