NEW: Evaluation of the board’s performance 

14 May, 2022 - 16:05 0 Views
NEW: Evaluation of the board’s performance 

The Sunday Mail

Memory Nguwi 

NOWADAYS good corporate governance requires boards of directors to evaluate and improve upon their own performance. 

After looking into a variety of corporate governance codes and practices worldwide, I’ve found that all of them now encourage performance reviews of boards of directors. These evaluations are essential for two primary reasons, which are: 

1. It offers the board of directors the chance to consider how it contributes to the company’s success 

2. It allows the board to correct any deficiencies in how the board and its members contribute value to the company 

Evaluations of the board’s performance are seldom carried out in poorly managed organisations that also lack adequate governance frameworks. On the other hand, assessing the board’s performance is common in well-managed organisations. If you want to get an idea of the quality of governance in an organisation, all you have to do is inquire how often performance reviews of the board are carried out. 

According to a list compiled by the Harvard Law School Review and the EY Center for Board Matters titled “How Companies are Evolving Board Evaluations and Disclosures,” the following are the primary areas of concentration for board performance reviews: 

Board composition, including skills and diversity Review of the efficiency and effectiveness of board leadership Director independence The handling of meetings Information sharing processes and their effectiveness Quality of boardroom discussions Assessing relationships among directors, as well as the relationship between executive directors and the board The strategic nature of boardroom discussions Board diversity in terms of age, tenure, and gender Committee responsibilities Committee composition Committee composition Committee responsibilities Committee composition Committee responsibilities 

Utilising the services of an impartial consultant is the most effective method for carrying out board reviews. 

The performance of the various components of the board’s operations should be evaluated as the primary focus of the appraisal. Depending on the purpose of the evaluation, the following are some of the primary areas of attention to consider. 

1). Evaluation of the board: This analysis concentrates on the board’s effectiveness in terms of how it is carrying out its responsibilities. At this point, considerations such as the standard of the board’s conversations, the composition of its membership, and the degree to which it adheres to generally accepted principles of sound governance are evaluated. This can be accomplished by distributing a questionnaire to all board members and having them fill it out. If you want to get extra qualitative information and the questionnaire, you might want to think about conducting interviews with each board member. The consultant can also look over past minutes to get an idea of how the board functions. 

2). Evaluation of committees: This evaluation focuses on the quality of input that each committee brings to the table during decision-making for the board. The committee members are responsible for conducting an internal assessment of the committee. Still, other board members who are not members of a particular committee can also evaluate the committee. Conducting interviews is another option for gaining a more in-depth understanding of the operations of each committee and the effectiveness of their work. 

3). Evaluation of board members: This assessment is now centred on the evaluation of each board member based on a set of pre-agreed-upon competencies that are significant to the board’s efficiency. The member will conduct an assessment of themselves, and each board member will similarly evaluate every other board member. 

4). Evaluation of the chairman: This evaluation section will focus on the chairman’s ability to lead. The chairman of the board will do a self-evaluation, and each member of the board will also assess the chairman. To gather qualitative information regarding the chairman’s leadership, interviews of a more in-depth nature can also come after this step. 

The findings of the evaluations above are compiled into thorough reports that illustrate both present performance and performance gaps. The report may also include action plans to overcome any performance gaps found. 

*Memory Nguwi is an occupational psychologist, data scientist, speaker, & managing consultant- Industrial Psychology Consultants (Pvt) Ltd, a management and human resources consulting firm. https://www.thehumancapitalhub.com Email: [email protected]  or visit our website at www.ipcconsultants.com 

 

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