ENSURING YOUR BOARD IS HIGHLY EFFECTIVE

How do the markets, stakeholders and wider community perceive your Board? A role model for the organisation’s core values? Where the dynamic is one of respectful challenge and trust? A place for collective knowledge, wisdom and energy that enhances vision and transforms strategy? Or, is the Board, despite everyone’s best efforts, unknowingly limiting potential?

As board leaders are increasingly held in the accountability spotlight, whole-board effectiveness has become a critical aspect of organisational governance. Which is why as Chair, SID or Co-Sec, you need to be certain your Board not only follows regulatory and global best practice, but functions at the highest and most effective level.


BOARDS NOW NEED TO UNDERTAKE REGULAR EXTERNAL REVIEWS

In July 2018, the UK Financial Reporting Council (FRC) updated and published the Corporate Governance Code and its guidance on board effectiveness, recommending that:

  • Boards continually need to monitor and improve their performance
  • The evaluation should be objective, rigorous and bespoke in formulation and delivery
  • Board evaluations should inform and influence succession planning
  • Outcomes should be fed back into the Board’s work on composition and design of induction and development programmes.

The FRC concludes that external facilitation can add value by introducing a fresh perspective and new ways of thinking. The Code recommends that FTSE 350 companies hold externally facilitated board evaluations at least every three years, and chairs of smaller companies consider having them periodically.

An external evaluation may also be useful in other circumstances, including when there is a new chair, if there is a known problem requiring tactful handling, or there is an external perception that the board is – or has been – ineffective.

Working Together