Is your board value-adding? Part 4, evaluate the board’s impact

Does your board of directors add value or derail it? How do you measure the impact of your board on your business? In part 1, I listed the four practices that must be fostered among board members – open dissent, individual board member accountability, a climate of trust and candor, and four, timely board evaluations to assess the board and individual board members’ impact.

In part 4, I explore the importance of board evaluation.

Feedback is a powerful tool for performance improvement. Without timely feedback, expectations are diverse, and people (board members) may feel that their input is less valued.

Many times, I am asked to submit a proposal to conduct board member evaluation. The first question I ask is whether the board to be evaluated has specific targets that were set to be accomplished during their term. You could conduct a board evaluation annually or per the term of the board. For this to be effective, you need to evaluate against prior agreed or set targets.

The better way:

  1. On appointment, a board member is also given specific targets in the scorecard of the expected outcomes they must deliver. For example, if a lawyer is appointed on the board as part of diversity, the scorecard target must specify the legal issues she or he is expected to fix during their term on the board, for example, attain 100% compliance to laws and regulations in respect to the board decisions. At any time during the board evaluation, one can easily assess the value-added. If there have been areas of non-compliance, these can be reviewed, and the failings of the member highlighted.
  2. The board as a whole must be held accountable. The board is responsible for going concerned (strategy and growth) and oversight (risk management and compliance). The board as a whole must have a board scorecard that is enterprise-wide against which the board’s performance must be evaluated. Every year, specific targets for the board must be defined against which board evaluation is done.

What are the targets of the board as a whole to accomplish as aligned to the approved corporate strategy and risk management agenda? What are the top 3-5 outcomes the board set out to accomplish? Which specific target has been assigned to the specific board member respective to their skills and experience and the board committee they serve?

As pointed out earlier, peer review and accountability is the best motivation for individual board members to do their best. A seat on the board must be deserved. And that means each member has specific targets they must deliver on during their term.

Board evaluation must be based on how the board or individual board member attained or failed to attain the prior agreed targets instead of using generic criteria to assess performance.

Copyright Mustapha B Mugisa, Mr. Strategy, 2020. All rights reserved.

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