Undertaking evaluation demonstrates a board is committed to best practice and continuous improvement. Increased scrutiny from shareholders and customers has brought into focus the activities of the board; a successful board is no longer just about bringing together successful individuals.
Board evaluation is critical.
“It’s a very, very useful tool,” says Greg Barclay, chair of Boffa Miskell and Smartpay Holdings, of the IoD’s BetterBoards service.
Barclay has used BetterBoards several times in the past year with different boards he sits on, and says the benchmark that can be set is a valuable part of the process.
“It’s good to see year by year or on a biennual basis, those shortfalls or gaps in competencies, and whether or not you have improved in those areas. Holistically it’s a very good exercise for a board to go through.
“We’ve certainly identified things that we do well and identified areas where we can improve.”
“It’s meant to be a positive experience, an opportunity to look for ways in which the board can lift its performance,” IoD Board Services Advisor Sally Jarvis explains.
"An evaluation is a snapshot in time; a chance to think about performance and look for opportunities to improve."
Glennis Wilson is chair of the Disabilities Resource Centre Trust and found the evaluation process beneficial for gauging where the board was heading and identifying where to upskill members.
“We decided an evaluation was a good tool to see where our strengths and weaknesses were. Although we’re a charitable trust we need to target people coming on to our board who have the skills we need. Particularly in the health sector we need to be evaluating ourselves to make sure we are headed in the right direction.
“We have a mix of experience so for those who had been on the board for a while it was a tool to see where they are at and see if they were really bringing the strengths we thought they were.
“It also makes the discussion easier around succession – the more senior members can say well you can expect me to be here for a year or two years, because that’s the timeline I’ve set for myself. It’s very open.”
Jarvis notes that part of the value of an evaluation comes from the thinking the directors do as they complete the questionnaire. Barclay agrees, saying the process focuses a board on areas that they might normally shy away from discussing.
“It’s quite a comprehensive, introspective survey and evaluation process,” Barclay says. “You can’t hide, you can’t pick and choose questions, you’ve got to make a call and it’s quite uncanny just how accurate it is in terms of joining the lines and picking up trends. When two or three directors start to identify the same thing then you have got no choice except to start to address it.
“In my experience we will probably pick up two or three key things, and they’re not obvious things like shortage in finance, legal or IT skills. They can be more deep-seated, inherent things like integrity, communication and treatment of stakeholders; the sort of things that if the board is not performing as well as it could or should, those are the areas that you tend not to see until it is starting to become too late.”
Barclay points out that evaluation shouldn’t be seen as simply a box-ticking exercise to comply with expectations, especially for listed companies.
“I think a lot of evaluations are done as a requirement or expectation so they’re done to get through the compliance part. I do think that there is an increasing awareness of its benefit to performance and if you do it properly there should be areas that you can improve and enhance.”
While some may feel an evaluation is a method of probing into skills deficits or only identifying problems, Jarvis says that it is important to be clear about the aim of the evaluation.
“The best outcomes are a result of everyone understanding why they are there, and embracing the opportunity to improve. The chair is key; they set the scene.”
“It’s how you sell it,” Wilson says. “People might automatically think, me included as chair, if it shows up big gaps that I have then the board may need to consider if they should replace me.
“You have to be open to all of that. It’s not about personal criticism in any way shape or form and was never put across in that way.”
Taking the results of an evaluation and discussing and implementing change is a vital part of the process, Jarvis adds.
“Key to getting the most value from an evaluation is the discussion of the outcomes. The chair will be thinking about how the discussion session will be run and may like to consider using an independent, external facilitator to create a neutral environment and bring fresh perspectives,” Jarvis suggest.
IoD CEO Simon Arcus facilitated the discussion for the Trust. Wilson says he put the board at ease and made the discussion easy.
“Simon and Sally are very easy to work with – they are very knowledgeable. Simon was extremely good at facilitating the discussion around what might be perceived gaps – not necessarily skills. It might be something as simple as commitment to the board. It was useful in lots of areas.”
“We tend to have a really good session once all the results came back and can spend up to three hours going through the evaluation ourselves,” Barclay says.
“It gets the guys to focus. It makes a heck of a lot of difference in terms of what we might have agreed to as a board in terms of performance matters going forward. Once the exercise has been completed it’ll be easier to do it next year because there will be things to focus on and see if there has been improvement.
“Without doubt there is an appreciation by the board that there are areas to improve. They might be areas that they are already doing quite well but they can still improve. A better performing board will obviously enhance value for the stakeholders and that’s what you’re there for.”