Board Evaluation Checklist

24 Jul 2022

July 24, 2022

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CONDUCTING BOARD EVALUATION

Board Evaluation refers to the method(s), processes and ways of checking, measuring and ascertaining the effectiveness, efficiency, transparency and accountability of the board members of an organization as it relates to the total governance of the board. It seeks to verify whether the board members are meeting the expectations required of them, checking their progress level as it relates to the set goals, checking if the laws are being upheld and it generally checks the “health’’ of the board. Board evaluation will assist in scrutiny of the board’s activities and make for increased openness to its stakeholders. Profit or non-profit organizations need to engage in board evaluation and engage in it periodically so that greater steps can be taken towards effective cooperate governance. The board members tend to garner and gain more experience and it helps to improve the productivity of the Board. The evaluation of the board is much of an important matter because it will help in giving the organization the success it would require hence crisis in the organization should not determine when the evaluation should take place. The organization need to be pro-active in this area. They need not wait until certain negative issues raise their ugly heads before they evaluate themselves.

FACTORS THAT HAVE LED TO THE NEED FOR BOARD EVALUATION

Organizations at various times face certain challenges and some have faced challenges that almost or actually threatened their existence. This means that where evaluation is not done, things can go haywire. Regulatory bodies, investors in companies and general stakeholders usually require accountability and seek for improved effectiveness from the board hence they need to know the processes and the results of the board. The board is also not left out in trying to be more effective in the delivery of its duties and addressing of the needs of the stakeholders.  The factors that tend to lead to board evaluation include the following;

  • Examples of board oversight failures from high-profile and reputable organizations.
  • Increasing levels of risks, complexities and uncertain turn out in the business milieu at large.
  • Stakeholders seeking better explanation of the activities of the board as it relates to the achievement of the objectives of the organization
  • Focus of high-profile investors on the organizational structure, hierarchy and composition of the board.

 

 

 

 IMPORTANCE OF BOARD EVALUATION

The need and necessity for board evaluation cannot be overemphasized. Board evaluation tend to bring understanding, further insight and clarity to the board members and gives them opportunity for improvement. It is always important for the board to do an analysis or evaluation on how they have fared over a period of time. They should not just work and continue to work. They need to work and pause a bit for evaluation’s sake, it makes them better equipped as they continue to discharge their duties. The board is comprised of people having different opinions so sometimes we may need to hear from each person as the board is assessed as a whole. The goal of the organization is not just to survive or exist, it seeks to make profit and discomfit its competitors hence an evaluated board will come out with better strategies, practices and ways for proper functionality.

Other importance of board evaluation includes the following;

  • Good Cooperate Management
  • Favourable Organizational Results and/or Proceeding
  • Proper Stewardship of Organization’s Finance
  • Improved Competence and Accountability in Leadership
  • Little or No Conflict
  • High Regard for Ethics of work and Organizational Culture
  • Improved Organizational Performance

WHO DOES THE BOARD EVALUATION?

Board Evaluation could be done in a variety of ways. Who does the assessment of a board may be contained in the laws of the company or may be arrived at depending on the model of governance of the organization or a need at a certain point in time. A company depending on its financial capacity may decide to hire an external consultant or do it on its own accord. The common options for who should access include the following;

  • Self-Assessment
  • Peer to Peer Assessment
  • Executive Director Assessment
  • Third Party Assessment

 

SELF ASSESSMENTS

Self-assessment will certainly be the best or even the perfect option for a board of a relatively small or medium sized company or entity. Here, the board members are urged to say what they wish to say concerning the board without fear or intimidation. These small entities may not have a formal method for board evaluation, they would be required to begin by self-evaluation. Feedbacks would be collected from individual board members and used to assess the collective performance of the board. The goal or idea is not to blame anyone for any misdeed or wrong deed, but to seek for better ways to do things.  Many or some board members will be a little uncomfortable in this kind of assessment so you will need to get their cooperation before this can be done.

PEER-TO-PEER ASSESSMENTS

Peer-to-Peer evaluation or P2P is another effective way to do a board assessment. Here board members will be made to assess or evaluate their fellow board members. This goes beyond just self- assessment. Since people will assess people, it is necessary that the reviews are kept anonymous to avoid certain kinds of issues which may erupt. The disadvantage here is that if reviews are not kept anonymous, confrontations may occur especially from senior board members to junior members that assess them negatively. However, it helps in that the culture and pattern of the board is known and how it fares is known by members of the board.

EXECUTIVE DIRECTOR ASSESSMENT

There are times when the director will need to assess or evaluate the board as a whole. In this kind of assessment, the director does not assess individual members of the board, he evaluates the board as a whole. He looks at the board as an entire, total structure and gives objective judgements to the board. This is important because the board will not lay blame on any particular person but look at the director’s comment as a whole. In some profit organizations, individuals are evaluated by their supervisors and subordinates, in some other places, individual members are made to assess the board and give feedbacks about the board.

ASSESSMENT BY A THIRD PARTY

There are certain times that an assessment may need to be done by a third party, especially when this company is new and lacks the expertise on how to carry out board assessment. A third-party consultant will be impartial in his assessment, he will also bring out specialized skills in his duty. A third-party assessment will help in bringing about the questions for evaluation and also help in the evaluation process. A third- party assessment will be useful when;

  • The board wants to have an improved evaluation process in existence.
  • There is no internal evaluator
  • The board needs an objective evaluation on a pending matter at hand
  • The board is relatively new and the directors cannot conduct an effective evaluation
  • The board is currently facing crisis
  • External evaluation and feedback

DETERMINING WHAT TO ASSESS

Sometimes the company or the board may have a problem on what to assess. However, in checking or determining what to assess, emphasis should be made on the operations of the board as a whole. The different areas the board functions in should be the fundamental areas to be assessed when doing the board evaluation. The areas to be assessed as it involves the board includes the following;

  • Financial dealings- Financial reports, company budgets and expenditures incurred by the company
  • The Strategic plan of the organization
  • Review of the program reports and evaluation of the operations of the organization
  • The governance of the board- evaluation of the board members participation, effectiveness of the committee and the board itself at large.
  • Means of raising fund and board contributions.
  • Job Description of the board
  • Vision and Mission of the board and how it is executed
  • Plan execution by the organization
  • Recruitment processes and management of risk in the organization
  • Accomplishments of the organization and the means of accomplishment
  • Integrity and reputation of the company
  • Stakeholder engagements with the company
  • Official documents of the company and the board
  • Succession Plan of the Board

BOARD EVALUATION PROCESS

Prior to the commencement of an evaluation process, it is important for the board to be specific on what they want to achieve through the evaluation process. Aside from just assessing the duties and responsibilities of the board, the evaluation should critically look at the operation and structure of the board to be sure it can cope with short-term and long-term responsibilities for better effectiveness.

The evaluation intends to;

  • Make the board reach an agreement on the things to be done and give timeframe on when they should be done.
  • Allow board members to give precise and valuable feedback without attributing blame games to anybody. They are to give feedbacks on the matters already listed above as things to be assessed
  • Critically assess the actual performance of the board as against its planned performance.

It is important for the board to decide the approach to be taken for the evaluation, the process of conduction of the process, the person or persons to lead the evaluation, the things to be evaluated, and how the results will be communicated.

The evaluation process will include the following;

  • Determine the purpose/ reason for the evaluation.
  • An appropriate evaluation model or structure should be selected
  • Get an evaluation design
  • Get relevant information to help effective evaluation
  • Do an analysis of the information gathered
  • Carry out implementation of the information or results gathered that should be implemented.

DESIGNING BOARD EVALUATION QUESTIONS AND QUESTIONNAIRES

For the purpose of board evaluation, questions are not just selected anyhow, questions that will be used for achieving the purpose of the evaluation will be used after being thought out properly. Questions for evaluations are prepared and gotten from interviews, questionnaires and surveys. Questionnaires are thoughtfully crafted to enhance effectivity of the evaluation process. They are crafted in such a way that detailed feedback is received from those who participate in the process without attributing anything to anybody.

In designing questionnaires for evaluation, statements are made and allowance is given for them to make response along a numerical scale. Example of such will include the following;

The Vision of the Board is being achieved?

The Board has the right size?

We are managing our risks well?

The Policy statements of the board is followed well?

Board has full and common understanding of its roles and responsibilities?

Structural pattern of the board is clear?

Board has clear goals and actions arising from strategic planning?

Each member of the board is carried along in the board’s activities?

Example of numerical scale will include;

5- Very Good

4- Good

3- Average

2- Bad

1-Very Bad

Another way to as questions would be to ask yes or no questions for more specific and direct feedback. This would seek to address directly the operations of the board.

 

CONDUCTING BOARD EVALUATION INTERVIEWS

There are times when it would be ok for the board to conduct interviews to aid its evaluation process. Where the interviews are well conducted, it can lead to detailed and sensitive feedback when compared to questionnaires. Depending on the situation, the interviewer may be an in-house person or it may be a third-party interviewer. Where the latter is the case, then the interviewer must be; highly trusted, free from bias, well- grounded in the affairs of the board and its business environment, skilled in handling conversations. There are times when certain issues will need a discussion rather than just writing or just a yes or no answer. It is this that warrants the need for an interview. Interviews may not enable a person to be anonymous, an interviewer who is wise and skilled will still be able to relay feedback without mentioning or attributing anything to anybody.

 

A Board Evaluation seeks to answer two basic questions which are;

  1. WHAT IS WORKING? Questions asked should be able to allow board members to highlight the areas where the board is getting it right and needs to continue.
  2. WHAT DO WE NEED TO CHANGE OR IMPROVE ON? Questions asked should not only reflect what is working or where the company is doing it right, it should also include areas that need total change or that needs improvement.

At the end of the evaluation exercise, the following would be part of the solutions reached. They include the following;

  • Directors would have an enhanced orientation on their responsibilities
  • There could be slight adjustments in the board structure and its composition
  • The evaluation process will witness an improvement
  • There could be changes to the governance documents of the board or the entire organization
  • Critical issues in the company would have been reviewed

 

For the analysis of the data gathered, an organization may need to hire the expertise of an external consultant for an unbiased analysis of board evaluation results and also inform the company on the steps it may need to take. For that you may need to contact us today No 5, Ishola Bello Close off Iyalla Street, Alausa Ikeja, Lagos. You may also call us on 08023200801.

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