Measuring the effectiveness of a board of directors is important to ensure solid governance geared to the company’s success.
By regularly assessing board performance, companies can identify areas for improvement and maximize their strategic effectiveness.
Here are some tools and methods for assessing this performance.
Key performance indicators (KPI)
Key performance indicators (KPIs) are essential for measuring a board’s effectiveness.
Here are a few commonly used KPIs:
Member participation and commitment :
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- Meeting attendance: Percentage of attendance at Board meetings.
- Preparation: Assessment of members’ readiness for meetings.
- Contributions: Quality and relevance of contributions made by members at meetings
Strategic decision-making :
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- Reaction time: Speed with which the board makes important decisions.
- Impact of decisions: Measurement of the effectiveness of decisions taken on company performance.
Compliance and governance :
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- Regulatory compliance: Compliance with legal and regulatory standards.
- Follow-up of recommendations: Percentage of board recommendations actually implemented by management.
Relationships and group dynamics :
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- Cohesion and collaboration: Quality of interaction and collaboration between board members.
- Feedback and communication: Effectiveness of feedback and communication mechanisms within the board.
Self-evaluation
Self-evaluation enables board members to reflect on their performance and suggest improvements.
Here are some steps to effective self-evaluation:
- Anonymous questionnaires: Distribution of anonymous questionnaires to gather honest feedback on various aspects of board performance.
- Discussion meetings: Organization of discussion sessions to analyze the results of the questionnaires and identify areas for improvement.
- Action plans: Development of action plans based on the results of the self-assessment to address identified weaknesses and reinforce strengths.
External evaluation
Calling in an external assessment can offer an impartial perspective and valuable insights.
An external assessment usually involves a consultant or company specializing in corporate governance.
Typical steps include :
- Individual interviews: Conduct individual interviews with board members and senior executives to obtain a variety of viewpoints.
- Document analysis: Review of meeting minutes, performance reports, and other relevant documents.
- Performance report: Preparation of a detailed report presenting the results of the assessment, strengths, weaknesses and recommendations.
At APIA Swiss, we can help you or redirect you in this regard.
APIA Swiss team