Board Effectiveness - Beyond Compliance
The High Performance Board:
High Performance Boards are characterised as combining challenge and cohesion. Corporate governance principles highlight the roles which non executive directors play as independent thinkers, providing challenge to Board discussions. The chairman's role is specified as the first among equals, responsible for orchestrating inputs from all parties, encouraging rigorous thinking and creating an environment in which cohesion is achieved.
Establishing how a Board performs and how it can maximise effectiveness, involves a process which goes beyond evaluating compliance with regulatory principles. Exploring the relational dynamics and their impact on both decision making and behaviour, is an essential foundation for developing Board effectiveness.
Why it matters:
The UK Companies Act 2006 is a mixture of reform and restatement of company law, redefining the 7 Director duties and highlighting the need to consider the interests of a wide range of stakeholders. The introduction of the Act and the continued preoccupation of the media with high profile corporate governance failures, has focused the minds of many Boards. Chairmen are keen to develop good internal processes which track their strategic decision making and actions, linking these to the corporate ethics and principles they espouse. They are investing in the development of their Board effectiveness.
What it takes to succeed:
- The active sponsorship, involvement and continuous commitment of the chairman.
- The involvement of all Board members in a process which is built on established business cycles.
- Independent facilitation of the evaluation and development activity, to promote confidence in objectivity.
- A process and timescale which builds focus and momentum.
And so:
In an information age when the behaviour of Boards is the subject of continuous scrutiny from all their stakeholders, Board evaluation and development become essential activities.
