06/08/2024
At the end of a board meeting do you feel flat, or energised? Taking note of your energy and whether you feel negative or flat after a meeting can be an indicator that the board is not working effectively and probably not creating value for the company.
Regular board performance reviews are part of making sure your board and executive team are working effectively to keep your company achieving the right strategy.
What is a board performance review?
There is not a standard scorecard or test for determining if a board is effective. Every company and board are different.
However, a board performance review will look at some standard things:
- Is the board clear on where the organisation is going? Is there a clear path for management to follow in getting there?
- Is the board doing what it should be? Is the board focused on key board roles: setting strategy, financial monitoring, compliance, risk identification, CEO oversight?
- How is each Director contributing to the board? Does everyone know what value each member brings and how to make the best use of it?
- How is the board working? Is there a culture of collaboration and trust? Are board meetings being used effectively?
Board performance reviews do not have to be exhausting and time consuming. A good board performance review will look at what and how the board is doing things and provide a trust space for the board to talk about how to improve.
A performance review can include any of the following:
- extensive or simple surveys of board members, which can extend to management and stakeholders for comprehensive reviews;
- follow up one-on-one interviews;
- facilitated discussion with the board (and key management if appropriate) following surveys;
- open discussion of questions in a board meeting.
Your board can then receive the review as a comprehensive report or an action-oriented improvement plan, or a combination.
What are the benefits of a board performance review?
A board performance review, done well, improves the governance of the organisation. Improving the governance of the board leads to better process and decision-making. The result of this is better value from the Board for the company and ideally better company performance.
To undertake a performance review requires the board to set aside its usual work and dedicate time to consider improvement. Making this extra time creates space for discussion and relationship development, which leads to better communication and collaboration within board meetings.
Some of the immediate benefits of a board performance review include:
- increasing board and director understanding of their roles and responsibilities and their own contribution to the board;
- discussion about director performance lifts individual performance or creates an opening to discuss succession and the appropriate skills needed on the board;
- creates greater accountability of the board and individual committees and directors to set goals and deliver;
- improves relationships within the board thereby improving communication and discussion;
- reduces conflict in the boardroom being better aligned on strategy and vision;
- better risk management by creating an open culture;
- better risk management by giving more time to think about potential risks and mitigation strategies.
Another important benefit of board performance reviews is that it demonstrates to funding bodies or partners, that the board of the company is committed to continuous improvement and good governance of the company, its assets and people. This can be a critical differentiator between your company and a competitor.
Where do I start?
Many boards have a cycle of alternating internal self-review and externally facilitated reviews. It can be helpful to start the cycle with an externally facilitated review as this will set a benchmark and framework that can be used by the board in the years it chooses to do a self-review.
Don’t be overwhelmed at the thought of the time, expense or challenge of undertaking a board performance review.
At Griffin Legal we can design a process that suits exactly where you are at as a board and an organisation. Light touch or comprehensive – reach out to the team at Griffin Legal at enquiries@griffinlegal.com.au to discuss how we can help your board add value to your business.