Board Appraisals 

Improving Board Performance through Evaluation 

It is now becoming best practice, and in certain cases included in new guidelines from regulators, for Boards to consider annual evaluations. For many companies, this will be one of the corporate governance committee’s more important tasks. For more information contact info@miod.mu

There are at least two approaches to performing the annual board evaluation:

1. Starting the process by having directors fill out a brief questionnaire.

2. Planning and executing an evaluation process that truly will add value to the board and, consequently, to shareholders.

The MIoD can help you with either approach, but we do believe that a well thought-out and executed board evaluation process should prove beneficial even to already well-run boards, reinforcing appropriate roles and responsibilities and giving the board and the directors a regular opportunity to review their effectiveness.

The MIoD now has a range of confidential consultants who can be called upon both in Mauritius and from South Africa, UK or France to help you implement this confidential process.

The heightened level of accountability and responsibility which requires Boards to the improve their own performance means that Boards need to carefully review the board’s roles and responsibilities and then determine whether it is performing adequately to protect the interests of all stakeholders. Evaluations should take into account context, key issues and sensitivities as well as performance.

MIoD Board Evaluation Proposal:

The Mauritius Institute of Directors (MIoD) services include facilitating board and board committee appraisals and peer evaluations of directors. The MIoD uses a pool of trained and experienced freelance facilitators. The MIoD oversees the process and will match your needs to the most appropriate facilitator. The basic appraisal service includes:

• Designing and delivering a questionnaire to all board members followed by individual interviews, analysis, and a full report
• Meeting with the Chairman
• Drafting the Board Communication and designing a questionnaire that will be sent by the Chairman to each Director
• ‘One on one’ interviews with each Board Member
• Collating and analysing the data from the interviews and questionnaires
• Drafting the report including gap analysis and recommendations
• Presenting the findings and report to the Chairman and ratifying the report
• Presenting the general findings and recommendations to the Board.

For more information and a tailored quotation, please contact the MIoD tel 4681015 or email contact@miod.mu

WHAT TO ASSESS AND HOW?

For a board that is tackling an evaluation for the first time, it is best to start with some general discussion at the committee level and then follow this at board level. Board evaluation is not a one-size-fits-all proposition and needs to be tailored to the culture and goals of a particular board and company in order to be effective. The key to success is for the board to be actively engaged in the assessment process. It is equally important to be clear about the objectives in the assessment process are and what you really want to accomplish by the process.

There are a few different approaches, which can be mixed and matched, in undertaking board evaluations, depending upon the board’s needs, prior experience, chemistry and appetite for the process. They include:

> Survey — Any survey should be carefully tailored and designed for a specific company and its board, and be constructed by drawing from the corporation’s bylaws, committee charters, the roles and responsibilities of directors, and corporate governance guidelines. The survey should produce reliable results and feedback is usually presented in the context of a goal-setting process with the board, intended to improve performance and educate the board.

> Interviews — Interviews of the board often are used prior to a board assessment — particularly where boards have not previously done an evaluation — to gain an understanding of the issues on directors’ minds. Typically, outside facilitator interviews directors individually using a structured questionnaire that takes into account the company’s bylaws, charters, guidelines, and codes of conduct and ethics. Based on the results of the interviews, the governance committee provides anonymous feedback to the board, often in the form of a narrative report that is organized thematically according to key areas for board improvement.

> Group evaluation — During a group evaluation, a trained consultant engages the board and the CEO in an interactive dialogue. Working against a backdrop of general best governance practices and the specific bylaws and guidelines for the company, the discussion focuses on how a board can improve its performance. This approach works best when directors are able to talk candidly and openly, and have a limited amount of time to devote to the process. Once again, feedback is geared to setting goals for the board to improve its performance and the real value of the assessment exercise is derived through the final session when the board evaluates the findings and discusses what measures, if any, to act upon.

Boards should view evaluations as a valuable opportunity to refocus on critical issues and improve performance. Of course, evaluations on their own are not enough and need to be followed up to have the maximum impact. This includes engaging directors in discussion about the results, following through with a plan of action for addressing points that arise from the discussion and assigning follow-up responsibilities to the governance committee or the board chair.

In order to be truly effective, board evaluations should be done on a consistent annual basis. Board evaluations will and should change somewhat from year to year; priorities may shift depending on the critical issues facing the board. Questions should be relevant to the board’s current tasks and should be based on the needs of the board at the particular time when the evaluation is planned. Moreover, questions should be targeted to focus on areas of board performance, not CEO and staff performance, which also are essential exercises, but discrete ones from evaluating the board.

A well-planned and well-executed board evaluation that focuses on the unique culture, bylaws and needs of the board can reveal issues that hinder optimal board performance. Identifying and addressing these issues, and reinforcing the appropriate board roles and responsibilities, can yield significant benefits to the board, the company and all stakeholders.

For more information, please contact on Tel: 468 1015/6 or E-mail: info@miod.mu