Effective, Efficient and Ethical: What to consider when choosing your Board performance review approach
Tips for choosing your approach to Board evaluation.
Regular review of Board performance is now a governance standard and we are fast approaching the time when Boards are considering how best to approach this important activity.
Here are some issues to consider when choosing the best approach for your Board.
Board Members’ Experience
The past experience of the Board members in the performance review process is likely to determine how comfortable they are with a performance review of the Board. If you have a Board with little or no experience in performance reviews – either as a Director or as an executive officer – they may be quite anxious about their performance being scrutinised through such a process and unwilling to engage in a review which they see as threatening.
Best to start with an internal, non threatening review process such as individual personal assessment against agreed criteria which can still provide some good information while building the confidence of the group in the benefits of a conversation about performance.
If the Board is quite experienced, then the range of evaluation approaches can be considered such as external evaluation, 360 degree feedback and benchmark evaluation.
Board Lifecycle
A newly formed Board for a start-up organisation may require a review approach that focuses on setting up the governance practices of the organisation rather than assessing its current practices. As the Board progresses, the review approach evolves to assessment of introduced practices against contemporary governance standards and the Board’s current practices against those standards.
Motivation for Action
What is the Board’s motivation for doing this review? If it is a ‘tick the box’ exercise to satisfy an external party, then choose a cost and time efficient approach which does not waste resources on a non-value add activity.
If it is seen as a valuable opportunity to have a constructive conversation on performance, then consider using an external facilitator to provide input on current and emerging governance standards, provide objective input into the assessment and facilitate discussions on sensitive issues that the Board may not feel they want to initiate themselves.
Key Points of Focus
Do you have a sneaking suspicion that you have a problem that needs to be dealt with and this is the process to bring it to everyone’s attention in a non threatening way?
Board reviews often focus on three key areas of performance:
- Effective Performance – How well does the Board perform its functions?
- Efficient Performance – How well do the governance practices of the Board and executive support the Board’s ability to perform its functions?
- Ethical Performance – How well does the behaviour of the Board support sound decision making and lead by example to people internal and external to the organisation?
Performed well, the review should be able to highlight any problems in these three areas. If you want to shine a spotlight on a particular area, then structure the review to be able to deliver this.
Review Involvement
The choice of approach will be informed by your thoughts on who should be involved in providing input into the review. The options might be:
- Board only
- Board and Executive team
- Board, Executive Team and Shareholders
The more people involved, the more likely it is that an external facilitator will be required to gather the information and feedback appropriately to the group.