It is essential that the board conducts a thorough director review that is effective. The process should be transparent and timely as well as assist the board to recognize its strengths and weaknesses, so that it can improve the performance of the company.
It is often difficult to assess the performance of each director. The chair’s role on the board has a huge impact on others. It’s also difficult to evaluate boards due to differences in strategy the company’s cycle, as well as director refreshment policies.
A director board review could take many forms and the way that a review is conducted will determine the degree of honesty that feedback will be. Some evaluations are informal, like asking other directors for their opinions and others are more structured, with interviews with fellow directors, SIDs, CEOs committee chairs, and the Company Secretary. The review can include observations made by the Chairman at board meetings – looking at factors like the degree of inclusion information sharing, the level of inclusion, and the sharing of discussions.
It is usually beneficial to use an experienced facilitator from outside to conduct these reviews. Their neutrality can bring additional rigor and objectiveness to the process. The key is to start the process by setting the goals of the review and defining the scope. The next step is to formulate an action plan for how to evaluate the board and also to gather the insights of those involved. This could include the distribution of questionnaires as well as interviews, document review and/or using board management software.
