In a nutshell, boards should conduct board self-assessments because it’s considered a best practice. Whether it’s a public board, private board or nonprofit board, all board members are accountable to those they serve and it’s important for them to do the best job that they can during their board service. The nominating and governance committee is normally tasked with ensuring that boards complete their annual board self-assessments.
The purpose of board self-assessments is to be sure that boards are fulfilling their duties and responsibilities and that appropriate processes are in place to ensure that boards are giving due diligence to planning and oversight over the organization. Essentially, no one directly oversees the board, so it’s vital that they take an annual objective look at themselves as individual directors and how they function as a group.
Preparing Board Directors for Their Duties
It would be difficult, if not impossible, to conduct an objective and adequate assessment of a board director’s progress if they weren’t aware of their expectations from the start. The board self-assessment process really has to begin the moment a new board director accepts a vacant board seat.
The best-case scenario is for the nominating committee to talk through the board director’s responsibilities during the search and recruitment process. There’s no point in recruiting someone who isn’t even willing to meet the minimum board director requirements. The discussions about board director responsibilities should expand and continue throughout the selection process.
The orientation is the best time to provide a written job description for the board director position to the new nominees. Corporate board directors should understand that they’re expected to read all board meeting materials thoroughly and come to the meeting prepared to ask questions and participate in discussions. They should also either be directed to serve on a committee or receive a committee assignment. Along those lines, they should also be clear on their duties and responsibilities as committee members.
For nonprofit organizations, board directors should be informed at the orientation or early in the process that fundraising is a priority and that they’re expected to participate. They should also be aware that they’re expected to contribute some of their own funds to nonprofits on a regular basis.
All board directors should know what their goals and expectations are so there are no surprises at the annual self-evaluation time. Board directors for all types of organizations will likely be more invested in the organization when the board gives them an opportunity to set some goals for themselves. In addition, it helps if boards assign a mentor to support and guide new board members through the first year of board service.
Reasons for Conducting Annual Board Self-Assessments
While much of a board’s work is done behind the scenes, the work they do and the decisions they make have a far-reaching effect. Shareholders and stakeholders have much to lose by lackluster or failing boards of directors. One important issue that boards can address through board self-assessments is to ensure that board directors don’t have any current or impending conflicts of interest.
Investors, consumers, vendors and whole communities falter when board directors fail to perform at their highest capability. It’s vital that boards take the necessary time to do an annual self-assessment of their performance to look for opportunities to improve. At the same time, shareholders and stakeholders will be judging them informally based on the outcomes of their work.
Online Surveys Streamline the Process of Annual Board Self-Assessments
With full respect for governance, BoardEffect streamlines the process for board self-assessments. Board administrators can use the tool to create a variety of question formats. Boards can keep the results from year to year for comparison purposes and to use as a template for the following year’s self-assessment.
Board directors prefer the easy-to-use online format where they can log in or out to complete the questionnaire at their convenience. Most directors also appreciate the convenience of being able to complete the assessment questionnaire using any electronic device in any setting they happen to be.
Evaluating the Board’s Functioning as a Group
Board directors work individually to fulfill their duties. It’s equally important for the group to function well as a whole. Group dynamics have much to do with that. Some boards find that they get the most objective results when they ask a third party to facilitate their board self-evaluation.
The manner in which board directors interact with one another has a major impact on their effectiveness. Board directors should be evaluated not only on the knowledge and expertise that they bring into the boardroom, but also how well prepared they are at meetings and how well they interact with other board directors.
Positive boardroom behavior means that board directors are asking the right questions, framing their comments and questions in a constructive manner, and building on the comments and opinions of their peers. Board directors should be evaluated on their ability to remain objective rather than to allow personal or past experiences to dominate their perspective.
Board directors should also be evaluated on their understanding of the differences between their role and management’s role. For example, can board directors support and guide managers effectively without overstepping their role of oversight and micromanaging them?
Boards would be remiss in failing to consider the interpersonal and group dynamics among board members. This part of the evaluation should be as rigorous and objective as possible. Facilitators of the process should encourage an environment of mutual respect, honesty and trust as they work through topics of board dynamics. It’s important to thoroughly assess such topics as group thinking, open-mindedness, acceptance of dissenting opinions and addressing issues of board director ineffectiveness.
The board self-evaluation should have a positive, encouraging tone that helps to set the stage for a healthy, eager and energized board. An impactful and viable board self-assessment process leaves board directors asking themselves how they can improve and what more they could be doing. This is the outcome that boards should be striving to achieve.