An organisation’s success depends on how well board and committee members work together to drive company goals, align resources, and reinforce the organisational culture and mission. As part of good governance and to reduce organisational risk, it’s essential to regularly review the performance of the board or management committee and its members.
Performance reviews (also known as evaluations) are conducted to ensure the board/committee:
is operating effectively
has a strong ethical basis and active participation in decision making
- has the skills, knowledge, and experience to meet current and future organisational challenges.
Benefits of board and committee performance reviews
The key benefits derived from board/committee-level reviews include:
- 1. An objective assessment of common issues for boards such as leadership, relationships, size and tenure. This also provides an insight into the engagement of each director with the organisation and the dynamic environment in which it operates.
- 2. Helping to set the board/committee’s culture and build cohesion that flows through the organisation.
- 3. Keeping the board/committee in step with organisational needs through renewal and training.
- 4. Identifying excellence in current practices and letting directors and board/committee members provide honest feedback through an independent party.
This all leads to continuous improvement of board and committee practices and better outcomes from their interactions. A high-functioning board or management committee provides a solid grounding for effective decision-making and better manages strategic risks. It also delivers opportunities to identify improvements that will lead to enhanced organisational performance that creates greater business value.
Five steps for best practice reviews
1. Clarify the scope with the chair/CEO/head of governance
This is a critical first step because it will determine how outcomes from the performance review will drive the organisation’s governance settings for the next year.
The scope of the review should consider measurable elements such as:
- performance relative to strategy
- adherence to regulatory requirements where applicable
- board skills assessment
- benchmarking against others in the industry.
2. Design the methodology to suit the organisational structure and industry
The methodology may consist of an individual questionnaire, individual interviews, workshops, a review of documentation, policies and minutes or attendance at meetings, for example.
3. Conduct the review and analyse results
When conducting the review, it’s important to clearly communicate the scope and methodology with board and committee members to ensure they understand the type of feedback needed, how it should be submitted, and the submission deadline. This will help analyse results faster and easier.
4. Prepare draft report for discussion with chair
Ensure the draft report outlines the scope and methodology used for the performance evaluation, along with results and recommendations. Graphics are a powerful tool to highlight results and show a direct comparison with previous reporting periods, or others in the industry.
It is essential that this report is clear and easy to understand, and that the recommendations are relatively straightforward to implement.
5. Present approved report to the board/committee
Assist the chair to socialise the report to the board/committee by presenting the findings and providing copies of the report to board/committee members. A best practice presentation includes the use of graphics to show comparisons as well as board/committee strengths, weaknesses, and opportunities. Include recommendations as agreed with the chair and aim to agree on board/committee actions for improvement.
If you need assistance with achieving best practice performance evaluations for your board or management committee, contact our expert team at PFS Consulting.
