At a time when the economic aftermath of the Coronavirus (COVID-19) pandemic remains a real issue for Australian organisations, it is easy to push aside matters such as board evaluations. For boards required to undergo a performance evaluation, the easy option, most definitely, is a ‘tick-and-flick’ approach. But, as we have seen time and again in governance and board performance, the easy option is rarely the option that delivers the desired outcome and that is to have in place a board that can not only carry out its governance obligations, but one that can also successfully lead an organisation through a crisis and help it thrive when normality resumes. Now, more than ever, is not the time to be ‘ticking and flicking’ when it comes to board performance and a thorough yet efficient board evaluation process should feature prominently on the to-do list.
A board evaluation is a process designed to enable an existing board to recognise straightforward and complex issues and bring them to the surface for resolution. Prior to any crisis, including the current global pandemic, a thorough board evaluation would likely alert a board to any potential issues around deficiencies in business continuity or crisis management planning.
The Effective Governance board evaluation process, considers a number of key areas of performance, including:
- Risk management – liquidity risk, crisis preparedness, capacity to mobilise a workforce to work remotely;
- Survival response – surviving in a dynamic environment; returning to ‘normal’ operations and becoming stronger, more resilient organisation in the aftermath of COVID-19;
- Stakeholder communication – a board’s ability to respond to the challenges and opportunities in communicating with their key stakeholders; and
- Decision making –the flow of information from management to the board to ensure the board receives all the information necessary for defensible decision making.
While a management team is responsible for dealing with the day to day aspects of the pandemic impacts in an organisation, the board has ultimate accountability for an organisation’s survival, revival and its ability to thrive. This means boards are making tough decisions about issues that are critical here and now, as opposed to more typical board decision making over long-term time horizons. Are all of your directors equipped to oversee critical risks and respond to a crisis?
A focused board review process will identify the areas where directors need support during a crisis, particularly around defining their roles and responsibilities, or supporting them in situations where they are required to step in and support the management team if they are unable to handle a particular situation.
If uncertainty is our new normal, boards need to be equipped to act quickly. They need to understand their director and organisational capabilities and be prepared to act on any performance evaluation findings and recommendations to ensure that their organisation not only survives this pandemic, but that it is primed to thrive in coming months as economic conditions stabilise. In our new world, a tick and flick approach simply won’t cut it and a more thorough approach to board evaluations is a non-negotiable. With more than 23 years helping Australian boards to optimise their performance, Effective Governance is here to assist your board and organisation to survive, revive and thrive.