So how do you know if your board is doing well?
In my role as a trusted adviser working with boards, this is often the first question I ask. And I am struck, how often boards and members can struggle to answer the question.
Most attempt to answer by referencing the effectiveness, or growth of the organisation that the board is responsible for, and whilst it can be argued that that they play a contributory part, assuming that the board doing is well because the organisation well is missing the governance point. After all, the organisation may be doing well, despite the performance of the board.
So why is question important?
I believe it is critical for any board to have a clear sense of the effectiveness, or otherwise of itself. The role of the board is to set direction and strategy, as well as hold the CEO accountable for organisational performance. How the board does this, sets and tone and behaviours for the rest of the organisation. And it is the “how” of board interaction, engagement with the CEO, and the decision-making processes that can have a huge impact on the how the rest of the organisation performs. The Spanish have a proverb – “the fish stinks from the head”.
Board members add value by focusing on directing and not managing, hence the need for metrics to assess organisational performance. By the same token, board members need to be aware of how their individual and collective behaviours impact and affect the both the quality of decisions and organisational culture. As Boards rightly establish frameworks to measure the effectiveness of the CEO and the organisation, it is not unreasonable that the board has processes to assess their own level of effectiveness.
I believe that regular evaluation of both the board and board members is a pre-requisite of serious-minded board, committed to# good governance. And whilst there has been a significant increase in the number of organisations who conduct evaluation, there is academic analysis that much of the response to assessment comes from a compliance, rather than a good governance approach. Indeed within boards themselves there is marked reluctance to include themselves in this process.
Ensuring strong decision-making processes and engaged leadership, as well as setting the tone of an organisation can be big and demanding. Yet this is precisely the role of a board. Thus, boards need to have a sense of how” good/or not” they are. Not just because they want to do things right, but because it is the right thing to do. So, boards need to be exacting on performance and that must include themselves.
Board members need to give a lead on being open to their performance being assessed, and self- assessment is one of the ways in which board members and boards can open themselves up to scrutiny and review. It provides the start of a process in how the board can analyse on how it can become more effective in a wider sense. This may include, decision making processes, skill sets and diversity for example. In turn, such a process gives board members are clearer sense of their personal and collective effectiveness or otherwise.
By accepting the need for effectiveness assessment, their boards show clear leadership in that they are not above and beyond scrutiny on performance. It creates a common approach and behaviours, and strengthens trust across the organisation. Above all, it shows board members who want to get the best for their organisation by being the best they can be.
So what processes do you have, and have they they been effective? Would be keen to hear views about your experiences.