Is Your Board Efficient?

Effective management of the company is the key to the prosperity and development of the enterprise. However, achieving high efficiency is not easy. To understand in what plane there are problems and to solve them, specialists in evaluating the effectiveness of the work of the board will help.

Main performance issues

The key problems that the management bodies of the company face about efficiency are:

  • Insufficient effectiveness of procedures for evaluating the work of the board of directors
  • The results of the evaluation of the work of the board of directors are not used for subsequent changes in corporate governance practices
  • Members of the board of directors believe that they receive insufficient support in the area of professional development
  • Members of the board of directors may be concerned that the board of directors does not pay due attention to the issues of risk management, development, performance, and strategy

What influences the efficiency of the board of the company

The ability of the board of directors to effectively perform its key functions depends on eight factors:

  1. The composition of the board of directors: is the management team competent enough in the issues to be addressed.
  2. Involvement of the board of directors: board members are equally interested in both internal and external affairs, are involved in solving problems.
  3. The structure of the board of directors: it should be clear to each participant so that it can ensure adequate resolution of difficult situations.
  4. Agenda and work plan of the council: managers can solve problems promptly, set goals, planning is not alien to them.
  5. Information provided to the board: in the hands of the company’s top managers, clearly structured and complete information is provided on any issue.
  6. The dynamics of the board of directors: the board of the company is a single mechanism that works smoothly, for a common result.
  7. The role of the Chairman: this member of the team is its full leader, which everyone accepts.
  8. Council evaluation procedure: each of the managers is constantly working on their professional growth.

Main tasks in performance evaluation

Analysis of key documentation. A thorough review of documentation is essential to provide evidence and understand the parameters within which the organization and the board of directors operate.

Meetings with directors. Usually, face-to-face meetings or telephone interviews are held with each member of the board of directors to understand the role of the board of directors in the activities of the organization.

Meetings with executive management. Studying the opinion of management on the effectiveness of the board of directors, for example, in setting the overall strategy, making decisions, and managing risks, as well as advising the executive management.

observation. By attending meetings of the board and committees in person, the evaluating enterprise monitors the activities of the board of directors to assess the relationship and the dynamics of interaction.

Cases. It is often helpful to examine corporate governance practices in action on a single issue, transaction, or significant decision and gain insight into the circumstances of the decision, escalation procedures, and approval process.

Comparative analysis. Compares the work of your board of directors with best practices, as well as with corporate governance practices in comparable organizations by type of activity and size.