Few governance issues are more difficult than assessing the performance of boards. The symbiotic relationship between the firm management, board results and management determines whether a board’s performance is more of a science than art- and rarely clear-cut. For instance the board may be governing the company well but shareholders are unhappy with an unsatisfactory return on investment. The board may have inherited governance and management issues and is working hard to improve the situation. It may also have invested in new strategic projects and formulated a turnaround plan.
In other cases the board could be too involved with operational details and making decisions that should be left to the management team. This is especially true when the board isn’t employing the right method to assess its members. It is not difficult for minor issues to escalate into serious issues, which could compromise the effectiveness of the board.
The board could have cultivated an informal culture that doesn’t take its performance assessment obligations seriously. This could be due to the fact that it lacks the systems in place to collect information on performance, or it’s not able to acquire the necessary skills required for a boardroom to effectively carry out its assessment duties.
Boards should not only have the necessary skills, but also be open to the findings of the evaluation. The board should prioritize areas that need improvement, and work with the management team in developing an action plan. This may http://www.boardroompro.net/5-organizational-assessment-tools-for-nonprofits/ include setting up regular board meetings on relevant topics to improve knowledge levels across the board, and address information inconsistencies.