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Board Evaluation Background

The FRC has indicated that FTSE 350 companies should conduct an externally facilitated board review at least every three years. However, there are no guidelines on the scope or standards of these evaluations, nor the required expertise and independence of providers.

The Unitary Board is the prevalent board structure in UK and US. This has clear accountabilities, but is quite a delicate body whose performance rests on subtlely different director roles. Effectiveness is usually driven more by behaviours, judgement and Board leadership than by formal procedures or structures.

Appointing a provider to conduct a Board Evaluation can be an opaque and sensitive process for Chairmen. On the one hand they want an independent and thorough review; but they need also to ensure that the process enhances the cohesion and morale of their Boards.

A successful review depends on a clearly agreed process, “rules of engagement” and a suitably qualified provider. Important attributes in facilitating a positive experience for Boards include: a combination of tact and excellent communication, board experience and business understanding, and expertise in interviewing and group dynamics.