Evaluate the board and its directors? Sure, but how?

Evaluating the board is sometimes seen as a perilous exercise, a potential source of conflict and dissatisfaction. Too often, the idea of conducting such an evaluation arises, but it never gets done. 

Unfortunately, when we avoid or fear this process, we forgot the benefits it can offer; when properly structured and executed, it can significantly contribute to the quality of an organization’s governance. An effective evaluation 

• improves board cohesion; 
• provides a shared vision of each person’s role;
• increases director engagement and motivation;
• generally contributes to greater board efficiency. 

Strong board performance is never about luck. Any organization concerned about the quality of its governance needs to integrate recognized best practices and embrace continuous improvement principles. In that regard, adopting evaluation practices is a must. 

But be careful! The negative perceptions mentioned earlier are often the result of real experiences with clumsy or disorganized evaluations. A divided board is sad indeed; caustic exchanges expose distrust among directors, and tension erodes the work dynamic and even leads to widespread disengagement. It is therefore crucial to lay solid foundations at the outset, by adopting a policy and structuring processes. 

Policy and processes

To ensure evaluation is at the heart of the organization’s governance best practices and takes root over time, the board should adopt a policy specifying which evaluations to conduct and set the conditions to attain the stated objectives.

To be credible and effective, an evaluation process must be structured and transparent. Therefore, the policy that the board adopts should specify the seven following elements for each type of evaluation:

• Evaluation objectives
• Approach and timetable 
• Key players
• Evaluation criteria 
• Required and gathered information
• Feedback to the people concerned
• Evaluation information management

Formalizing an evaluation should be part of a broader board management strategy that begins during the selection and onboarding process. Indeed, at the time of appointment, directors should be informed of how important evaluations are to the organization, along with the related processes (the seven above-mentioned elements for each evaluation type). Even with an established policy, the person responsible for a given evaluation should issue a reminder of its objectives and the elements defining the process for each evaluation conducted.

Three types of evaluations and their objectives

1) Director evaluation

This evaluation should focus exclusively on the directors’ contributions to the activities of the board and its committees. It should be conducted by the chair, usually when the directors’ mandates are up for renewal, and based entirely on the description of their roles and responsibilities.

This evaluation should provide directors with the opportunity to improve, make their actions more effective and relevant, and thus enhance their contributions. The entire board can benefit from such improvements, becoming more productive and contributing beyond its purely fiduciary obligations. 

The goal of the director evaluation is not to rate or judge individuals. It is not the time or place to resolve latent issues like interpersonal conflicts or inappropriate behaviours. The board chair should address such matters as they arise.

2) In camera session

The board should systematically hold an in camera session, without senior management present, at the end of each meeting. This gives directors a specific time to freely discuss the board’s effectiveness and the possibility of improving internal dynamics. The board chair should lead this exercise.

3) Board self-evaluation

Essentially, the purpose of self-evaluation is to ensure the board and its committees are functioning properly. Usually, each member completes an evaluation questionnaire consisting of 30 to 50 questions, with a view to assessing the board’s and the committees’ overall performance. Several aspects are covered, encouraging members to consider and discuss a variety of important topics like the number and duration of meetings, documentation quality, collective expertise and director preparation, insight into the roles and responsibilities of the board, committees and directors, conflict of interest management, the value of exchanges, the level of strategic engagement, and more.

This exercise is particularly useful, allowing the board to evaluate existing governance mechanisms and practices. Then, the directors, collectively, can make the required adjustments for the board to function effectively, make decisions that are truly in the organization’s interests, and thus provide a genuine strategic contribution.

If the organization’s size and budget allow, calling on an external governance advisor with the necessary experience and expertise to conduct an independent board self-evaluation is recommended. A neutral and critical perspective can lead to innovative and structuring recommendations, and discussions are often smoother (and more sincere) when someone outside the organization and the board does the exercise. Nevertheless, the chair of the board initiates and leads the self-evaluation process, sometimes with the chair or a member of the governance committee. Ideally, the exercise should occur every three or four years.

In conclusion

An evaluation itself fosters discussion and reflection. However, survey results, questionnaire responses and individual meetings without follow-up won’t make a real difference in governance. The considerable benefits of evaluation fully materialize when it is taken seriously and, most importantly, when the board acts on the findings. If the process is carried out to the very end, evaluation is not only a diagnostic tool, but also an instrument of change. Why miss out? 

About the authors

Luc Martinet
Governance Advisor, Customized Training

Luc has been with IGOPP since 2016, supporting organizations of every kind in their efforts to improve their governance practices. Over the years, he has worked on numerous interventions, becoming a savvy collaborator for issues and challenges relating to corporate governance. His versatility and unique perspective on the rich world of governance allow him to quickly understand the needs of boards and their directors. He has a bachelor’s degree in political science and a master’s in regional development, as well as certificates in administration and accounting.

François Dauphin, MBA, CPA
President and Chief Executive Officer
Institute for governance of private and public organizations (IGOPP)

François has been IGOPP’s CEO since June 2020. He has worked in management, strategy and governance for the past 20 years. From 2017 to 2020, he was vice-president of a property management firm, where he was responsible for the supervision and governance of some 20 co-owners’ boards of directors, among other things. After being a member of the Quebec CPA Order’s professional development team, he was IGOPP’s research director from 2014 to 2017, responsible for various research projects that led to publications in Canada and abroad. Since 2008, he has lectured at ESG UQAM’s strategy and social and environmental responsibility department.