In the UK Boards are governed by various Codes that range from “Comply or Explain” for FTSE companies to specific industry Code requirements. Board Evaluation or Board Effectiveness Review have become “requirements” that are usually totally resisted by most Boards.
The Board sees the compliance easy route out is to do an internal Board Review, which is permissible in most circumstances except for the UK Corporate Governance Code which requires, under the comply or explain rule that there is an external evaluation at least every three years.
Genius Methods concerns about Board self evaluation are –
– Structured to an internal agenda rather than all encompassing including specific needs
– The rating of answers
– The answer content should be multiple choice in the style to ensure valuable information is accumulated
– The quality of the answers provided that are effectively tailored to the organisation
– The ability to compile and assess the information provided accurately and completely in an effective manner
– Risk that Directors will not be totally open with an insider
– Confidentiality of commentary and individual assessments
– Ability of someone internal being able to deliver the message objectively and competently
– There is the risk that the messages are not accepted if not given objectively by someone external
– Risk that nothing happens and there is no party to whom they feel accountable
– A head rolls … which is not the brief of an external evaluator who promotes board development
Therefore an external process is risk free in comparison to the above and is cost effective and brings experience with it. The concerns of Boards are more about perception than reality.
Genius Methods runs Board Evaluations and we find that, without fail, the value accepted by the companies substantially outweigh the cost of the exercise. Our process is very thorough, rigorous and totally transparent. Tailored and aimed at the “softer” issues – for example leadership, debate, decision making, risk culture, risk maturity, strategy, process, governance, succession planning, communication, crisis planning and more … We all handle Director self evaluations, peer reviews and the reviews of the Chairman.
The providers of services to this market is growing rapidly in the UK and it is for the organisation to understand the different USP’s of each provider and find the one that matches their style, maturity and personality to ensure that the value is extracted.