Board evaluations are necessary for many companies. However, few board members realize the value that the evaluation process can generate. There are several ways to conduct a board evaluation and in this article we will present four suggestions so you can get started with building a high performance board.
Different types of board evaluations
Conducting successful board evaluations are crucial for functioning governance, hence making it a necessary activity for most companies. However, the assessment can be done in various ways as illustrated below.
Internal-physical:
An internal-physical evaluation is conducted by the board members themselves. The evaluation can be in the form of an interview or open meeting where topics are discussed. This evaluation needs to be thoroughly prepared in order to generate actionworthy results. As the evaluation is physical it is usually hard to gain tangible results. Likewise there is a risk of members not wanting to disclose delicate information, as it is hard to fully stay anonymous. Furthermore this type of evaluation can be time-consuming in the sense that it needs thorough prior preparation and also physical processing of the results afterwards.
Internal-digital:
The internal-digital assessment is both created and executed internally by the board members. The internal-digital evaluation is oftentime made as an online survey using tools such as surveymonkey or google forms. This type of evaluation makes it easy to evaluate answers and they are digitized. Another positive aspect is that all participants can answer privately, ensuring safe and trustworthy results. However the process of creating the forms, and also evaluating the results, is all done internally, which can lead to bias in how the result is presented.
External-physical:
The external physical evaluation means bringing in a third party, usually a board consultancy company that conducts interviews with individual board members and hands out survey forms that are filled out by the directors. All in all it is quite similar to the internal physical evaluation in the way that it is conducted. However, it is easier to make this evaluation format more transparent since it is administered by an external party. One downside with this format is that it often requires a large financial investment and is thus not particularly well suited for small-medium enterprises where the budget is often tight.
External-digital:
An external-digital evaluation is done by outsourcing the work to a third-party. This includes both the creation of the assessment and also the processing of results. Performing a digital external evaluation grants you the perks of the external-physical evaluation and the internal digital evaluation. The third party will increase the transparency of the evaluation while the digital part will allow full anonymity. While requiring more resources than an internal evaluation, the external-digital will be significantly cheaper than the external-physical. One downside with an external-digital evaluation is that it often lacks the in depth-interviews with each board member.
Most important factors for a successful board evaluation
As displayed in the section above, a board evaluation can take many forms, also making it consist of different components. Below we have listed what we believe are the most crucial parts in conducting a successful assessment. These aspects are good to have in mind when doing a board evaluation.
1. Communicate the value of the assessment
Make sure that all directors are aware of the up-sides of the evaluation. This means that it is communicated why the evaluation should be done and what you aspire to achieve with the results. By doing so you increase the chance of having compliant members, but also that you strive to get tangible results. When the evaluation is done properly, the results can be incorporated into a working document that describes key improvement areas.
2. Present the results clearly
To make actionable decisions based on the result of the evaluation it’s crucial to present the result so that everyone comprehends the data. This can be done by illustrating the data in different ways. We strongly recommend using suitable graphics to display the different areas. When numbers are concretized into pictorial material makes for greater understanding.
3. Make an actionable plan
It’s one thing to check the box for an evaluation. It’s a different story to actually take action based on the result. We recommend identifying five key improvement areas for the coming period and implement an action plan on how to actually improve on these matters. This gives a good basis for further board-work and helps in strategizing and prioritizing issues at hand. Ideally this is done in a workshop format where all involved parties get together and discuss the matters at hand. Doing it together will increase engagement and align the team.
4. Follow up to ensure consistency over time
It’s essential to compare the result to an established benchmark. Therefore the same questions should be answered every time the assessment is conducted. By doing so the board easily can follow up on goals and targets in a constructive way. This also gives a better understanding of the actuality of the board’s direction.
Having these four strategic components in mind when conducting board evaluations will likely have a positive impact. Short-term the components will help in organising the work activities, while long-term it can help building a stable and consistent structure.
“But we don’t have time for a board evaluation…”
This is something that we often hear when speaking to clients. Our simple counter argument is usually “You don’t have time to ignore doing a board evaluation”. The board of directors are employed part time and often have tight schedules. This means that when they do get together it’s important to be as efficient as possible. By having an action plan that is based on data from the assessment, your priorities will become clearer. Furthermore you will be significantly more efficient when getting together and working on the complex matters of the board.
Prepare your company for success
Hopefully you have understood the importance of a proper board evaluation and are ready to take the first steps towards improved efficiency in your governance. The team at Governance@Work are more than happy to guide you through your process and help you with external-digital evaluation solutions. We suggest that you can draw inspiration from our test evaluation to know what type of questions to ask, which you can find here. We also have an eGuide on efficient governance which you can find here.