However, a lot of companies donâ€™t conduct independent board performance evaluations. Common reasons for such reticence include costs and lack of available guidance and information on best practices. Board evaluations are usually undertaken to address specific issues, to ensure that the board is performing its best and to benchmark performance against other organizations.
Itâ€™s important to determine the scope of the evaluation and whether it extends to individual directors and board committees. Board evaluations can be done in various ways. The best option depends on what the organization is seeking to get from the evaluation and on the cycle that the organization is in. Options range from DIY or self-assessment questions through external software solutions and facilitated self-assessment by hiring a third party provider to conduct an independent assessment of the entire board or to provide an independent report.
Results of the evaluation can be used to conduct group discussions and to implement process changes. Basic management principles can be introduced to create action plans that have specific timelines for implementing the recommendations from the evaluation and for keeping track of these recommendations. Results from the evaluation and arrangements resulting from the evaluation must establish a constant process of improvement.
What Should be Disclosed by the Board?
Investors have to know if a board is effective. Excellent corporate communication can convey the boardâ€™s message to stakeholders and investors about the results of the evaluation. Investor relations teams play an important role here. The board should disclose what was assessed during the evaluation and the reason for the decision, the nature of the evaluation process, who conducted the board evaluation and the reason why they were chosen, the important findings, lessons learned, and any follow-up action needed and by whom.
A corporate governance consultant Canada can provide board evaluations and other governance services. They can conduct a comprehensive assessment of the corporate governance system, develop recommendations and help in their implementation. Corporate governance consultants can also develop codes for business conduct, corporate governance, and other internal corporate documents. They can help improve a companyâ€™s processes and risk management system by identifying and assessing risks, setting risk appetite, and implementing risk management measures.
Corporate governance consultants can also help ensure the efficient transfer of authorities or teams to hired management, assess corporate governance at investment targets or as part of IPO preparations, improve corporate governance procedures at subsidiaries and provide comprehensive advisory services on data disclosure issues. They can assess the performance of board committees and board of directors, help companies meet the regulatory requirements on information disclosure and corporate governance as well as prepare sustainability or yearly report based on legislation requirements, foreign stock exchanges requirements and global best practices.
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Article Added on Thursday, August 23, 2018
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