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In difficult economic and geopolitical times, the effectiveness of your company’s board could be the difference between success and failure. You need a board of directors who are engaged and possess a wide range of skills to lead you through the tricky landscape.
This is why a board evaluation should be much more than just a tick-box exercise. It should explore the workings of your decision-making process, how directors manage risk and whether there is a healthy and productive board culture in place. With only 30% of C-suite executives rating their own boards as ‘good’ or ‘excellent’ and 49% believing at least one board member should be removed, it is easy to see why a thorough and detailed evaluation is a necessity for the future success of corporate boards and the companies they serve.
With so much at stake, regulators and investors require boards to be transparent, thorough and objective in the way they assess their own work, taking accountability for fixing issues and driving better performance. However, this surfaces the question of who evaluates whom in order to achieve these aims? Who can be trusted to be fair, unbiased and completely honest in a way that is necessary to create the right conditions for better corporate governance?
This article explores the dynamics of board assessments and how to select the appropriate evaluators for each stakeholder within the board structure.
- With only 30% of C-suite leaders rating their boards good or excellent, robust evaluations are essential to performance and trust.
- Independence underpins credibility, so use external evaluators on a cycle and have the senior independent director lead when the chair is reviewed.
- Structure matters: clear roles, confidentiality and evidence-based methods allow for candid input and a more focused action plan.
- Evaluate the board annually internally and every two to three years externally to test composition, dynamics, meeting effectiveness and oversight.
- Assess individual directors through chair or SID feedback, structured peer review and external 360s to reduce bias and target development.
Why the evaluator–evaluated relationship matters
The quality of the outcome of your board evaluation rests on trust. This is why independence is important for credibility. Where there is no stake for the evaluator in the outcome, those being evaluated can be more open with their answers and you can dive deeper into the state of board operations.
This is why it is essential to choose the right party, either internally or externally, to lead the assessment for each different governance body.
The evaluator needs to set out clear terms of engagement and make promises of confidentiality to help members be honest with their feedback in a well-structured process. This way, everyone understands who is responsible, how they will gather evidence and how they will use the replies to formulate a plan for the board moving forwards.
This can only happen where there is no bias or conflicts of interest. When that happens, respondents can self-censor and you do not gain the benefit of a full and frank reporting of the real state of the board. This would be a missed opportunity to positively affect their performance.
Evaluating the board as a whole
The board evaluation needs to engage all members and gauge their opinions on what the board is doing right and where it can improve. It should ask questions of directors to understand how the board currently stands with regard to aspects like:
- The board composition, its level of diversity and any skills gaps that are evident and which need to be addressed.
- The dynamics of the board, including how well it collaborates, whether there are any members overstepping and others who might not feel able to contribute due to power relationships in the boardroom.
- How effective board meetings are, including how many decisions are made and how well the board follows up and completes the assigned action items.
- The quality of oversight that the board demonstrates, helping to keep strategy on course and manage risks effectively.
- How well the board interacts with committees and how information flows between both parties for the benefit of the company.
To achieve this, you require objective oversight of the evaluation process that brings a fresh perspective on these matters. The following parties should, therefore, play a role in evaluating the board as a whole:
- External independent consultants provide an essential outside perspective that can be difficult for internal parties to truly understand. They are also independent and able to get members to open up more freely, as there are no established relationship dynamics in place. External evaluation can be time-consuming and costly, but it is best practice to bring in an external evaluator every two or three years.
- Internal governance teams should carry out annual assessments. They possess the knowledge and insight needed to ask the right questions to be able to build a picture of the board’s effectiveness and extrapolate that into positive actions.
- The chair or a lead independent director should oversee the process, appointing the evaluator and holding them accountable for producing a fair and balanced review of the board’s workings.
Evaluating individual directors
When it comes to assessing the performance of individual board members, it requires a delicate approach that takes into account pre-existing relationships to ensure all directors feel comfortable with the evaluator and that they will receive a fair and balanced assessment.
It is important to prevent interpersonal biases when choosing assessors to create a pathway that provides constructive feedback for the director and identifies key areas in which they need development.
Potential evaluators include:
- The chair or lead independent director, who will have gained an understanding of the director’s performance from leading meetings and conducting other board work. They should have developed a trusting relationship with the board member, laying the groundwork for an open and honest dialogue.
- Peer directors might evaluate each other if there is a structured peer review process in place and board members are comfortable with being open with their colleagues.
- External evaluators might be brought in to carry out individual director evaluations if there is not that level of trust within the board or if there are other sensitive situations at play.
By using interviews, 360 questionnaires and behavioural competency assessments, you can build a picture of that director’s effectiveness and the areas in which they can improve, given a tailored upskilling programme.
Director self-assessment
A very practical and insightful form of evaluation, director self-assessment can provide a unique angle on board dynamics. It encourages directors to take ownership of their contribution and reflect honestly on how they add value in the boardroom.
A well-designed self-assessment questionnaire will avoid making directors feel as though they are sitting an exam, as well as engaging them and enabling them to be candid. Pairing it with an external perspective, such as peer review, helps paint a more rounded picture of each director and reduces the risk of bias.
It should typically contain questions about:
- How well prepared the director feels for board meetings and whether they feel they have enough information to participate with confidence
- Where they believe they add the most value in discussions and decisions, and where they think they might contribute more
- How comfortable they feel challenging assumptions or raising sensitive issues when needed
- How they experience collaboration with other board members
- The skills or perspectives they bring that are particularly relevant today
- The areas where they would like to receive training
- Their approach to judgement and integrity, including handling conflicts of interest and balancing different stakeholder views.
Evaluating the chair
Given the chair’s central role in the governance structure, it is essential to assess them in a thorough, yet neutral, manner. Given the power dynamics at play, you must give some thought to the best candidate to act as evaluator. With that in mind, your options include:
- All board members collectively, through anonymous peer reviews and surveys where they feel comfortable being able to provide honest and constructive feedback.
- A senior independent director who has a degree of separation from the chair, given their role. They should also have the experience to be able to carry out a fair and constructive assessment.
- An external evaluator every two to three years provides a high degree of neutrality and is better placed to benchmark the chair’s performance against other organisations.
The chair’s evaluation should focus on areas such as:
- Their leadership style and whether it brings the best out of the board
- How effectively they facilitate meetings and where they can improve
- Their ability to encourage open dialogue and collaboration between board members
- Their relationship with the CEO and how that impacts the business
- How they manage board dynamics and resolve conflicts.
Evaluating the board secretary
As a key figure supporting the executive team, the board secretary is responsible for ensuring meetings run smoothly, information flows effectively and compliance standards are upheld. So, it is important to include them in the board evaluation process, too.
When it comes to choosing evaluators for this purpose, they must be parties who can provide objective and constructive feedback. With that in mind, the options usually include:
- The chair, who works most closely with the board secretary and has direct insight into how effectively they support the board’s work.
- Board members collectively, who can give the secretary a rounded view of how their support is experienced in practice.
- An external evaluator, particularly in larger or more complex organisations, to provide an independent perspective and benchmark the role against recognised governance standards.
The board secretary’s evaluation should focus on areas such as:
- How effectively they support the chair and board in preparing for meetings and managing agendas.
- The quality, clarity and timeliness of board information and documentation.
- Their ability to advise confidently on governance, regulatory requirements and best practice.
- How well they facilitate communication and follow-up between the board, committees and management.
- Their judgement and discretion in handling sensitive matters and confidential information.
- How they contribute to a positive and professional board culture.
Evaluating board committees
The board’s committees feed into its decision-making, so it is essential that you evaluate their performance, too. Focus on how well-aligned their members are with the necessary expertise of the committee, how clear each committee’s remit is, the quality of the reports they make to the board and their oversight of risks and controls.
Potential evaluators include:
- The committee members carrying out a self-evaluation, through anonymised surveys
- The board chair and governance committee, taking an overview of the role that each committee plays in the governance structure
- An external evaluator, especially for complex matters involving the audit and risk committees. Their independence can be hugely beneficial for ensuring these committees are functioning in a manner that reduces the risk to the company as a whole.
Evaluating the CEO and executive team
Whilst the board evaluation focuses on governance oversight, the CEO’s evaluation is more about execution of their role, leadership for the company and their input in organisational performance. As such, these are the likely evaluators of the chief executive and their executive team:
- The board of directors works underneath the executive team, meaning it has insight into the way executives carry out their duties. The chair should lead the process.
- The remuneration or compensation committee has an interest in monitoring the performance of executives already, so it is well placed to evaluate performance
- An external assessor to eliminate the chance of the evaluation being held back for fear of upsetting leadership.
When and why to involve external evaluators
| When to involve an external evaluator | Why it helps |
|---|---|
| On the regular cycle for listed companies (every 2 to 3 years) | Adds independence and benchmarking that investors and regulators trust |
| When the chair or CEO is being evaluated | Removes conflict of interest and unlocks candid feedback on leadership and board dynamics |
| After a major event (merger, crisis or investigation) | Brings an objective lessons-learned view and a focused improvement plan |
| When board culture feels stuck or trust is low | Creates a safe route for honest input and practical fixes to behaviours and meetings |
| When investors or proxy advisers raise concerns | Provides credible evidence of change with a plan that addresses specific asks |
Creating a balanced evaluation framework
It is important to understand how the process will work to ensure it meets its aims. Have a clear evaluation lead in place, decide who will provide input and designate someone to receive results and turn them into actions that make positive and effective change possible. Document your process and communicate the outcomes in a sensitive manner that highlights positive change and maintains the confidentiality of all parties involved.
Make sure the follow-up is agreed and integrated into your governance cycles so that you take the learnings of the evaluation and use them to improve the company’s performance as a result.
Frequently Asked Questions
Yes, anonymity encourages honesty on behalf of those being questioned and reduces the fear of retaliation. Being able to reply in confidence is key to an in-depth and useful process.
Annually, with an external evaluation every two to three years, depending on local regulations. External evaluations offer a different perspective from internal evaluations and a combination of both approaches is a cost-effective method of running productive assessments.
They can be useful but are not sufficient alone. It is a good practice to get into, but you need to pair it with other forms of evaluation to reduce bias and provide additional perspectives.
Determining who evaluates whom is essential to building an effective, accountable and transparent governance system. A balanced approach, where internal leaders maintain continuity and external experts provide impartiality, yields the most meaningful insights. By clearly defining evaluator roles across the board, chair, committees and executives, you can strengthen your governance performance and create a culture of continuous improvement.
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