Self-evaluation of Board of Directors
The Board of Directors (BoD) sets objectives and evaluates its own performance.
The role of the BoD is to ensure the organization’s prosperity by collectively directing the affairs of the organization. Overseeing rather than actively managing the day-to-day operation, the BoD is responsible for the organization’s governance, and for meeting the interests of its shareholders and stakeholders.1,2 BoDs mostly consult with management on the organization’s strategic and operational direction, as well as monitor the organization’s performance and reduce agency costs. 3
To ensure that the BoD functions effectively and with integrity, the board should set objectives for its own performance. It should also regularly evaluate its performance as a whole as well as the performance of individual members, for instance once a year.4
PURPOSE & LINK TO INTEGRITY
Some of the reasons for conducting self-evaluations of the board include:5
- Giving individual members an opportunity to reflect on their individual and corporate responsibilities
- Identifying different perceptions and opinions among BoD members
- Pointing to issues that need the BoD’s attention
- Serving as a starting point for setting realistic performance objectives and improve performance in the future
- Increasing the level of teamwork in the BoD
- Providing an opportunity to address mutual expectations among the BoD and staff
- Demonstrating to staff and other stakeholders that accountability is a serious organizational issue in the BoD
- Providing credibility with donors, investors, shareholders, and other external persons/organizations.
If properly conducted, a self-evaluation can have a profound impact on a BoD’s understanding of responsibilities, perceptions and behaviour – including integrity issues. If answers are given honestly, it can provide the impetus for a BoD to resolve issues that have remained simmering, unattended to, and create synergy among the members. 5
- Does your organization have a corporate governance structure including a BoD in place? (See also the tool Corporate governance structure)
- Are the BoD’s roles and responsibilities clearly defined to enable adequate evaluation?
- To which extent is there a culture of openness and trust in the BoD that will allow for a critical self-evaluation?
In a self-evaluation, BoD members are asked to review a list of core responsibilities and best practices and indicate how well they think the board is doing in achieving them. Both online and paper surveys can be used, and a number of sample questionnaires can be found online.3 The evaluations should be considered as a process and not a one-time activity or simply the completion of a survey.4 The self-evaluation may have three sections:5
Section A: Contains an evaluation format of the BoD by all members. It is in three parts, i.e.
- BoD responsibility
- BoD operations
- BoD effectiveness.
Section B: Contains an evaluation format of the chairperson by other BoD members.
Section C: Contains an evaluation format of individual BoD members by the chairperson.
It is recommended that the BoD start with section A and then moves on to sections B and C when members have become more familiar and comfortable with self-evaluations.
KEY GUIDING DOCUMENTS
National Council of Nonprofits, no year, Board Member Self-Assessment (including sample surveys), National Council of Nonprofits, www.councilofnonprofits.org/resources/resources-topic/boards-governance/board-member-self-assessment, accessed 19.11.2015
Wahlstrom, no year, Is Your Board Ready for Self Assessment? A guide for non-profit leaders, Starboard Leadership Consulting LLC, Main Associations of Non-profits
WASREB, 2009, Corporate Governance Guidelines for the Water Services Sector, Water Services Regulatory Board (WASREB), Kenya
Dalhousie University , 2005, Board Self-Evaluation Questionnaire, Dalhousie University, Canada
GB Associates , no year, Self-evaluation checklist for board of directors, GB Associates, UK
Stybel, L. J., and Peabody, M., 2005, Structural options for board self-evaluations, National Association of Corporate Directors (NACD), USA
Korngold, A., 2012, Nonprofit Board Self-Assessment: Creating the Path Forward, Huffington Post, http://www.huffingtonpost.com/alice-korngold/nonprofit-board-self-assessment_b_1721595.html, accessed 19.1.2015
- ProMetic, no year, Board of Directors Charter, ProMetic Life Sciences Inc., Canada
- Brefi Group Limited, 2000, The Board of Directors – roles and responsibilities, Brefi Group Limited, UK
- Larcker, D. F., and Tayan,B., 2011, Board of Directors: Duties & Liabilities, Stanford Graduate School of Business
- Wahlstrom, no year, Is Your Board Ready for Self Assessment? A guide for non-profit leaders, Starboard Leadership Consulting LLC, Main Associations of Non-profits
- WASREB, 2009, Corporate Governance Guidelines for the Water Services Sector, Water Services Regulatory Board (WASREB), Kenya
- National Council of Nonprofits, no year, Board Member Self-Assessment (including sample surveys), National Council of Nonprofits, www.councilofnonprofits.org/resources/resources-topic/boards-governance/board-member-self-assessment, accessed 19.11.2015