Is your board taking all the steps necessary to ensure you have the right mix of skills and qualities?
What are other boards doing to maximise their effectiveness?
Grant Thornton’s report, The Board – Creating and Protecting Value looks at the approaches organisations are taking to ensure their boards are successful.
Are boards effective?
The survey behind the report asked: Does your board have the appropriate skills and expertise to fulfil its role effectively?
85% of respondents said yes, it does – good news.
More than 60% of respondents believe there are adequate processes in place to evaluate the performance of their directors.
There are some sector differences here, with FTSE-listed companies more likely to believe their board reviews its own performance sufficiently, and private companies more likely to disagree. In some ways, this is unsurprising, given that publicly-listed companies are open to more scrutiny than privately-owned ones.
The charity sector is seeing increased pressure to demonstrate effectiveness and good governance, in line with a growing accountability for charities in the media.
Evaluation is a key component of a successful strategy. The report says that ‘A high performing board will open itself out to external scrutiny’. In many organisations, this need for evaluation is embedded in the code of governance. With governance being an area where some boards are falling short, you will want to do all you can to comply.
How can you make sure your board is effective?
- Identify the blend of skills and qualities you need.
- Review your current members to see if they deliver this mix.
- Make sure your directors, cumulatively, strike the right balance between opportunity and risk.
- It may help to produce a matrix of the skills needed, aligned to your organisation’s strategy. Do your directors deliver what you need to advance your objectives?
- If you are lacking certain skills or traits, do you need to appoint one or more members to fill the gap?
- Diversity is important – you need an ideal mix of perspectives to ensure that all viewpoints are taken into account in decision making. This will help to stop your decisions being undermined by social processes. For more on diverse viewpoints, find out why the female brain may be the secret weapon of the best boards.
- Provide regular training and development to enhance your exec and non-exec directors’ capabilities.
- Carry out formal evaluations of your performance and make it clear to your organisation and the wider world how you measure your success. If the evaluations show areas for improvement, identify the actions you need to take to make your board more efficient.
- Make sure your members get the information they need to operate effectively. Working out how they prefer to receive board papers can help you to deliver essential information in the most efficient way.
Follow these tips and you will enjoy a more effective board process: one that makes the best use of your directors’ time, drives the best decisions, and supports your organisation’s strategy.
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