1 September, 2020
Q: The Directors would like to undertake a board evaluation; how can we do this?
A: At the outset, the Board should consider the purpose for conducting a board evaluation. It may be the Board has been through several changes which its needs to evaluate, or is looking to agree priorities for the future, or comply with its governance code. Whatever the reasons, identifying the purpose of the evaluation will help to focus its structure and ensure there is agreement on the aim of the evaluation.
Whilst the UK Corporate Governance Code specifies evaluation on an annual basis and the Quoted Companies Alliance Corporate Governance Code states that the Board should ‘regularly review’ its effectiveness, there is no set format of how an evaluation needs to be conducted. To date, questionnaires and interviews have formed the basis for an evaluation, but if a Board would prefer an alternative method of evaluation this can be agreed. The Chartered Governance Institute has consulted on ways to improve the quality and effectiveness of board evaluations, so there is some potential for change on this.
Both individual director as well as whole board performance should be reviewed, and keeping the content tailored to the company’s circumstances and relevant to the recent period will ensure better engagement. Any findings from previous evaluations should be considered to ascertain if these have been fully addressed, as well as appropriate questioning on recent challenges, such as crisis management over the past year, and whether there is sufficient stakeholder engagement.
A successful board evaluation can help to improve dynamics as well as ensure there has been appropriate reflection on issues dealt with by the Board. It can also serve to identify whether there is agreement on the Board’s future priorities. Any actions identified as part of the evaluation should have clear ownership and be regularly reviewed over the next year.
If you need any help with your board evaluation, please contact us. All our contact details are on our website www.brucewallace.co.uk.
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