Regardless of the make-up of your Board, it has a very important role to play within the decision-making process of your organisation. However, your Board is made up of people and people are not infallible, so it is vitally important that you carry out regular Board Reviews to ensure you are maintaining and demonstrating good governance.
According to the UK Corporate Governance Code, formerly known as the Combined Code, a Board Review is a formal and rigorous evaluation that is carried out annually to identify the strengths and weaknesses of the Board. It is aimed at UK listed companies, but in fact it is equally beneficial to non-listed public and private companies, including not-for-profit organisations and charities.
Conducting a Board Review
While a Board Review can be carried out internally, there is also an argument for using an external body. A thorough Board Review looks at the Board as a whole, as well as the Chair and individual board members. Using an external partner to carry out the review does help to ensure objectivity and reduces the risk of bias, although the Chair needs to lead the process regardless.
While there is no set framework for what a review of the overall Board should cover, there are key areas such as:
- How the Board operates as a single entity
- What the skills and experience make-up of the Board is
- Whether it has SMART performance objectives and if these have been achieved
- Whether the Board receives the right level of information and at the right point in time
Possibly the most important and overriding element of the review of the Chair is whether they are able to demonstrate effective leadership. This needs to delve into the effectiveness of the Chair and also the relationships they hold within the Board and also the wider stakeholders.
Individual Board Members
Commitment to the role and effectiveness within the role, including levels of participation, are probably the most important aspects of the review of the individual board members.
Getting the most out of an Annual Board Review
However, it is not enough just to carry out a review. The results from the review need to be developed into an action plan with agreed next steps. These can include anything from setting SMART objectives for the Board as a whole or individual Board directors, through to identifying training requirements to ensure the Board has the necessary skills. Monitoring and review of the plan and the agreed actions should also take place on a regular basis, not just wait for the next review to come around.
Contact the C.Co team to find out how we can help you with your annual Board Review, and work with you to ensure your governance is leading the way.