While it would be easy to poke fun at the above statement (told to us by one of our clients), it nevertheless highlights a real issue with which organisations often do not grapple until it’s too late.
There are sufficient examples around of Boards not functioning properly, ranging from outright mutiny and never-ending political gamesmanship, to one hundred per cent passivity where usually one person, the Chief Executive, is driving the organisation forward in solo drive.
For years there were no obligations on Boards to monitor themselves.
The recent UK Corporate Governance Code updated the Combined Code and insists, among other things, that Boards should engage in an annual evaluation. At least every three years this exercise should be conducted by an external facilitator to ensure objectivity. And this must be reported in the annual reports.
While the above applies to Listed Companies only, and the independent facilitation exercise to FTSE 350 only, it is nevertheless considered good practice for Boards to commit to this irrespective of size. Numerous Private, Public and Third Sector organisations have found this to be immensely beneficial.