a development opportunity
Board evaluations are a development opportunity for companies of all sizes. Conducted effectively, they can be a powerful catalyst for change, continuous improvement and constructive feedback – rather than simply a compliance activity. They are a valuable process for improving both board performance and corporate governance.
Board evaluations enable the board to consider the effectiveness of their decision-making and whether they have the right balance of skills to operate strategically and adapt to the ever-changing business environment.
why external board evaluation?
External evaluation brings independence and objectivity, while avoiding the potential for complacence or “group think”. An external facilitator has the experience to know when to probe issues rather than simply accepting them at face value. For sensitive topics, the involvement of an experienced facilitator is more likely to achieve a resolution. Other benefits of external evaluation include access to a wider range of evaluation tools, time efficiency and compliance with the Corporate Governance Code.
uk corporate governance code
By assessing areas such as board effectiveness, corporate governance frameworks and risk management, the long term interests of shareholders and stakeholders can be protected.
While the UK Corporate Governance Code applies to listed companies, it is equally appropriate for the majority of UK companies, which are unlisted.
the board evaluation process
Board evaluations are planned in consultation with the Chair, Chief Executive Officer and Senior Independent Director. Our approach is facilitative and tailored to the needs of the organisation. For larger organisations, a rolling programme can be effective. For example, this might address the board in one year and the committees in the following year.
In the interests of best practice, we use multiple methods, employing an appropriate balance of objective and subjective techniques. The pros and cons of different approaches are discussed at the planning stage so that the review can be tailored to the needs of the business.The information gathering stage includes a survey, interviews and evidence gathering.
A comparison of information obtained from surveys, interviews and evidence-gathering provides the basis for our analysis and board evaluation report. A feature of our approach is that we always seek to corroborate opinions with evidence. Our aim is to provide a robust and objective snapshot of the performance of the board, its committees and its individual directors.
The purpose of the presentation is to share the findings with the board and to discuss an action plan which will bring about performance improvement at organisation, board and individual level.
The board evaluation presentation is supported by a more detailed report and analysis of findings.
*Financial Reporting Council, The UK Corporate Governance Code, September 2012
B.6.1: The board should state in the annual report how performance evaluation of the board, its committees
and its individual directors has been conducted.
B.6.2: Evaluation of the board of FTSE 350 companies should be externally facilitated at least every three
years. The external facilitator should be identified in the annual report and a statement made as to
whether they have any other connection with the company.
B.6.3: The non-executive directors, led by the senior independent director, should be responsible for
performance evaluation of the chairman, taking into account the views of executive directors.