Board Evaluations Canada – Know the Basics and Why You Need It

If the board of directors of an organization is not effective, it is can easily lead to its downfall. On the other hand, if the board is effective and functional, the success of the organization will follow. This is why quality and top of the line board evaluations Canada is essential.

Board Evaluations – A Short Definition

Board evaluations serve as a vital tool to advance the board’s effectiveness. They give directors the chance to reflect on their function as the board. The process gives them a glimpse of what works well and if improvements are still necessary.

Board evaluations can be used to align senior and board management. This can also serve as the foundation for planning board succession. Through board evaluations, board members can give their perspective on the changes in board practices, processes, and focus will pave the way for better effectiveness of the board.

When each self-assessment of every director is included as part of the process of evaluation, the directors also get the opportunity to reflect on their personal effectiveness and levels of participation. Reviews from peers allow directors to have a good understanding of how their colleagues perceive them. These also offer constructive feedback to further improve directors and the overall effectiveness of the board. This process is made even better if independent and experienced governance consultants conduct the board evaluation.

Two Classifications of Board Evaluations

The two classifications of board evaluations are external evaluations and self-evaluations.

In self-evaluations, it is the responsibility of the board to manage the content and the process alike. Self-evaluations are often coordinated by the governance committee chair, the board chair, or the corporate governance officer or board secretary. The performance of the board is usually evaluated through one-on-one interviews or with the use of a standard questionnaire.

On the other hand, an external third-party will conduct, retain, and report the external evaluations to the board. The external evaluation of board members is also carried out through one-on-one interviews or with the use of a questionnaire. The difference is that external evaluators are allowed to give their personal judgment regarding the quality of performance of the board during the process of evaluation. They may also decide to request inputs from the rest of the stakeholders.

The Need for Independent Governance Consultation

Even if the board is comfortable with the fellow members of the board, general counsel, corporate secretary, or the outside counsel of the company, boards usually agree that an independent governance consultation Canada allows directors to show more candidness in comments regarding board operations, specifically in peer assessments and self-evaluations.

Independent governance consultants can give the board franker comments than the outside counsel or internal staff of the company during the presentation of the evaluation results. Another advantage of hiring seasoned governance consultants is the fact that they already have worked hand in hand with other boards. They have first hand experience of seeing how companies have addressed the same issues. They bring knowledge and skills on the table that can make board evaluations more effective and reliable.

Professor David R. Beatty of chairmanofboard.com provides corporate governance, board evaluation and CEO consultation in Canada. He offers valuable experience working with global boards and CEOs.