While board evaluations generally form part of any good boardroom methodology, many boards choose to not leverage the insight that can be gained from them.
There are two reasons why boards usually conduct board evaluations: on the one hand there is basic compliance, and on the other is an investment to determine what has and had not served the board and business well, and what will take both into the future.
Many boards approach board evaluations as a tick-box event due to compliance requirements and to avoid legal ramifications.
Consider the cost associated with this for a board of five (chairman, two executive directors and two non-executive directors):
- Time associated with a possible tender process multiplied by per-hour remuneration of board members involved
- Cost associated with time spent on determining which service provider should conduct the board evaluation
- Monetary cost of evaluation
- Per-hour remuneration of a board member who takes as long as 90 minutes to complete the evaluation
- Per-hour remuneration of board members for time spent on a debrief with the service provider (if this is even done)
- Board evaluation reports usually get filed in board members’ inboxes and things continue as usual.
- Negligible if any (and only if debrief is attended)
Investing in the Future
Forward-thinking boards of directors that understand the gravity of their role, are held accountable and are enthused by their potential impact take board evaluations very seriously – and opt to conduct them whether legally required or not.
While the “cost” of the evaluation is the same as in the example above (they view it as an investment though), the actions and reward are significant.
- Results are reflected on and probed in detail by members and by the board as a whole.
- Findings are revisited by including key questions in each board interaction, including the following (ideally a handful of different questions per meeting to actively reflect and learn):
- Is this (the company and this boardroom) a safe place to explore and trust?
- Do I feel that I can speak my mind?
- Do I allow others to speak their minds?
- Are we getting sufficient information?
- Is the information that we get well structured?
- Is it the right information at the right time?
- Is the format that we get the information in useful/usable?
- Does the format that we use make the real information accessible?
- Are the “rules of the game” clear and commonly understood:
- Around this (boardroom) table?
- In the business as a whole?
- Are these rules aligned to our values and to the key requirements of the business model?
- Strategically where are we going (and do we all agree)?
- What are we currently doing (and is this the best thing to be doing now)?
- What do we need to leave behind?
- What has happened?
- What is happening?
- What is going to happen?
- Are all our interests aligned?
- Are we on the same page?
- Are we seeing the same thing?
- Are we clear about what we are deciding?
- Are we doing the same things?
- Are we thinking in the same way?
- What do we see?
- Looking out
- Looking back
- Looking in
- Looking forward
- The learning loop is closed as and when things happen, leading to continuous improvement.
- Progress is tracked by conducting board evaluations regularly with a partner that has a robust methodology.
Now understanding the value that a board evaluation offers, ensure that you get the most out of the “cost” of conducting one. Partner with a service provider that supports you in learning, adapting and then moving forward.
Having designed and deployed many board evaluations over the years, Sirdar is well versed in both the technicalities and the intricacies that offer the greatest insights to leverage – especially considering the impact on and of board relationship dynamics.
What better time to reflect on the past and anticipate what lies ahead than at this time of year?