Is the board effective in overseeing the operations of the business and can it deliver on its objectives, both now and into the future
How can I measure the effectiveness of my board?
Assessing the performance and effectiveness of your board and its directors can be of real benefit in determining and improving boardroom practices and procedures and can provide assurance to stakeholders and potential investors that your business is committed to the highest standards of governance and probity.
One way to assess the effectiveness of your board is through an external board performance evaluation, carried out by an independent assessor. An independent evaluation of the performance of your board and its directors will help you to gain a valuable insight into its effectiveness and to assess how it is operating in key areas such as strategy, business principles, risk management, internal control, stakeholder management and boardroom practice.
By undertaking a performance evaluation you can identify the board’s strengths and also pinpoint any areas for improvement.
How can I ensure that the right people are on the board?
When examining the composition of your board, it is important to do so in the context of what skills and expertise are needed on the board. Every board should develop a customised skills matrix which can be used to assess board members’ skills in a range of key areas such as finance and risk, marketing, strategy, IT and so on and to identify any skills gaps that need to be filled. In many cases, particular specialist skills and experience will be required to enhance a particular board and will highlight succession issues that may be required into the future.
By developing a skills matrix you can ensure that that the most suitably qualified and appropriate individuals are appointed on the basis that they possess the requisite skills and expertise required by your board, in addition to meeting regulatory requirements.
Should the board undertake training to improve effectiveness?
It is certainly recommended that directors undergo a minimum level of specific training for the role to increase their effectiveness as directors. Training should include best practice in corporate governance and the responsibilities of the role and can also look at more specific areas such as finance and strategy, depending on the skills needs of the board.
What can a non-executive director contribute to the effectiveness of the board?
Non-executive directors can bring a number of benefits to a board. Because they are not heavily involved in the day-to-day running of the company, they can see issues in their totality and bring a fresh and new perspective to board discussions and decision-making, along with providing an independent view on any potential conflicts of interest.
Non-executive directors bring balance to the boardroom and can strengthen and improve the effectiveness of a board by offering expert counsel and bringing specialist skills, independence and expertise to the board.
By Maura Quinn, Chief Executive, Institute of Directors in Ireland
To find out more about how the IoD can support you to improve the effectiveness and performance of your board, contact the Institute of Directors in Ireland on 01 411 0010 or visit www.iodireland.ie.
The Institute of Directors in Ireland is the representative body for over 1,900 directors and senior executives within the private and public sectors. As the leading voice in the debate on improving corporate governance standards, the Institute of Directors is dedicated to developing and improving the effectiveness and performance of directors and boards throughout Ireland.
