The Board of Directors ("Board") has collective responsibility for managing the organisation, including setting out and overseeing the successful implementation of the organisation's strategy. In turn, each member of the Board has their fiduciary duties, including but not limited to, acting honestly, responsibly and in the interests of the organisation, as well as exercising the care, skill and diligence that would be expected of a person in their position.
As part of a Board Performance Review, therefore, it should not be surprising that the assessment should at least cover the key aspects of each of the following:
- The governance and operations of Board as a collective.
- If relevant, the governance and operations of the established Committees of the Board; and
- The performance of individual Board Members, particularly the Board and Committee Chairs.
What might be more surprising, however, is that an effective Board Performance Review is often more focused on assessing internal dynamics within the boardroom than on the quality of the formal governing documents and/or the board papers.
As shown in the table below, some of the features of a high-performing and effective Board can include the following:
Hendrith Vanlon Smith Jr.
|
Feature |
Non-Exhaustive Examples of Good Practice |
|---|---|
|
Trust & Dynamics |
Strong bilateral relationships between all Board Members, not just between Board Members and the Chair. While Board Members trust that their fellow directors consistently apply due care, skill, and diligence in their roles, Board Members demonstrate a healthy level of professional scepticism when assessing proposals and recommendations. Board Members work well together as a team and demonstrate an awareness of which member(s) may possess keen insights on a specific topic. All voices are heard equally; no one director dominates, and equally, no director is allowed to remain silent throughout meetings. |
|
Skills and Competencies |
Collectively, the Board possesses the right mix of professional skills and technical competencies to lead the organisation and to set the strategic goals and objectives. Skill and competency needs are frequently assessed, and any gaps identified are remediated on a timely basis through either training or future vacancies, as appropriate. Board and Committee performance is assessed at least annually, with one in every three assessments being facilitated by an external provider, and appropriate steps taken to ensure continuous improvement of the same. |
|
Culture & Values |
The Board takes responsibility for setting the 'tone at the top' and seeks to create a positive and collaborative culture allowing for respectful review and challenge of each other as well as of members of the Senior Management Team. |
|
Experience & Networks |
The Board benefits from the insights of a subset of members who have relevant experience working in the same industry and market sector as the organisation they have been appointed to. Members understand how the organisation operates in practice and the various challenges and risks that it may face. |
|
Performance of Board Chair |
The Board Chair works with the Company Secretary to set out and agree an agenda that allows sufficient time for the review and discussion of each item. The Board Chair recognises that time is a limited resource and thus ensures that strategic matters are prioritised and only material operational matters should be brought to the Board's attention. Meetings are managed to the agreed agenda such that presenters can be appropriately coordinated, and no agenda item is unduly rushed. The Board Chair controls who is in the boardroom and seeks to limit standing attendees wherever possible. |
|
Performance of Committee Chair(s) |
Like the Board Chair, each Committee Chair is responsible for managing the agenda and leading the meeting. A high-performing Committee Chair shall also provide clear and concise reporting to the Board on the activities of the Committee, avoiding undue repetition of committee-level discussions or the duplication of committee materials. |
|
Relationship with Management |
The Board fosters an appropriate working relationship with the Senior Management Team whilst maintaining clear and defined boundaries, i.e., they strike the balance between supporting management and ensuring there is sufficient review and challenge of reporting provided. |
|
Training & Support |
As appropriate, the Board seeks out training and support to ensure they are equipped to support the organisation and to ensure compliance with legal and regulatory obligations. The formal induction programme for new Board Members ensures that the training covers the operations and structures of the organisation itself and not just the mechanics of the Board and its Committees. |
|
Documentation |
Strong and sufficiently detailed terms of reference at both Board and Committee level, which are reviewed and approved at least annually. Clear and documented assignment of authority, where relevant, such that all Board Members and Members of the Senior Management Team are aware of and understand their roles and responsibilities. Management Reporting to Board is sufficiently detailed and timely to facilitate informed decision-making, and Board Minutes appropriately reflect the ensuing discussion, challenge, and decision-making of the Board. |
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.
