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“There is a growing expectation that boards should conduct annual self-assessment and as well as take full responsibility for the performance of their organisations (adapted from Boards that work by Kiel and Nicholson, 2003).”

Board and Management Evaluation

Although most organisations periodically review the performance of key contributors, including individual employees, work teams, senior management, business units, departments, divisions, but one contributor usually escapes such review, and that contributor is arguably the single most important, the board. In some organisations, board evaluation is too often viewed as a necessary evil.  In fact, it is often approached in a mechanistic way by checking off items on a list that ultimately has little or no real value for the board apart from satisfying regulatory requirements. Furthermore, many boards seem to get tied up in knots about the process of self-evaluation, spending a lot of time discussing how to go about it or how to do it, but not getting down to actually doing it. However, an effective board evaluation and assessment process has the potential to be transformational. Indeed, there is great value in properly conducting board evaluations. Some of the benefits of board reviews when properly and rigorously conducted include:

   Enable the board to identify areas of improving performance

   Provide accountability to relevant stakeholders, including the board itself and shareholders

   Highlight the board’s achievements

   Provide greater clarity with regard to members’ roles and responsibilities

   Set the tone for the organisation from the top regarding performance evaluation and continuous improvement

   Proactively expose members blind spots before they could get into trouble

   Enable more effective team dynamics and communication within the boardroom

   Create more effective board operations

   Provide a check on progress against the organisations vision, purpose, core principles and policies

   The report of the review can act as a readily available tools to project the image of the organisation when discussing with potential investors, particularly institutional investors

   Boost regulatory confidence in the organisation

   Enhance members’ image, especially if such reviews confer high performance status on the board

   Improve Board-CEO relations

   Provide opportunity for underperforming directors to voluntarily stand down for re-election, as well as prevent director candidates who are not willing or able to work hard from standing for election

   Motivate members to work hard to make sure they are not perceived as underperforming in the first place

   The outcome of the review becomes the benchmark for assessing the board performance in the coming year

The irony is that, when a major organisational crisis occurs, such as the one experienced my Aero, Arik, HITV, Etisalat Nigeria and BGL, it is to the board that the shareholders, regulators, media, law enforcement/investigative agencies and customers look for answers. So, if this process is this important, then why do boards resist it?

Despite the growing empirical evidence on the value of annual evaluations, many directors, particularly in the Nigerian jurisdiction, struggles with the need to deploy resources for annual board evaluation. Some even feel that they do not need it because they know what they are doing in their boards, thus, the evaluation exercise is of no value. Still some others take the view that they, and their companies, are performing well, so, “if it is not broken, why fix it.” But the good news is, when the board evaluation process is designed and approached thoughtfully and conducted with an eye for candour, then the outcome can improve performance, uncover useful insights and be a catalyst for an effective annual board agenda.