Board evaluations are used to assess and report on individual director and group performance.
A strategically designed board evaluation process can foster board effectiveness. Board evaluations are used to assess and report on individual director and group performance. Analysis of results showcases strengths and highlights gaps in performance, which may ultimately help promote deeper board engagement and encourage directors to utilize their unique perspectives to enhance board performance. Board evaluations also show management, employees, and investors that directors care about the performance of the organization and its stakeholders.
A strategically designed board evaluation process can foster board effectiveness. Board evaluations are used to assess and report on individual director and group performance. Analysis of results showcases strengths and highlights gaps in performance, which may ultimately help promote deeper board engagement and encourage directors to utilize their unique perspectives to enhance board performance. Board evaluations also show management, employees, and investors that directors care about the performance of the organization and its stakeholders.
In this new era of corporate governance, organizations—and their boards—are adapting to complexities driven by factors such as crises, societal perspectives, regulatory requirements, and economic changes.
In addition, boards are responding to investor, regulator, and other stakeholder expectations for more participation and engagement.
In this new era of corporate governance, organizations—and their boards—are adapting to complexities driven by factors such as crises, societal perspectives, regulatory requirements, and economic changes.
In addition, boards are responding to investor, regulator, and other stakeholder expectations for more participation and engagement.
Robust disclosure of the board evaluation process helps reinforce the board’s effectiveness and commitment to its role. A well-structured board evaluation can be an effective driver of improvement.
Robust disclosure of the board evaluation process helps reinforce the board’s effectiveness and commitment to its role. A well-structured board evaluation can be an effective driver of improvement.
Conducting board evaluations may help solve for external pressures, such as:
Conducting board evaluations may help solve for external pressures, such as:
In addition, boards may face internal pressures related to responsibilities, such as:
In addition, boards may face internal pressures related to responsibilities, such as:
Organizations that are not utilizing board evaluations to measure performance could be missing an opportunity for growth.
Organizations that are not utilizing board evaluations to measure performance could be missing an opportunity for growth.
The board evaluation process, from inception to execution, can be complex and time-intensive. For board evaluations to be an effective and valuable use of directors’ time, it is important that the objectives for the process are clear, the substance of the board evaluations is appropriately tailored, and a process for reviewing feedback on effectiveness and for developing actions is established.
This focused approach helps ensure that boards can provide a swift response to new internal developments and opportunities, market dynamics, and even political, economic, and social environments. If too much time passes between gathering feedback and aligning on resultant actions, the findings and feedback may become irrelevant, and directors may view the board evaluation process as an ineffective use of their time and efforts.
The board evaluation process, from inception to execution, can be complex and time-intensive. For board evaluations to be an effective and valuable use of directors’ time, it is important that the objectives for the process are clear, the substance of the board evaluations is appropriately tailored, and a process for reviewing feedback on effectiveness and for developing actions is established.
This focused approach helps ensure that boards can provide a swift response to new internal developments and opportunities, market dynamics, and even political, economic, and social environments. If too much time passes between gathering feedback and aligning on resultant actions, the findings and feedback may become irrelevant, and directors may view the board evaluation process as an ineffective use of their time and efforts.
Boards that are committed to governance excellence establish a proper cadence for conducting evaluations to understand performance. With the appropriate process conducted at the right time, the evaluation may incorporate the following components:
Boards that are committed to governance excellence establish a proper cadence for conducting evaluations to understand performance. With the appropriate process conducted at the right time, the evaluation may incorporate the following components:
Developing the right “what” and “when” for the board evaluation process will provide the board with a holistic view of its effectiveness and help them maintain a healthy approach to governance. A written evaluation is an efficient method for gaining directors’ insights and provides opportunities to benchmark data and progress year over year.
Adding interviews to the board evaluation process can enhance engagement by prompting directors to think more deeply about the board’s, committee’s, or directors’ performance. Asking directors dynamic and thought-provoking questions can uncover nuanced insights into aspects of effectiveness. These detailed and contextual perspectives can lead to candid board discussions that may enhance the board’s cohesion and drive alignment on action areas that will show the board’s commitment to effective governance.
Developing the right “what” and “when” for the board evaluation process will provide the board with a holistic view of its effectiveness and help them maintain a healthy approach to governance. A written evaluation is an efficient method for gaining directors’ insights and provides opportunities to benchmark data and progress year over year.
Adding interviews to the board evaluation process can enhance engagement by prompting directors to think more deeply about the board’s, committee’s, or directors’ performance. Asking directors dynamic and thought-provoking questions can uncover nuanced insights into aspects of effectiveness. These detailed and contextual perspectives can lead to candid board discussions that may enhance the board’s cohesion and drive alignment on action areas that will show the board’s commitment to effective governance.
Techniques for undertaking board evaluations include:
Techniques for undertaking board evaluations include:
Key features of board evaluations include:
Key features of board evaluations include:
Boards may conduct their own board evaluations or may utilize a third-party facilitator, like the Nasdaq Governance Solutions Board Advisory Team. A third-party board evaluation facilitator may allow for a more transparent process and bring objective insights into review processes and good practices, such as:
Boards may conduct their own board evaluations or may utilize a third-party facilitator, like the Nasdaq Governance Solutions Board Advisory Team. A third-party board evaluation facilitator may allow for a more transparent process and bring objective insights into review processes and good practices, such as:
As the maxim goes, timing is everything. Boards should consider conducting annual evaluations when directors have time to provide thoughtful feedback on effectiveness, and when the board can build resultant actions into its work plan and agendas.
As the maxim goes, timing is everything. Boards should consider conducting annual evaluations when directors have time to provide thoughtful feedback on effectiveness, and when the board can build resultant actions into its work plan and agendas.
Key questions around timing may include:
Key questions around timing may include:
A process that allows too much time to elapse from receiving evaluation responses to reviewing results may diminish relevance. Digital board evaluations may be effective at gathering timely and candid feedback by enabling directors to provide honest and thoughtful perspectives in an efficient manner.
The board evaluation questions should be clearly worded and targeted. The scope of the questions should focus on core areas of effectiveness and be comprehensive without being redundant. Utilizing rated and open-ended questions may help to enhance reporting by balancing quantitative and qualitative insights. In addition, one-on-one interviews conducted by a third-party facilitator should add depth and breadth to the process.
A process that allows too much time to elapse from receiving evaluation responses to reviewing results may diminish relevance. Digital board evaluations may be effective at gathering timely and candid feedback by enabling directors to provide honest and thoughtful perspectives in an efficient manner.
The board evaluation questions should be clearly worded and targeted. The scope of the questions should focus on core areas of effectiveness and be comprehensive without being redundant. Utilizing rated and open-ended questions may help to enhance reporting by balancing quantitative and qualitative insights. In addition, one-on-one interviews conducted by a third-party facilitator should add depth and breadth to the process.
Having a third-party facilitator with experience in board evaluations and governance best practices can help ensure customized—and streamlined—design and facilitation. Effective third-party facilitators are also skilled in fostering candid and productive discussions.
They build trust and promote transparency throughout the board evaluation process, which encourages directors to share their honest experiences and ideas and appropriately express their concerns to advance positive outcomes.
Having a third-party facilitator with experience in board evaluations and governance best practices can help ensure customized—and streamlined—design and facilitation. Effective third-party facilitators are also skilled in fostering candid and productive discussions.
They build trust and promote transparency throughout the board evaluation process, which encourages directors to share their honest experiences and ideas and appropriately express their concerns to advance positive outcomes.
When considering a board evaluation tool for your organization, choose a third party that incorporates the following elements into their process:
When considering a board evaluation tool for your organization, choose a third party that incorporates the following elements into their process:
Third-party facilitators should take a customized approach so your evaluation process—and even specific questions—are tailored with your governance goals and objectives in mind. By fine-tuning written evaluations and follow-up interview questions to individual directors, you will receive refined input based on directors’ unique experiences and areas of expertise, driving more value from your board.
Third-party facilitators should take a customized approach so your evaluation process—and even specific questions—are tailored with your governance goals and objectives in mind. By fine-tuning written evaluations and follow-up interview questions to individual directors, you will receive refined input based on directors’ unique experiences and areas of expertise, driving more value from your board.
The board evaluation process should be structured to encourage candor and thoughtfulness. Having a third-party facilitator handle the end-to-end board evaluation process provides directors with the ability to be frank, because anonymity is built into every phase, from feedback collection through reporting and results discussion.
The board evaluation process should be structured to encourage candor and thoughtfulness. Having a third-party facilitator handle the end-to-end board evaluation process provides directors with the ability to be frank, because anonymity is built into every phase, from feedback collection through reporting and results discussion.
Consider the third-party partner’s technology. Evaluations may be accessible in a platform, such as Nasdaq EnGauge™, and delivered via email or through a board portal, like Nasdaq Boardvantage. Using technology, administrators can send automated reminders to directors, helping to optimize engagement and ensure full participation.
Consider the third-party partner’s technology. Evaluations may be accessible in a platform, such as Nasdaq EnGauge™, and delivered via email or through a board portal, like Nasdaq Boardvantage. Using technology, administrators can send automated reminders to directors, helping to optimize engagement and ensure full participation.
Board evaluations are useful if they provide actionable insights. Strategically designed questions help cultivate director-level thinking on relevant governance topics. This feedback can inform follow-up interviews that the third party conducts with directors, which add more depth to the process. The breadth of data and commentary provides a deeper level of analysis that turns feedback into productive discussions and agreed-upon actions. These conversations are a starting point for aspirational ideas that may become work plans to help drive growth and stakeholder value.
Board evaluations are useful if they provide actionable insights. Strategically designed questions help cultivate director-level thinking on relevant governance topics. This feedback can inform follow-up interviews that the third party conducts with directors, which add more depth to the process. The breadth of data and commentary provides a deeper level of analysis that turns feedback into productive discussions and agreed-upon actions. These conversations are a starting point for aspirational ideas that may become work plans to help drive growth and stakeholder value.
Board evaluation data and feedback should not only be anonymized but should also be clear and digestible. Informative infographics, qualitative and quantitative analyses, and year-over-year comparative data drive understanding and promote an actionable process. As part of a customized approach, a third-party partner may help provide a variety of rich visual analysis tools such as:
Board evaluation data and feedback should not only be anonymized but should also be clear and digestible. Informative infographics, qualitative and quantitative analyses, and year-over-year comparative data drive understanding and promote an actionable process. As part of a customized approach, a third-party partner may help provide a variety of rich visual analysis tools such as:
The Nasdaq Governance Solutions Board Advisory Team works with public, private, and non-profit organizations to design and implement board evaluations that help to improve board and management alignment, while also promoting a culture of communication, collaboration, and continuous improvement.
Regardless of size or industry, the Board Advisory Team has helped organizations turn board evaluations into strategic assets. The team acts as a true partner throughout the process, helping boards craft and execute written board evaluations, facilitate follow-up interviews, visualize key findings, and turn evaluation results into productive effectiveness insights and action points. Additionally, the team is experienced at presenting results and hosting Q&A sessions on comparative trends and governance practices, so boards can focus on promoting commitment to good governance practices.
The Nasdaq Governance Solutions Board Advisory Team works with public, private, and non-profit organizations to design and implement board evaluations that help to improve board and management alignment, while also promoting a culture of communication, collaboration, and continuous improvement.
Regardless of size or industry, the Board Advisory Team has helped organizations turn board evaluations into strategic assets. The team acts as a true partner throughout the process, helping boards craft and execute written board evaluations, facilitate follow-up interviews, visualize key findings, and turn evaluation results into productive effectiveness insights and action points. Additionally, the team is experienced at presenting results and hosting Q&A sessions on comparative trends and governance practices, so boards can focus on promoting commitment to good governance practices.
Streamline meeting management, collaboration, and decision-making processes for boards, committees, and leadership teams.
Streamline meeting management, collaboration, and decision-making processes for boards, committees, and leadership teams.
Identify opportunities for improvement, promote alignment between the board and management, and turn director feedback into strategic action.
Identify opportunities for improvement, promote alignment between the board and management, and turn director feedback into strategic action.
Digitally collect information from directors and officers to help ensure accuracy in disclosures, simplify compliance efforts, and manage potential risks.
Digitally collect information from directors and officers to help ensure accuracy in disclosures, simplify compliance efforts, and manage potential risks.
Simplify the process of environmental, social, and governance (ESG) data capture, engagement, oversight, and disclosure.
Simplify the process of environmental, social, and governance (ESG) data capture, engagement, oversight, and disclosure.