It is crucial that the board conducts a thorough director review that is effective. The process should not only be transparent and timely, but it should assist the board know what its strengths and weaknesses are in order that it can improve its performance and therefore that of the company.
The measurement of the performance of directors can be challenging. A director’s contribution to the board could greatly impact others, especially when the Chair is involved and it’s hard to assess the performance of a particular board with other boards. The differences in strategy, company lifecycles and director refreshment policies can make comparisons difficult.
The manner in which a director’s board review is conducted can affect the candor of the feedback. Some evaluations are informal, such as asking other directors for their opinion while others are structured, involving interviews with fellow directors, CEOs, SIDs chairpersons of committees, and the Company Secretary. The review can include observations made the power of virtual data rooms for digital due diligence by the Chairman at board meetings, which examine aspects like the degree of participation information sharing, the level of inclusion, and discussion sharing.
It is often advantageous to hire an experienced facilitator outside to conduct these reviews. Their neutrality can add an extra level of rigor and impartiality to this process. The first step is to begin the process by defining the goals for the review and defining the scope. Once this is done the next step is to develop a plan for how to assess the board and gather insight from the various stakeholders. This could include the distribution of questionnaires and interviews, document reviews and/or using board management software.