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Board evaluation: A call to action

The board evaluation is over, so what do we do with the results? A board evaluation should have positive outcomes. If it doesn’t result in governance improvements, then it is wasting both the directors’ time and organisational resources. So how does a board evaluation add value? It begins with directors reviewing the results, then discussing and agreeing the governance challenges facing the board and the appropriate actions to redress any concerns raised in the review. The benefits of this comes from the board reaching a shared understanding of the issues it faces and developing a unified position on how to address them. 

Types of board evaluation processes 

In the first instance, a shared understanding of issues facing the board relies on having a robust evaluation process that gathers and analyses relevant data into a report—with or without recommendations for improvement. Some boards choose board-only reviews, some choose board, chair and committee reviews, while others choose to include individual director self and peer assessments. Some boards conduct evaluations through surveys, and others may choose a process that involves interviews or both surveys and interviews.Others choose to have their governance documentation reviewed or meetings observed. Whatever method the board chooses, it is important to remember that it is a tool for continuous improvement, not a report card.2 However, a key consideration is to set aside enough time to have a meaningful discussion of the evaluation data. Figure 1 provides a summary of options for a board to consider.

Figure 1: Evaluation review options3

Generally, boards have a dedicated session to review the evaluation outcomes. One recommended option is to hold a workshop focused entirely on discussing the evaluation’s outcomes and developing appropriate steps to improve governance. Other boards incorporate the evaluation into strategic retreats with a dedicated session to discuss board performance. Another alternative is to review the evaluation outcomes as a major agenda item during a regular board meeting.

In other cases, the board may decide to integrate their discussions into the governance system. This includes either making a review of the evaluation outcomes an ongoing component of board meetings, or as the subject of informal discussions between board members. 

The stand-alone workshop format is a popular format, as it provides the most appropriate venue for directors to come together, share opinions, agree on key concerns and plan performance improvements. The independent nature of the workshop means that boards set aside their regular directorial duties and focus entirely on their own performance. It can be particularly helpful to involve an external governance facilitator in stand-alone workshops where there are sensitive issues or areas of major conflict or disagreement. An external facilitator can assist the board to maintain a focused discussion and move the board towards a successful resolution of any difficulties.

A workshop generally begins with a review of the evaluation objectives and methodology. Often the findings of the review are presented and discussed in the light of good practice recommendations. As a result of these discussions, the board develops a shared understanding of the major governance challenges it faces and can develop action plans to improve performance in problem areas. The workshop can then conclude with agreement on who will document the outcomes and what review/monitoring process will be implemented. The outcomes of a facilitated workshop should be an acknowledgement of differences of opinion, development of consensus on key issues and action plans to ensure agreed measures for performance improvement are adopted.

Strategic retreats also provide a useful venue to discuss performance evaluation because the retreat is generally a regularly scheduled event in the board’s annual calendar. Integrating the performance evaluation of the board with strategy discussions works to cement the importance of a performance culture in the minds of the board members and management. The key concern, however, is that since the main focus of a retreat is the strategic direction of the organisation, there is a danger that board performance issues may be overlooked.

However, many boards will not have the time to dedicate solely to their performance, particularly if there are no major issues to discuss. In my experience, a two to three hour session, often as part of an extended regular board meeting is ideal. At the session, board members can then focus on discussion of the findings, encourage director feedback, summarise key concerns and develop areas of agreement and action plans. For example, ‘quick wins’ from an evaluation may include the board revising its agenda or directing management to restructure the board papers. Longer term activities would include establishing a new committee or policy.

Regular board meetings can also incorporate discussion of particular aspects of board evaluation. As well as an agenda item at a single board meeting, boards have the option of segmenting the evaluation’s findings into topics and reviewing these over a series of board meetings. As a regular component of the board meeting, it also encourages the board to review its previous decisions and ensure they are putting agreed actions in place. 

Finally, informal discussions between directors or between the chair and individual board members can serve a useful role in developing a shared understanding of performance expectations and necessary skills and behavioural norms. However, private chats between the chair and individual directors will not help to develop teamwork and are not recommended as the chief means of reviewing a performance evaluation, as the evaluation runs the risk of reflecting the interpretation of the director. One-on-one discussions also make it difficult for the board to demonstrate that they have as a whole, reached agreement on performance outcomes and actions. 

How to implement decisions identified 

The issues identified and decisions reached by the board need to be documented so that implementation can be monitored, and any goals identified can be used as the basis for planning the following year’s evaluation. To ensure the activities are scheduled into the board’s ‘action plan’, determination is then required to ascertain:

  • who will be responsible for the tasks;
  • prioritisation of each activity; and
  • the timeline required for each activity.

If external facilitators carried out the review, they will most likely document the board’s agreed actions, often in conjunction with the company secretary. Otherwise, it can be delegated to the appropriate board committee or person nominated by the board. As part of this assessment phase, the board may also want to consider how effective the process was and what improvements could be incorporated next time. 

The key to moving beyond workshop discussions to tangible governance improvements lies in follow-up. It is critical that the board ensures that agreed actions are being monitored. Many boards include a review of steps in the action plan as an agenda item to be tracked at each meeting. Milestones can be established for the achievement of the action plans and progress reviewed until all agreed changes have been implemented. The benefits of using such an action plan include:

  • demonstrating leadership and the board’s focus on continuous improvement of its governance practices and process to add value to the organisation; 
  • ensuring the agreed governance improvements from a board or other review are documented, monitored and achieved;
  • providing a clear statement of what is being done, who is doing it and by when it should be done; and
  • recognising that it takes time for all measures from a board evaluation to be implemented—allowing for prioritisation of activities.

Board evaluations, if conducted properly, can contribute significantly to performance improvements. Boards who commit to a regular evaluation process find benefits in terms of improved leadership, greater clarity of roles and responsibilities, improved teamwork, greater accountability, better decision making, improved communication and more efficient board operations. But this is only possible if the results are discussed and recommendations for improvement are implemented.

If you would like to discuss further or have any questions, please contact our team for more information. 

1. A board evaluation methodology needs to be adapted to the evaluation objectives and board context. In particular, the research designer needs to be aware of the advantages and disadvantages of the various techniques, which is why external experts are preferable when a board is experiencing problems or is dysfunctional.
2. For more on conducting a board evaluation, see Kiel, G., G. Nicholson, J. Tunny, & J. Beck, Reviewing Your Board: A Guide to Board and Director Evaluation, Australian Institute of Company Directors, Sydney, 2018.
3 Ibid., p.224

Stephen Howell
Director and Principal Advisor
Stephen is the Principal Advisor for Effective Governance Pty Ltd, a corporate governance consultant, forensic accountant and company director.