Global Governance Advisors

The Power of Board Assessments

Posted by Peter Landers on Jul 5, 2018 3:23:19 PM
Peter Landers
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Board assessments are a powerful tool that can be used to evaluate the ongoing performance of your Board and ensure that you are following proper governance practices.

The board assessment process helps directors answer the important questions, such as:

  1. Do all directors understand the organization’s short and long-term strategies?
  2. Are directors and the executive team aligned on the organization’s strategy?
  3. Do directors understand the factors that drive the organization’s success, as well as the risk elements that can destroy value?
  4. Are there disputes or other issues between the directors and management, that impede smooth functioning of the Board?
  5. Do the Board and management understand their respective roles, so that there is clarity on both sides?

There are three types of board assessments:

Overall Board Assessments, Committee Assessments, and Peer Assessments. 98% of Boards assess their Overall Board performance, and over the past few years there has been an increase in the importance of Committee Evaluations and Peer Evaluations at 85% and 38% of Boards respectively, according to research conducted by Spencer Stuart. Organizations can also use the board assessment process to have directors reflect on their own performance, using self-evaluation questions, but this is less prevalent in the marketplace. 

Board Assessments Continue to Evolve:

Evaluating your Board’s performance is a critical step in ensuring that you, as a director, are fulfilling your fiduciary duties. While this used to be done in a vacuum informally through individual one-on-one conversations between the Board Chair and individual directors, it has evolved into a much more robust process that involves post-meeting assessments, but also formal assessments of Board, Committee and Peer performance on a regular basis. While the results of the 1-5 rating scale questionnaire used to take weeks to compile and aggregate into a more formalized document, this process can now be streamlined using technology such as GGA’s Survey tool in the emPowerBoards module of its emPower software platform, which allows Boards to design customized questionnaires for directors to fill out online with aggregate results produced in seconds (as opposed to weeks). This capability allows Boards to quickly identify areas of strength and weakness and follow-up with directors through one-on-one interviews on how the Board’s performance can be improved, saving them time and money. Boards that adopt this kind of technology are more impactful on the success of their organizations and create a competitive advantage. Organizations who do not adopt this kind of technology are at a distinct disadvantage.

With the increased pressure and workload being placed on Boards of Directors in today’s marketplace, it is critical that you evaluate your Board’s performance on a regular basis. Regular board assessments can act as a powerful tool in identifying areas for continuous improvement to ensure that your Board is fulfilling its fiduciary obligations and ensuring the long-term sustainability of your organization. 

Topics: board of directors, GGA, board assessments