When should your organisation conduct a Board Review?
Boards of organisations must wrestle with the important decision regarding how often they should conduct reviews to assess their performance. While boards that are not required to undertake annual evaluations (such as those listed on FTSE) still need to consider what type and scope of evaluations would be beneficial, there are a number of options available for consideration. For example, boards can choose an ‘as needs’ approach, opt for major reviews every two or three years, semi-annual or annual reviews, or incorporate evaluation into the regular board meetings – each with its own advantages and disadvantages.
Ultimately boards must decide which strategy best fits their individual circumstances in order to ensure effective monitoring and governance of their organisation.
Annual Board Reviews
Boards should consider incorporating a variety of different evaluation styles and techniques into their annual reviews. This will ensure that boards can develop new insights and fresh perspectives on performance, while continuously evaluating progress. Different approaches might include group discussions, surveys or interviews to understand the effectiveness of board members’ input, feedback sessions to review key decisions or individual assessments to identify personal development goals. Board-focused evaluation should be tailored to suit the specific needs and requirements of each organisation, as well as take into account its size and sector.
Board Reviews on an ‘as needs’ basis
The difficulty with the ‘as needs’ review is that, unless there are clear guidelines linking them to specific situations as outlined above, performance evaluation is liable to be overlooked. The implication of the ‘as needs’ review is that evaluation will only occur when a problem has already been identified. This approach does not promote a culture of continuous improvement or demonstrate the board’s commitment to performance improvement. These goals are best achieved by instituting a regular performance evaluation cycle.
The board should consider reviewing and evaluating itself on a regular basis, to ensure that the board remains effective and up-to-date. Regular board reviews can help identify areas for improvement, provide guidance on addressing those areas, and allow board members to remain accountable for their roles. By conducting board reviews regularly, boards can stay informed about current issues affecting them and make sure they are properly equipped to handle any challenges that may arise.
Board evaluations should be tailored to the specific needs of each board or organization and should incorporate feedback from both internal and external stakeholders. In order to ensure that board reviews are conducted effectively, it is important to establish clear objectives ahead of time that measure progress towards achieving those objectives over time.
Ultimately boards must decide which strategy best fits their individual institution, but a common guideline is every three to five years. A board review should include a review of the governance structure and policies, an assessment of the effectiveness of the board and its committees, an evaluation of the CEO and other executive staff, and an assessment of risk management. Financial reviews should also be conducted as part of a regular board review.