The process of evaluating the board, its committees and directors should be developmental rather than just a compliance exercise. Doing just bare minimum of compliance would mean squandering the opportunity of genuinely improving the work of the Board. Typically, the Board evaluation process should comprise of both assessment and review. This would include analysis of how the Board and its committees are functioning, the time spent by the Board considering matters and whether the terms of reference of the Board committees have been met, besides compliance of the provisions of the law.
It is now becoming best practice for Boards to consider annual evaluations. For many companies, this will be one of the corporate governance committee’s most important task.
The IoD Tanzania has a range of confidential consultants who can be called upon to help you implement this confidential process. The heightened level of accountability and responsibility which require Boards to improve their own performance means that Boards need to carefully review their roles and responsibilities and then determine whether it is performing adequately to protect the interests of all stakeholders. Evaluations should take into account context, key issues and sensitivities as well as performance.
Some of the objectives of Board Evaluation are to highlight to the Board the essential practices in evaluating the quality of its operations and thereby enabling it to:
- Appreciate Board Performance Evaluation Best Practices;
- Update Knowledge on Responsibilities of Members of the Board;
- Understand how and why the Board Performance Evaluation is conducted;
- Technically understand the structure and real work of the Board.
- Improve the performance of Board towards corporate goals and objectives.
- Assess the balance of skills, knowledge and experience on the Board.
- Identify the areas of concern and areas to be focused for improvement.
- Identify and create awareness about the role of Directors individually and collectively.
- Build Team work among Board members.
- Effectively Coordinate the roles and functions of the Board and Management, and
- Determine the overall health, performance and growth of the company.
Generally Board appraisals include following components:
- Evaluation of the Board as a whole i.e., externally facilitated with the assistance of an external expert which adds to the level of independence of the evaluation. It is an approach recommended by many international best practices and
- Evaluation of Individual Directors (Independent, Executive, Non- executive, Whole Time Director) a.)Self-evaluation b.) Peer to Peer evaluation c. ) External
- Evaluation of the Committees a. ) Internal (by the Board) b.) External
- Evaluation of the Chairperson a. ) All Directors b. ) External
For a board that is tackling an evaluation for the first time, it is best to start with some general discussion at the committee level and then follow this at board level. Board evaluation is not a one-size-fits-all proposition and needs to be tailored to the culture and goals of a particular board and company in order to be effective. The key to success is for the board to be actively engaged in the assessment process. It is equally important to be clear about the objectives in the assessment process are and what you really want to accomplish by the process.
There are a few different approaches, which can be mixed and matched, in undertaking board evaluations, depending upon the board’s needs, prior experience, chemistry and appetite for the process.
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