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Board Effectiveness: Using Assessments to Drive Performance

Participating in a board assessment may prove to be a valuable feedback tool to help boards increase their effectiveness if the assessment process is done right. 

According to the 2021 pwc Annual Corporate Directors Survey, 72% of directors indicate their board has taken some action in response to their last assessment process. 

These assessments may help organizations:

  • Evaluate board composition by identifying gaps in skillsets and potential areas of underperformance.

  • Understand board culture by evaluating group dynamics, communication styles and approach to conflict.

  • Improve board practices and processes to gain insights into how board members’ time is utilized and ensure meeting agendas are aligned with strategic objectives as well as address the required compliance and tactical items.

  • Plan for succession by proactively recognizing the critical skills and experience needed to assist the organization in achieving its long-term goals and developing board and committee succession plans.

Board leadership should oversee the initiative; external advisors sometimes facilitate the process and should be highly experienced, if outsourced. Assessments may address the full board, committees and directors at the individual level with 45% of S&P 500 boards reporting they assess each of these three components[AH1] [MW2] .  The information gathered should be both quantitative and qualitative and open-ended questions are typically used to provide more meaningful and targeted feedback. Conducting individual interviews with each board member can be an effective way to solicit constructive feedback and gain insights into the strengths and value that each board member provides. Some boards include anonymous peer assessments as a mechanism to further dive into board culture, while others are hesitant to use this approach because they feel their current process is sufficient or have concerns that peer reviews could damage individual relationships among board members.

Having the appropriate follow up to the assessment results is key. The pwc Governance Insights Center references several best practices that will enable improved performance including:

  • Identify a point person to take lead on reviewing results with the full board and committee members.

  • Develop an action plan to implement any changes that come from the findings.

  • Consider results when developing board and committee succession plans.

 

Published on: June 10, 2022

Authors: Megan Wolf

Topics: Compensation Committee and Board, Corporate Governance

Megan Wolf

Director, Practice, HR Policy Association and Center On Executive Compensation

Detailed Bio

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