Few governance issues are more complex than assessing board performance. Assessment of board performance is more art than science, as there is a symbiotic link between firm, management and board outcomes. It’s not always straightforward. For instance, a board could be good at governing the business, but shareholders are dissatisfied with a low return on investment. The board may have inherited firm, management and governance issues and be working to fix the problems. It might have also invested in new strategic initiatives, and created the turnaround plan.
In other situations boards can become too involved in the operations and take decisions that should be left to management. These issues are made worse when the board is not employing the right method to evaluate its members. It is very easy for minor issues to become major issues, which could compromise the effectiveness of an organization’s board.
The board could have developed an informal culture that doesn’t consider its responsibilities for performance assessment seriously. It could be because the board isn’t equipped with the tools to collect performance data or the boardroom skills necessary to perform its evaluation duties.
In addition to having the proper boardroom skills in place, boards should be willing and open to address the results of the test. The board should prioritise areas that need improvement and work with the http://www.boardroompro.net/managing-conflict-of-interest-at-board-level-4-things-to-know/ management team in developing a plan of action. This may include setting up regular board training on relevant topics to increase knowledge levels across the board. It could also be a way to address information gaps.
