How Can You Improve the Effectiveness and Performance of Your Board?

The Institute of Directors defines a board's role as "to ensure the company's prosperity by collectively directing the company's affairs while meeting the appropriate interests of its shareholders and relevant stakeholders." With today's rapidly evolving business landscape, characterised by rapid technological advancements, geopolitical uncertainties, and evolving consumer preferences, it is fair to say that serving on a board has become more challenging.

Research conducted by PwC on Board effectiveness suggests that many boards are struggling to adapt to the complexities of the modern business landscape, particularly when confronted with emerging risks and new challenges. Alarmingly, only 10% of C-suite executives rated their boards as 'excellent' in terms of their effectiveness, while the overwhelming majority – 55% – described their board's performance as 'fair'. Even worse, 89% believe one or more directors on their board should be replaced. In response to these challenges, board directors must reflect on how to improve their board's performance to meet the demands of today's business environment.

A board evaluation can be a valuable tool if applied correctly, pinpointing strengths and weaknesses and guiding targeted improvements. Through systematic evaluation processes, boards can gain insights into their effectiveness and identify areas for improvement. However, it's surprising how little emphasis is currently placed on the systematic development of boards, considering their crucial role.?

At Better Boards, we have conducted rigorous research initiatives and ongoing conversations with industry leaders to understand the complexities of board dynamics and glean practical insights and best practices. Our collaborative efforts with Chairs and Company Secretaries across various sectors have provided valuable insights. This has resulted in the identification of the Seven Hallmarks of Effective Boards, which offer practical strategies and solutions to help boards improve their effectiveness, confidently address today's business challenges, and generate positive value creation, thereby achieving true effectiveness.

Prerequisites for Effective Board Audits and Development Programs

There are some prerequisites to enable board audits and development programmes to effectively improve board performance and drive value creation:

1. Integration with the Value Creation Process

Any board evaluation or development program must be integrated into the organisation's value creation strategy. Although boards do not get involved operationally, they must have the ability to understand the intricacies of an organisation's value creation plan. This ensures that insights garnered from the evaluation are directly aligned with the overarching goals and objectives of the organisation.

2. Evidence-Based Approach

While a wealth of data can be collected during board evaluations, adopting an evidence-based approach is essential. Simply gathering data without relevance is a waste of time and money. Unfortunately, many board evaluations often delve into issues or themes without evidence supporting their impact on effectiveness and value creation. Ensuring that the data collected is relevant to the organisation's goals improves the efficacy of the evaluation process.

3. Provision of Real Data to Management

Board members are driven individuals who seek tangible results to further their success. It is crucial to provide them with real, hard data that offers genuine insight relevant to their roles. When armed with meaningful data, board members are more likely to engage fully in the evaluation process and utilise insights for an action plan.

4. Create a Safe and Supportive Environment

To facilitate meaningful reflection and action planning, it's essential to provide members of boards with a secure and confidential environment. This allows board members to openly discuss the data collected during evaluations and explore potential actions to strengthen their positions and contribute to the collective board's effectiveness in relation to the value creation plan.

5. Establish Continuous Data Collection Mechanisms

To effectively monitor progress and adapt strategies as needed, it's vital to establish mechanisms for continuous data collection. This ensures that the board can stay informed about the organisation's performance and make informed decisions.

With these five prerequisites in place, board audits and development programs can effectively improve board performance and contribute to value creation. By integrating with the value creation process, adopting an evidence-based approach, providing real data, creating a supportive environment, and establishing continuous data collection mechanisms, boards can better navigate the complexities of the modern business landscape and fulfil their roles as stewards of corporate governance and prosperity. Through ongoing evaluation and improvement efforts, boards can address emerging risks, seize opportunities, and contribute to the success and growth of their organisations.

Conclusion

In the face of unprecedented challenges, boards are increasingly realising the need for a fundamental reassessment of their operations and evaluation methods. Traditional approaches no longer suffice in today's dynamic environment, prompting a search for fresh perspectives and effective solutions.

Our approach, centred around the 7-Hallmarks of Effective Boards, offers a solid foundation for boards seeking to adapt and thrive. Through our fully facilitated external board evaluations, we offer a comprehensive examination of your board's performance, providing invaluable insights that pave the way for adaptation and growth.

Our approach is backed by data, drawing upon a wealth of experience and proven results from leading organisations spanning diverse sectors. This track record instils confidence, offering the assurance needed to develop a higher performing, more effective board.

Central to our offering is access to the Better Boards Board evaluation platform, a cutting-edge digital platform designed to streamline the evaluation process and facilitate seamless integration of internal and external evaluations. This platform not only enables robust assessment but also lays the groundwork for continuous development by establishing longitudinal data trends.

The platform itself is intuitive and user-friendly, ensuring accessibility for all board members. However, should assistance be required, our dedicated service and support team stand ready to provide guidance and expertise. From tailored training sessions to personalised assistance, we are committed to empowering your board with the resources needed to overcome challenges and seize opportunities effectively.

In essence, our holistic approach to board evaluation and development is rooted in a commitment to excellence and continuous improvement. By partnering with us, boards can embark on a transformative journey towards improved effectiveness, resilience, and long-term success in an ever-changing business landscape.