How Often Should You Perform Board Assessments?

The Types of Board Assessments

The ‘As Needed’ Review

The ‘as needed’ approach works best for boards with clearly articulated policies on what should prompt a review. This approach also requires a solid understanding of the events that trigger a review. For example, any changes to board composition – the resignation of a director, the creation of a new committee, or the decision to change the organization’s strategic direction are situations that might automatically trigger a board assessment. These events will prompt the board to evaluate its skills mix and the changing roles of individuals. Another situation where the board may consider evaluating an individual director’s performance is where the director is reaching the end of their term. The board may choose to tie the succession planning or re-election to an evaluation of the individual director’s performance.

The difficulty with the ‘as needed’ review is that, unless clear guidelines link them to specific situations as outlined above, performance evaluations are liable to be overlooked. The implication of the ‘as needed’ review is that evaluation will only occur when a problem has already been identified. This approach does not promote a culture of continuous improvement or demonstrate the board’s commitment to performance improvement. These goals are best achieved by instituting a regular board assessment cycle.

The Every Few Years Review

Some boards choose to hold regular evaluations every two or three years. These will involve a more extensive process that combines interviews and surveys and often involves an external facilitator. This system will be the most appropriate for boards working in relatively stable industries, especially if the board membership is consistent.

The chief disadvantage of two or three-yearly reviews is that most organizations operate in a very dynamic environment, and many changes will occur during this time frame. If the board is to perform its role in setting the strategic direction of the organization and monitoring changes in the external environment, directors should be reviewing the board’s performance in these areas more frequently to fulfill their governance responsibilities adequately.

The Annual or Semi-Annual Review

The annual review is the most commonly recommended, or mandated, frequency of board evaluation and is consistent with most boards’ annual planning cycle. Some boards find it useful to tie board evaluation to the strategy formulation process. This is a valuable way of adapting board expectations to fit the strategic needs of the organization. However, for those organizations operating in more dynamic business environments, annual reviews may not be frequent enough. For example, in high technology industries, a review of the board’s performance every six months may be more appropriate.

Although the annual review is the most common form of evaluation, this does not necessarily make it the most effective. There is always a danger that the predictable annual event will become stale and no longer add value. If evaluation becomes too routine an activity, boards are at risk of becoming complacent. In these circumstances, it is essential to experiment with different evaluation styles and techniques to keep the process interesting and ensure that it continues to lead to performance improvements. For example, keeping a standard set of evaluation questions to develop performance benchmarks, but adding questions to vary the evaluation topics’ focus by concentrating on different areas each year. Similarly, the standard board questionnaire can be supplemented with individual director interviews and/or individual director peer reviews one year and a board skills assessment the next.

The Regular Meeting Review

Still, other boards believe that performance evaluation should be an ongoing process, not just an annual event. High performing boards tend to devise other mechanisms in addition to a yearly review to ensure constant performance improvement. One option is to review the effectiveness of each board meeting. This can be scheduled as a regular agenda item, with directors taking turns to lead the discussion.

The technique involves the appointment of one board member to act as the ‘meeting evaluator’. The meeting evaluator observes the participants and assesses the content and importance of items on the agenda and the quality of the board materials. The evaluator then gives their opinion in a five-minute review at the end of the meeting. The other board members add comments on the meeting’s effectiveness and can offer suggestions for improving performance. The whole process is intended to last no more than 10 or 15 minutes. This is a simple technique for keeping performance issues ‘front of mind’ for the board. It is an easy way to gain quick feedback and to encourage discussion and interaction between board members, and it requires little time or effort to put in place. This method is not recommended as a board’s sole means of evaluation and is especially true for dysfunctional boards. It can be easy to ignore larger overall issues facing board performance by only evaluation board meetings. 

Check out our article on Board Assessment Best Practices! 

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