AEA365 | A Tip-a-Day by and for Evaluators

Aug/10

16

Zita Unger on Assessing Board Performance: The Elephant in the Boardroom

My name is Zita Unger and I am Director of a private consulting company in Australia offering corporate diagnostic tools, including board self-assessment, culture surveys and 360-degree feedback. I also serve on two non-profit boards.

Does your board assess its performance? Whatever your organization, one of the most reliable ways a board can improve its performance as a governing body is to periodically assess itself. All best practice governance standards recommend this.

Board governance is not about management, but about direction and control, that is, approving the mission and strategic direction, monitoring risk assessment and reviewing and approving management decisions. Board assessments should, at very least, cover areas of functional activity and regulatory compliance.

However, the key to an effective board lies with its culture.

The elephant, of course, is a metaphor for a problem that everyone knows exists and which everyone tries to ignore. The elephant may be board power, chair leadership style, environmental uncertainty, information asymmetry, corporate culture, and executive/management relationships. The chair, who may be part of the problem, would be least suited to undertake the role of assessment.  A well conducted external evaluation process can assist to elicit the ‘undiscussable’ issues and facilitate positive board dialogue.

Hot Tips for assessing board performance:

  1. First and foremost, determine what the board hopes to achieve. One size does not fit all. The organization, sector, competitive environment, board maturity and severity of problems can all influence specific assessment objectives. Goals such as problem resolution, improved governance and board dynamics will thus determine the type of assessment and allocation of resources toward it.
  2. Second, align the scope of evaluation with agreed board assessment objectives. Assessment may include the board as-a-whole, individual director assessments, board committees, and chair. Bringing additional outside sources such as CEO, senior managers, owner/members, and major suppliers, will depend on the issues involved.  Ultimately, assessment should fit the purpose.
  3. Third, engage with the board to develop an evaluation process that is transparent and consistent with agreed board assessment objectives. Improved levels of trust among board members and between board and management should be a priority and an outcome of assessment.

Resource: Armstrong, A. and Unger, Z., (2009). Assessment, Evaluation and Improvement of University Council Performance. Evaluation Journal of Australasia 9 (1), 46-54

And, if you want to learn more from Zita, check out the B&I Sponsored Sessions on the program for Evaluation 2010, November 10-13 in San Antonio.

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