The board of directors is an essential player in the supervision and governance of a business. The most effective boards strive to be as well-prepared as they can, keep abreast of new governance issues and find ways to improve their performance to ensure they can bring strategic value to the business.

To do this, the board needs to be able to use good information practices and be able to turn insights into actions that drive a company toward its goals. The effectiveness of a board depends on its ability to create and maintain a positive relationship among directors. This requires the commitment to mutual respect and trust. This is grounded in an unambiguous mission, engagement model and vision for excellence that is documented in the board’s governance guidelines.

The process of evaluation is crucial to help the board discover its strengths and weaknesses. It should be a formal and rigorous process that involves the committees and the board in some way and also individual director interviews (conducted by the independent chair or lead director or an outsider) to get honest opinions. The objective of the evaluation is to identify specific actions that the board could undertake within a specified time to enhance its effectiveness.

Board evaluations also provide valuable insights into the composition the board. They can reveal the weaknesses in knowledge or abilities, and if it has the right mix of expertise to help the business. It could also reveal how the board is spending its time in deliberations and discussions at meetings and how it is able to balance that with reviewing the board’s materials and hearing presentations from management as well as independent advisors.

How to Evaluate Board of Directors Effectiveness

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