Over recent years in accordance with international best practice in corporate governance, non-profits are now conducting annual board performance evaluations. This process consists of an external evaluation every three years followed by internal evaluations held annually. Board evaluation is increasingly acknowledged as a vital process for improving board performance and dynamics whatever the size, status or type of organisation. If thoroughly conducted and embraced by a board, an independent external board evaluation has the potential to significantly enhance board effectiveness, maximise strengths, identify and tackle weaknesses.
The Irish non-profit governance code now recommends an annual review of the board and individual board member performance. The UK non-profit governance code updated its guidance in July 2017 to “The board reviews its own performance and that of individual trustees, including the chair. This happens every year, with an external evaluation every three years. Such evaluation typically considers the board’s balance of skills, experience and knowledge, its diversity in the widest sense, how the board works together and other factors relevant to its effectiveness.”
Board Excellence have developed a comprehensive independent board evaluation & performance programme for non-profits in Ireland & the UK based on best practices for non-profit boards across Europe and North America highlighted in Figure 1. This board evaluation and performance programme working closely in collaboration with the board members establishes a strong foundation to assess the current strengths & weaknesses of the board and drive a measurable plan of sustained improvement.
Board Excellence’s core approach is based on a passionate belief that a strong commitment by the board to continually improving its effectiveness & performance represents the cornerstone of the ability of the board to deliver significant value to the organisation’s shareholders and stakeholders
An independent evaluation, strongly embraced by the board, represents a genuine best-practice for a board in understanding its current strengths & weaknesses and lays the foundation for sustainable long-term improvement in the effectiveness & performance of the board.
Key Focus Areas Of Board Evaluation
- Board Information Management, Process & Procedures
- Board meeting dynamics & effectiveness
- Quality of board supervision & decision-making
- Strategy
- Relationship with Executive Management
- Performance of individual directors & committees
- Oversight of financial reporting & internal controls
- Risk management
Phases Of Board Evaluation Programme
- Meeting with Chairman & CEO
Agree on overall objectives, scope & schedule of the programme - Presentation to the board
Joint presentation between the chairman & independent board evaluator to the board directors - Detailed assessment phase
- Review of the last 12 months board papers
- Confidential questionnaire completed by board members
- Individual interviews with each board member (in-person, via video or phone)
- Initial feedback & Report
Feedback meeting with the chairman on findings & initial draft report - Presentation of overall report
Presentation by the board evaluator to the board on report & recommendations - Follow-up phase
Presentation to the board by chairman on key issues identified, follow-up action plans and annual board evaluation cycle established
Benefits
- Provide an independent high-quality assessment of the effectiveness & performance of the board
- Assess the current strengths & weaknesses of the board driving a measurable plan of sustained improvement.
- Help provide a framework to surface problematic issues which are affecting the board’s effectiveness (specifically interpersonal issues )
- Re-enforce the board’s commitment to best-in-class corporate governance & continuous improvement in the eyes of its key stakeholders
Summary
An effective high-performance board of directors represents a critical cornerstone of an organisation’s success and delivery of shareholder value. A high-quality independent board evaluation, embraced by the board and championed by the chairman, has the potential to significantly enhance board effectiveness, maximise strengths, identify and tackle weaknesses.