Board evaluations – ticking a box or making a difference?
It is very clear that a new lens is being applied to board performance.
The demands and expectations on board members are changing dramatically with a clear focus on how boards are responding to issues such as technology disruption, climate change and articulating their contribution to wider society. But are board performance evaluations keeping pace with these changes? Is the performance of the board being really challenged? And if the answer is yes, are boards being bold enough with the results of their assessments in the annual report for investors and other stakeholders to see the effectiveness of the review?
Board performance evaluations have been part of regular governance processes for around fifteen years now, since they were first introduced into what was then the UK’s Combined Code of Corporate Governance, but there has been very little guidance produced on what an effective board performance evaluation should actually involve. In particular, the concept of the externally facilitated board performance evaluation (required for a FTSE 350 company at least once every three years under the UK Corporate Governance Code) is interpreted widely.