PWC in their 2017 Annual Corporate Directors Survey reported that 46% of Directors believe that someone on their board should be replaced, while 20% of believe that two or more directors should. Can re-examining your board assessment process break with unconscious bias and idealised criteria in the board room?
Why Do Board Assessments Matter?
Boards that are highly effective have one thing in common: they understand that is imperative to conduct regularly short and practical evaluations of their board operations. The Harvard Business Review understands that the definition of board effectiveness has ‘shifted dramatically over the past decade’ and that today, ‘a director now confronts not only complex over sight accountability, but also personal risk and liability’. Board assessments are especially crucial in the aftermath of the financial crisis and a steady slew of corporate scandals. In the headlines recently were the Board of Directors of Telsa who were scrambling last month after their CEO Elon Musk tweeted that he was about to take the electric car company private without their prior knowledge. It is therefore critical to understand how well boards can work together in times of crisis and uncertainty, knowledge that board assessments rigorously define. Board assessments can also establish and get a firmer grip on better working relationships, along with a razor-sharp overview on roles, responsibilities and strategic direction. They also most fruitfully discern what is not allowing the company to achieve its goals.
The Time is Now
Board assessments may seem like a tiresome chore, but organisations should act sooner rather than later to change this negative connotation. Your business will benefit hugely from decisive board assessment. Companies who wish to raise performance can look to a recent Spencer Stuart report that lists five key actions for a successful next assessment:
1: Strong Leadership
According to the consultancy groups research 87% of directors indicate that a strong focus from the board chair is an effective method to drive board refreshment.
2: Re-fresh Your Assessment Approach
Continuous assessment or a more formal process? A different format or more insightful questions? The key here is that the end product or agreed assessment procedure is adaptable to your boards culture.
3: Board Culture
Is board culture aligning with company strategy? Could the board benefit from age or gender diversity? Does the board require activist directors to increase innovation and provide more valuable feedback?
4: Ready, Steady, Action
The board needs to be disciplined about creating and carrying out actions from the assessment results from the get go. Results also need to be integrated into their director succession plan.
The rising trend of disclosing board assessment insights aids transparency and understanding for stakeholders.
Primed for Success
For boards who wish to test their mettle here are three key takeaways to remember when refreshing their next board assessment:
- Do not view a Board Assessment as a compliance exercise
- Allow for honest feedback
- Always follow up with the result
DiliTrust Board Software
Board of Directors can improve their overall effectiveness with DiliTrust Exec, a digital board portal which through its technology and user-friendly design aids the processes of a busy board. Along with an archive and current folder system, shareable sticky notes, polls, debates and automatic alerts, Board of Directors are kept informed of processes and updates instantaneously. Our software enhances the quality of debate and strategic input for each member to ensure a more efficient decision-making process.
Contact our team today to see what DiliTrust Exec can do for your Board of Directors.