REUTERS | Nikola Solic

The case for board effectiveness self-assessment

A board effectiveness self-assessment is an excellent way of improving the performance of the board and of individual board members. It can help identify the strengths of a board, any areas that need improvement and measures to achieve better performance.

Reasons for starting a board effectiveness self-assessment

Here are some of the reasons why a board should begin the annual board effectiveness self-assessment process. For example, to:

  • Look internally at the board itself and how well it is functioning.
  • Reflect on the individual performance of board members and the collective performance of the board.
  • Clarify expectations.
  • Ensure that board members are aligned and abide by a shared vision.
  • Identify areas that need attention and improvement.
  • Provide feedback to individual board members.
  • Increase the level of board teamwork.
  • Provide transparency and alleviate the concerns of investors, shareholders and other stakeholders requesting the result of the board effectiveness self-assessment.
  • Demonstrate and increase the accountability of the board and its members.

How to evaluate the effectiveness of board meetings

A board effectiveness self-assessment should include three main components:

  • Who. Board composition, skills and attributes.
  • What. Activities overseen by the board (such as strategy and succession planning).
  • How. Practicalities, board dynamics and board culture.

Peer-to-peer reviews can be helpful as non-executive directors (NEDs) and other board members often receive little feedback. Comments and suggestions from peers on where board members add value and any areas for improvement can help improve the overall performance of the board.

Best practice tips for a board effectiveness self-assessment

Here are some recommendations for you to implement when conducting your annual self-assessment:

  • Define the self-assessment process and agree it with all board members.
  • Make sure feedback given by individual board members is anonymous and confidential (to the extent this is possible, given the size and composition of the board).
  • Get buy-in from all board members on the process and purpose of the board effectiveness self-assessment.
  • Use technology, where possible, to streamline the process.
  • Include all board members in the self-assessment (the chair, NEDs and executive directors).
  • Make sure that the results of the self-assessment are shared with the full board and ensure that action is taken if any areas for improvement are identified.
  • Share the summarised board effectiveness self-assessment with stakeholders.

Who should lead a board effectiveness self-assessment?

This is specific to each organisation but typically the Nominations Committee, Company Secretary or a Senior Independent Director is tasked with ensuring that boards complete the self-assessment.

Leave a Reply

Your email address will not be published. Required fields are marked *

Share this post on: