Board Evaluations

EXCELLENCE IS MANDATORY

For organisations to stay sharp, displaying full transparency towards stakeholders and the general public, best practice militates in favour of Board Evaluations even when there is no regulatory requirement to undertake them.  A reluctant CE now feels differently – please view our case study

The UK Corporate Governance Code states that the underlying principles of good governance are:-

“accountability, transparency, objectivity & focus on the sustainable success of an entity over the longer term”

Frequency of evaluations
The Walker Review recommends that a Board Evaluation should be externally facilitated at least once in every three years. The FRC in the UK Corporate Governance Code effective from 29 June 2010 start of financial years, stated that the external requirement is only for FTSE 350 companies.

At a debate held at the IoD in June 2010 at the launch of the The Director’s Handbook the panel agreed that Best Practice would include an external evaluation for other businesses, particular financial services organisations.  The panel led by Dr Roger Barker, head of Policy and Governance at the IoD confirmed that there is tremendous value in the external evaluation provided it is handled correctly.  One of the panelists confirmed their company has an external evaluation every 2 years due to the value it provides.

The Code states the requirement of transparency, notification in the annual accounts of the process followed, actions defined as a result of the exercise and disclosure of any connections between external consultants and the company.

Genius Methods believes that there is no subsitute for objectivity
‘Seeing ourselves as others see us’ is not simply a salutary exercise; it is, for organisations, the perfect methodology for ensuring the health of the organisation above all else.

Mismanagement can be like dry rot; as soon as it is spotted and treated, it can be eradicated. The converse is also true; the longer it is allowed to take hold, the greater the damage it can do and the costlier any remedial measures may be.

Progressive approach to the 3 year cycle
For many organisations a Board Evaluation will be either a totally new exercise or a partly new process in some aspects.

At Genius Methods we understand and respect the natural reluctance to having outsiders inside the sanctuary of the Board and therefore have developed an number of ways that a Board can engage in the transition from their current position to fully compliant within the three year cycle.

The first important decision is to choose the right external evaluator for your business.  At Genius Methods we offer a number of ways to engage and have a portfolio of associate interviewers from many industries, most of whom are Chartered Directors.

The next decision is to determine the way to approach the change.  The decision taken will depend on the culture of the organisation and the degree to which evaluations have been performed to date.

Progress to full compliance

1.   Option 1 (Preferable)
Start year 1 with the external evaluation and gain the full benefit in the years that follow.  This will require a big cultural leap for some organisations and will be logical for those that have had some form of Board Evaluation performed to date.

2.   Option 2 – Progress to governance maturity
In year 1 – Internally managed using own questionnaire but using an external framework to add value to the reporting and to provide unattributed responses.  This process is usually more cost effective than handling the exercise totally internally.

In year 2 – As in year 1 and still internally managed, using the external framework but complementing the internal questionnaire to include Code & governance requirements and made fit for purpose for the industry and the company.    The process is extended to include the Board Committees and responses from other key people – for example the Company Secretary.

In year 3 – As in year 2 but now complement the questionnaire with the external interviews of the Board members, Committee members and other relevant staff.  This process is scoped with the Champion to ensure that the value is optimised.  The company can choose to have one or two interviewers conducting the process.  Genius Methods combines the responses into qualititative and quantitative reports which are drafted, presented, finalised and compiled for the Board.  In addition the actions can by monitored and the Annual Report statement reviewed.

Option 3 – Due Diligence
-   Are you not sure which way to turn and would like some guidance?

-   Do not know what option is best because you do not know the governance position currently?

-   Do you want to have a sneak preview of the process and get a health check view of your Board governance position?

-  Are you a prospective or current NED who would like to have a view on the governance situation?

-  Are you a prospective or current Chairman who would like to have a view on compliance to the Code?

If the answer to any of the above is yes, we have a Due Diligence governance questionnaire that can give you a quick view of the current position of your governance and conformance to the code and possible areas that need to be addressed.

Further information
Please view additional pages on Board Evaluation either by clicking this link or clicking on the Board Evaluation main tab button and accessing the drop down menus. 

Find out more…
Make your own assessment of our Board Evaluation
services by sampling our trial questionnaire which assesses the independence of your non-executive  directors.

Email us on boardevaluations@geniusmethods.com requesting information about our services or simply to get in touch for an unbiased, honest view of the available, suitable options.