CEO MONTHLY / ISSUE 11 2023 22 Mar22259 Why Independent Board Reviews Are More Important Than Ever By John Harte, Managing Partner at Integrity Governance A regular drip feed of news stories in the media about poor leadership and a toxic culture at well-known organisations is becoming increasingly commonplace. In a highly competitive and volatile world poor board performance, and what it delivers, is not something that can be tolerated, particularly the impact it has on employees and wider stakeholders. A major contributing factor to many of these issues is the lack of an effective board review process. While the vast majority of boards have restarted assessments of their boards and individual directors post Covid, because they recognise it is good governance practice, a large number have not been implementing them correctly. Unfortunately, too many view it as a tick box exercise, and yet another task to strike off from the governance to do list. This approach will not drive performance – something which is even more important today’s challenging business climate. Assessors need to be impartial Those that lead the evaluation process of board members must be independent and impartial. Otherwise, the review won’t be objective or of value, and therefore will not optimise the performance of the board. This means the evaluation can’t, for example, be led a serving member of the board, someone conflicted by recruitment, or have other consultancy roles with it who will bring their own agenda and beliefs. If this occurs the board will likely hear what they “want to hear” not what they “need to hear” and the assessment won’t add any value or be credible, perpetuating a poor board performance. The chosen independent assessor needs to be qualified and experienced in understanding the construct of the board, and how to spot opportunities to improve its effectiveness. Importantly, it will ensure that those who review the board or a director is credible and therefore trusted and respected. It is vital to recognise that board reviews implemented effectively are about far more than compliance. They provide the opportunity for reflection, assessment and questioning of whether the board and its performance are fit for purpose. An experienced third-party assessor understands this and helps to deliver a culture which is performance focused, and provides data to support improvements in their performance, enabling them to refine their approach. Stage one: Gather data As the first stage when it comes to implementing an effective review, any good independent third-party reviewer will analyse the relevant documentation, such as on board function, business plans and key performance indicators (KPIs). This enables them to gain a better understanding of the history of the board and assess how the board has handled recommendations from previous evaluations. They will then create and forward online surveys to all on the board. These will be tailored, reflecting the purpose and strategic objectives of the business, and help assess the behaviours, skills, knowledge and impact of the board. Bear in mind that board review processes that are simply a survey, delivered over a board portal or on a survey platform are often tick and flick exercises that provide data but no clarity about the reasons for the results. The critical element of an interview by a suitably qualified, independent interviewer with relevant board experience to add “flesh on the bones” of the survey and gain insight on the reasons behind a particular response, is a crucial part of effective board reviews. It’s the best approach to obtain a comprehensive collection of qualitative and quantitative data to deliver a 360-degree performance review. It’s also something that enables the board to move beyond specifically assessing performance against key performance indicators, to evaluating behaviours and ways of working. Stage two: Present findings to the board The report will identify any divergence between the director’s views on the board’s performance and in meeting their broader objectives. This way the board can spot strengths and opportunities to enhance performance and personal development. It will also ensure there is no ambiguity and confusion over the roles of directors, which can have a negative impact on board effectiveness and decision making. It is worth pointing out that the board is much more likely to trust the findings of an independent, thirdparty expert in the review process, as well as be more comfortable to candidly discuss solutions and next steps with them. Stage three: Follow-up and implement the required changes to improve board effectiveness Once the review process is complete regular follow-ups from the assessment must take place by the board, where credible actions with clear ownership are reviewed to guarantee progress and a strong performance, whether this is for an individual or the board as a whole. Otherwise, the work of the assessor and the board will have been in vain. To avoid having a poor performing board in these uncertain times it’s vital to source an experienced, independent third-party assessor to manage the entire board review process. Only then is it possible to deliver an effective, high performing board, that avoids the pitfalls that poor leadership can bring. Contact: John Harte Web Address: https:// integritygovernance.co.uk/ Sep23486
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