12. Board evaluation

Question 1

With whom does accountability for the board evaluation lie?

Answer 1

Chair

Question 2

With whom does responsibility for the board evaluation often fall in practice?

Answer 2

CoSec

Question 3

3 primary goals of a board consultant

Answer 3

Establish a collaborative relationship

Solve problems so that they stay solved

Ensure attention is given to both the technical problem and the client relationships

Question 4

5 classic phases for a board consultant

Answer 4

1 - entry and contracting (setting expectations and tone)

2 - discovery and dialogue

3 - feedback and decision to act

4 - engagement and implementation

5 - extension, recycle or termination

Question 5

UKCG Code provision on external board evaluations

Answer 5

FTSE350 companies - should be externally facilitated at least every three years

Question 6

2018 UK CG Code - what should annual board eval consider? (4)

Answer 6

Composition

Diversity

How effectively members work together

Whether each director continues to contribute effectively

Question 7

4 types of external provider for board evaluation

Answer 7

Independent consultancies

Search firms/agents

Auditors

Governing bodies

Question 8

3 concerns/issues over external board consultants

Answer 8

• Lack of common understanding of what ‘good’ evaluation and ‘good’ evaluators look like
• Suggestion that greater focus should be on behavioural elements of board dynamics
• Concerns over professional standards and independence

Question 9

Which major stakeholder has a growing interest in board evaluations, as part of a wider interest in human-capital?

Answer 9

Shareholders and investors

Question 10

Kiel and Nicholson’s board evaluation framework - 7 questions to ask before commencing process

Answer 10

• What are our objectives?
• Who will be evaluated?
• What will be evaluated?
• Who will be asked?
• What techniques will be used?
• Who will do the evaluation?
• What will you do with the results?

Question 11

Who should be consulted before setting objectives of board evaluation?

Answer 11

Key stakeholders, starting with the chair

Question 12

7 areas of benefits to board evaluations (areas to find objectives from)

Answer 12

Leadership

Role clarity

Teamwork

Accountability

Decision-making

Communication

Board operations

Question 13

Leadership benefits of board evaluations (4)

Answer 13

Demonstrates commitment to individual improvement

Demonstrates leadership of Chair

Demonstrates long-term focus of board

Sets culture and tone of organisation

Question 14

Role clarity benefits of board evaluations (2)

Answer 14

• Clarifies duties of individual directors as well as committee roles
• Sets a board norm for roles

Question 15

Accountability benefits of board evaluations (5)

Answer 15

• Ensures directors understand duties and responsibilities
• Sets performance expectations for individuals
• Focusses board attention on duties to stakeholders
• Ensures board is appropriately monitoring the organisation
• Improved CG standards

Question 16

Decision-making benefits of board evaluations (5)

Answer 16

• Identifies areas where director skills need development
• Aids on the identification of skills on the board
• Improves the board’s decision-making ability
• Clarifies strategic focus and corporate goals
• Improves organisational decision-making

Question 17

Communication benefits of board evaluations (4)

Answer 17

• Builds personal relationships between individual directors
• Improves board-management relationships
• Builds trust between board members
• Improves stakeholder relationships

Question 18

Board operations benefits of board evaluations (4)

Answer 18

• Saves directors’ time
• Increases effectiveness of individual contributions
• Ensures more efficient meetings
• Ensures appropriate top-level policy framework exists to guide org

Question 19

Generally, if a first attempt at evaluation is being made, who should be evaluated? (2)

Answer 19

• Board as a whole
• (maybe) chair’s role specifically

Question 20

4 groups (groups defined loosely) that may be the subject of evaluation

Answer 20

• Boards
• Committees
• Board and committee chairs
• Individual directors

Question 21

What should boards and committees be evaluated for? (4)

Answer 21

Effectiveness

Structures

Operations/design processes

Cultural dynamics

Question 22

What should chairs or individual directors be evaluated for? (3)

Answer 22

Fulfilment of role description (attendance, preparedness, participation, etc.)

Contribution of specific skills and diverse outlook

Personal attributes (empathy, humility, ability to ask questions and inquire, etc.)

Question 23

What would a systems perspective on board evaluation have more of an emphasis on?

Answer 23

Evaluating the board as a whole and how it functions together, rather than individual directors

Question 24

Who is the sole source of information for the majority of board and director evaluations?

Answer 24

The board themselves

Question 25

What should be considered when deciding who to ask to evaluate the board?

Answer 25

What the objectives of the evaluation are - eg. if it is based upon building internal and external reputation, outside parties such as major customers may be asked to provide feedback

Question 26

4 techniques that may be used in board evaulations

Answer 26

- Informal open discussions or structured self-evaluation groups - Benchmarking against recognised practices and codes of governance - Standardised evaluation schemes or questionnaires - Participant observation and analysis

Question 27

Two key problems with internal evaluations

Answer 27

Transparency & Capability

Question 28

What should be considered when determining who carries out the evaluation? (2)

Answer 28

How significant concerns with an internal eval such as re. transparency and capability are The evaluation objectives

Question 29

To whom will board eval results be shared initially?

Answer 29

Usually the chair, to then be shared with the board as a whole for subsequent discussion

Question 30

When might it be in the company's interest to share the eval results externally?

Answer 30

If reasons for the eval include factors such as accountability, reputation management and transparency

Question 31

How might underachievement of individuals that has become apparent through evaluation be dealt with?

Answer 31

Through developmental plans, including mentoring and coaching

Question 32

Key positive that can be taken from evals

Answer 32

Reinforce reasons why each of the directors were appointed and the expertise they bring to discussions

Question 33

5 restraining factors on progression of board evaluations

Answer 33

Chair's ego and defensiveness Organisational status quo Time Poor perceptions of evaluations Cost

Question 34

4 driving forces which could move board evals towards better practice in the future

Answer 34

- Having an enlightened chair - Generational changes (younger generations are more used to giving and receiving feedback) - Evolutions in the governance code - Greater stakeholder pressure