Summary

A well-executed integrated systemic review of the governing body (Board of Directors), on a regular basis, is what differentiates an ethical and effective governance approach from a box-ticking compliance-focused board evaluation. This enhances good corporate governance.

Governance is about the exercise of ethical and effective leadership by the governing body[1] (Board of Directors). It is recognized as best practice for governing bodies(Board of Directors) to continuously assess how effective they are in performing their roles and in meeting the organization’s objectives.

Performance Evaluation of Non-Executive Directors

Board evaluations are a useful tool for reviewing the effectiveness of governing bodies (Board of Directors) and evaluations that are skillfully conducted can contribute significantly to improving the performance of the Board, and individual Executive and Non-Executive directors. In addition, board evaluations can further identify areas of strengths and weakness, allowing the Board of Directors to make changes that positively impact performance and stakeholder value.

At Boardvisory, we recommend undertaking an integrated systemic review of the governing body (Board of Directors), rather than merely a board evaluation. The intention is to affirm what’s working, identify where the challenges lie and plot and support continuous improvement of personnel and processes. A genuine evaluation will challenge the Board of Directors to reflect seriously on their performance and how it could improve.

An Integrated approach to Board Evaluation

An integrated approach that helps the Board of Directors to better exercise ethical and effective Board leadership should include the following:

1. Understand the term of office of each board member. This is relevant to understanding the independence of the board member and vital for succession planning. 
2. Do a skills matrix assessment by first mapping the skills of the current board members, and then mapping that against the skill sets needed for the Board to operate more effectively. (Using an external facilitator can ensure objectivity.)
3. Reflect on the composition of the Board of Directors and any sub committees. This provides insight into succession planning, and the optimal and effective capacity of the Board of Directors and any sub committees.
4. Assess what training requirements the Board of Directors may have. This is important to close the knowledge gap of the Board of Directors, but also for individual Board Directors to take responsibility for their own learning.
5. Perform a Board evaluation of the effectiveness of the Board of Directors  by focusing on at least the following five (5) key areas:
   • Leadership
   • Governance
   • Strategy
   • Management
   • Board Governance Administration 
6. Once the Board evaluation is completed, embed the learnings and follow through with tangible actions, such as board training, board director coaching and/or mentoring and board simulations, to name a few.
7. Update the integrated Board Review Plan, alternating annually between in-house evaluations and evaluations using an external service provider.

A well-executed integrated systemic review of the governing body (Board of Directors), on a regular basis, is what differentiates an ethical and effective governance approach from a mere box-ticking compliance-focussed board evaluation. Board evaluations also help to reassure management, employees, investors and other stakeholders that the Board of directors care about the performance of the board and the organisation.

Written by: Joy-Marie Lawrence, your Coach in the Boardroom 

A seasoned  Board Director,  Independent Non-Executive Board Director, and Boardroom Coach

The Founder of Boardvisory

[1] . (King IV Report on Corporate Governance for South Africa 2016 definition of corporate governance is about the exercise of ethical and effective leadership by the governing body.)