Making Your Board a Strategic Asset

A report was published last week that tracked the impact of board characteristics on corporate performance and some clear links were established. We could have a very lengthy debate about the accuracy of the links, whether they apply for all organisations in all sectors and whether they would apply over an extended period of time. We could have an even longer discussion about the causes and effects of these linkages. Whilst not wishing to avoid these discussions, I would just like to pick-up on the general point that Board effectiveness is a crucial component of corporate performance.

There are many characteristics of a Board that influence performance such as size, composition, frequency and length of meetings, quality of information, chairmanship, personal relationships, internal and external communication, contribution to strategy and risk management, the list goes on. The relative importance of these characteristics will vary across all organisations and, therefore, it would be wrong to publish a global ranking of their impact.

At Board Evaluation Limited we recognise this very important point and that is why we advocate regular and thorough assessments and analytical reviews of how the Board is performing. It is not enough to carry out a one-off “tick box” assessment to ensure compliance with regulatory or best practice requirements, the set-up and dynamics of the Board over an extended period of time must be understood and appropriate action taken.

Only when the Board is performing effectively can an organisation achieve the best possible results. Leadership from the Board, properly aligned with corporate objectives and principles is crucial and the contribution that a powerful Board can make should never be underestimated. The Board is a costly resource and if it isn’t performing well it is wasted resource, even worse, it is a missed opportunity.

So, do not ignore how your Board is performing and do not just carry out a check to ensure regulatory compliance; assess your Board to ensure it is delivering real value to the organisation and use external facilitation or validation to ensure that the difficult questions get asked.