Our Managing Director, Jean Pousson, looks at the benefits of conducting regular Board Effectiveness Reviews.
Teams are as old as civilisation itself. Even Jesus had 12 Apostles and one of them turned. (Maybe that Board was already too big?)
Joking aside, Board Reviews should not be seen as a regulatory nuisance or something imposed from the Compliance people. Instead it should present an ideal opportunity to reflect, take stock and hopefully improve the performance of the Board.
Boards do not operate as well as they should for a multitude of reasons. This so-called malfunction can be caused by so many factors:
- Board too big
- No diversity of thought and experience
- Dominant personality coupled with a weak Chair
- Poor etiquette
- Processes abject, eg ritualised agendas, poor time management, etc
- Non-Executive/Independent Directors not truly independent, or trying to relive their executive roles.
- Important items get crowded out
And the list goes on.
Many Boards seem to be satisfied with a simple internally derived Questionnaire. This is akin to marking your own Exam Paper. A truly robust Board Effectiveness Review would display the following characteristics.
Brief by the Chair. The best evaluations are where they are driven and supported by the Chair.
Oversight of most recent evaluation, and relevant documentation, eg Board Minutes, Board Charter, Shareholder Agreement, Committees’ Terms of Reference and Minutes, etc.
Attendance of at least one Board and Committee Meeting.
This would inform the content of a Questionnaire, which would be deployed to all Board members and possibly some senior management who may provide additional insights.
Once the results are analysed, we would schedule a series of one-to-one interviews with all the Questionnaire respondents. More on that later.
We always reserve the right to go back for a second, (shorter), interview to validate some facts or get additional information.
The review can also incorporate an assessment of the Chair and individual Directors.
This would then allow us to compile our Report, complete with Questionnaire data, and this would always be shared with the Chair as a matter of professional courtesy.
The Report would then go out with the Board Papers and we would facilitate a discussion of the findings at such Board Meeting.
An Action Plan is then agreed and we can go back, (at no extra cost), to follow up a few months later.
This, we believe, is what a comprehensive review should look like. Any shortcuts simply impoverish the whole exercise and it becomes a wasted opportunity.
The one-to-one Interviews with the Directors are an essential part of this process. This is where Directors can confide and share their views in a risk free and anonymous environment. Typical questions that we would ask could be:
Who should be the next Board member to leave and why? This always draws a wry smile, but when processed, the Directors realise that this is an important question and not necessarily about personality. (Although sometimes it is!) The Board may not be totally fit for purpose, as the business landscape may have evolved and different capabilities are now required. Experience is great as long as the future resembles the past and all that.
What are the biggest risks facing the BOARD? This is a very different question from the organisation’s risks and it forces a deeper and more introspective line of thinking.
In two or three words, please describe this Board. Directors of good Boards never struggle with this question and we soon get very coherent and near unanimous answers.
After each Board meeting, could you answer the following: “How have we added value to the organisation today? This is an absolute must ask question after each Board meeting.
We also view these interviews as an opportunity to add value and share the benefits of our experience. We can recommend useful developmental activities, especially for newly appointed Directors.