Why and how to evaluate board performance and build better boards

In the current environment of rapid change, boards are asked to play an even more crucial role in steering their companies through turbulent times.

This means that ensuring the right non-executives are at the table and maximizing the board’s effectiveness are key elements in the company’s success. But we all are human, and even non-executives are at risk of not seeing the forest for the trees or letting groupthink impact their decisions.

Having an objective third-party board evaluation done at least every third year can open everyone’s eyes to potential pitfalls and inspire the board members to evolve from good to great.

So, what elements might a board performance evaluation contain? It depends on the board’s ambition and situation whether the board needs a full-fledged review or just a small follow-up on last year’s board evaluation.

Here are examples of some of our most popular modules, ranging from basic to more advanced, based on our experience carrying out board performance evaluations for various companies in Europe. You can read more about each of these in the PDF linked below.

  • Bespoke online questionnaire with anonymous answers. A relevant questionnaire should include general corporate governance questions as well as bespoke questions relating to the specific situations at the board and company level. Leaving plenty of room for anonymous additional comments often turns out to be highly valuable.
  • Individual interviews of each board member. It is crucial to understand each board member’s expertise, how and in what areas the member contributes, what concerns they might have, and what ideas they might have for improvement. The individual interviews are also a perfect occasion to test whether all board members are aligned and can articulate such things as the company strategy and how the CEO is compensated.
  • Composition mapping. A fundamental recipe for an effective board is cognitive diversity. Identifying how the board is composed in terms of types of prior experience, demographics and personal styles reveals the board’s strengths as well as some of the “blind spots”.
  • Composition benchmarking. If you decide to do a composition benchmarking, you will get inspiration from the composition mapping of other boards regarding what will be valuable to add and how you can work long-term with the board’s succession planning.
  • Board meeting observation. It can be useful to get an outside perspective on board dynamics and of how the board meetings are accomplished.
  • Time-spent analysis. This can be an eye-opening exercise and is something that with little effort can enable the board and executive management to revise the structure of the agenda going forward, helping the board make more time for strategic and future-oriented key discussions.
  • Board composition – risk – alignment. Comparing the outlined company risks with the factual board competencies is an exercise that is not frequently done, but for obvious reasons an exercise that might turn out to be a critical advantage.
  • Culture survey. Identifying the culture at the board level and comparing it with the culture in the executive team and the level reporting to the executive team can reveal in-depth insights regarding cultural differences and where to focus attention to improve corporate culture, increase motivation and unleash potential.
  • Evaluation of diversity of thought. By using a relevant profiling tool, you will be able to identify what kind of personalities you have on the board and what this might mean in terms of preferred work behavior, strengths, and potential pitfalls.
  • Compliance with national governance recommendations regarding what information should be publicly available. Having someone go over what you have published (on website and in Annual Report) and what you may have forgotten about in terms of complying with your respective governance recommendations is always an interesting exercise. Often, organizations forget to publish information that would serve them well and align them with or even help them stand out versus other organizations.

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Interested in self-evaluation? Try Online Board Evaluations

Well-aligned with national corporate- and foundation/charity governance recommendations, our board clients usually conduct an external board evaluation every three years. However, most national governance recommendations recommend that boards perform a self-evaluation in the years between an external board evaluation. Therefore, we have developed OnlineBoardEvaluations.com which is a tool enabling boards to self-evaluate effectively and effortlessly every year.