The success of a company is largely based on the quality of its governance. There are several ways to ensure that this governance is solid, and one of the most relevant is the assessment of the board of directors.

Indeed, an effective board of directors can play a driving role in the success of an organization, while an ineffective board risks hindering its development and exposing the company to certain dangers.

But What does a board evaluation actually consist of? What concrete benefits can we derive from it?

And above all, what pitfalls should be avoided in order for this approach to be truly constructive?

This guide offers you a detailed approach to understand the challenges of board evaluation and adopt best practices to take full advantage of this tool.

Board evaluation: what exactly are we talking about?

Board evaluation is a process that aims to measure its overall effectiveness. The aim is toanalyze both the collective dynamic of the council and the individual contribution of each member of the board of directors.

This includes various aspects such as the quality of decisions taken, the relevance of strategic discussions or the involvement of directors.

While, in some structures, this assessment may only be perceived as a regulatory requirement, it actually represents a valuable opportunity.

It not only makes it possible to take stock of the quality of your board of directors, but also to rethink its operating methods, to identify areas for improvement and to reinforce good practices in terms of governance.

Why evaluate a board of directors, and what benefits can be expected from it?

The evaluation of a board of directors meets several requirements, some of which may be imposed by the regulatory framework or circumstances.

However, the implementation of an evaluation of this body may also be the result of the desire of CEOs to make their turnover more efficient in order to enable their companies to achieve their strategic objectives.

1. Between legal obligations and specific circumstances

Depending on the country, legal requirements may require regular board evaluations — as is the case for companies listed on the New York Stock Exchange, which must undergo this exercise every one to three years.

But beyond legal obligations, there are key moments that particularly justify such an approach.

For example, when a new board is formed, the first year is essential to lay the foundations for its operation.

However, even outside of these particular circumstances, Evaluating your board of directors is above all a strategic lever to adjust and strengthen its collective relevance.

Because effective governance cannot be improvised: it is based on a desire for excellence and a dynamic of continuous improvement.

In this sense, establishing regular evaluations is not only useful — it is an essential step for any organization that aims to transform its governance.

2. The benefits of a well-conducted board assessment

When done seriously, board evaluation can have a real and positive impact on the governance and strategic direction of an organization.

It offers several concrete benefits, including:

Strengthened communication and cohesion

The proper functioning of a board of directors is based on fluid communication and real collaboration between its members.

Evaluation is an opportunity to improve the way meetings are organized and to foster a climate of transparency and constructive dialogue.

This contributes to a more harmonious and efficient working environment.

Smarter decisions

Evaluation often provides an honest assessment of how decisions are made within the board.

By identifying effective actions and those that slow the dynamic, it helps to refine processes to become more responsive and relevant, both individually and collectively.

Clarification of responsibilities and strategic coherence

In a board of directors, one of the most powerful levers for increasing efficiency is the clear distribution of responsibilities.

The evaluation of the board is an ideal opportunity to specify who is doing what, in order to avoid duplication and to better set priorities.

This development ensures that everyone works in the same direction, in line with the overall goals of the organization.

Risk management and efficiency assessment

A thorough review of the board of directors can also reveal areas for improvement in risk management and performance monitoring.

By defining relevant indicators, administrators will be better equipped to identify threats, monitor performance, and respond quickly if the situation deteriorates.

This strengthens their ability toanticipation And oflocalization.

Succession preparation

Assessments can highlight the importance of programming well-structured succession plans.

By anticipating departures and identifying the executive profiles necessary for the company, companies can go through transitions smoothly, without losing focus or suffering from a break in their governance.

What are the risks of a poorly supervised board evaluation?

As we have seen, implementing a board evaluation process can be very beneficial. But on the other hand, if it is botched or poorly orchestrated, it can generate tension.

An improperly conducted assessment can undermining the team spirit of the council and, in the long run, lead to a generalized loss of motivation. This is why it is essential to lay a solid foundation before starting.

What are the best practices for a successful board evaluation?

If the board of directors wishes to make evaluation a real governance tool, it must adopt a policy that specifies not only the types of evaluations to be carried out, but also the conditions necessary for their proper conduct.

1. Define clear terms and conditions

To be truly useful, evaluation must be based on a well-thought-out and transparent approach. This requires that the modalities are precisely defined, for each evaluation:

• The objectives pursued
• the method used and the expected timetable
• The people responsible for the implementation
• The evaluation criteria used
• data to be collected and analyzed
• the procedures for providing feedback to the persons concerned
• and finally, the rules for managing the data resulting from the process.

This approach must also be part of a broader vision of board management.

Once this structure is in place, it remains to clarify the objectives of the evaluation, so that it really serves to improve governance and not simply to check a box.

2. The key objectives of a board evaluation

Before launching a board evaluation process, it is essential to clarify what you want to achieve. Here are the most frequently pursued objectives:

• Review the composition and organization of the board in order to ensure that the diversity, skills and expertise of its participants meet the needs of the company.
• Analyzing the strategic contribution of the board, in particular its ability to define and follow up on broad policies.
• Measuring the effectiveness of risk management, by examining how risks are identified, assessed, and managed by the board of directors.
• Examining board involvement in financial processes, whether it's planning, control, or the transparency of financial reports.
• Appreciate the quality of the collective dynamic of the Board, by observing interactions and the climate of collaboration.

3. Opt for varied and complementary assessment methods for the board of directors

To obtain a complete and nuanced view of boards of directors (BOs), it is essential to use several types of assessment.

Each of these approaches provides a different perspective and makes it possible to identify concrete ways of improvement.

Here are the top recommended methods for gauging a board of directors:

• Collective board self-assessment
  It is a collective exercise that allows the board of directors to take a step back from its functioning. Using a questionnaire, participants assess key aspects such as the quality of meetings, the preparation of directors or the clarity of roles. The aim is to identify what works well, what can be improved, so that advice is more effective and relevant.
• Individual assessment of directors
  It focuses on the contribution of each director to the work of the board and its committees. Conducted by the Chairman of the Board, this evaluation aims to support the development of directors, without seeking to judge or grade. Personal or relational issues need to be addressed elsewhere.
• Peer reviews
  In this case, the directors evaluate each other's contribution to the board. This method promotes the recognition of strengths, the identification of areas for improvement, and the strengthening of collaboration between board members. It must be conducted in a climate of respect and trust in order to be truly effective.
• Exchange between administrators
  A discussion session in the absence of executive management should take place at the end of each board meeting. This confidential time allows directors to freely discuss the functioning of the board, its internal dynamics and opportunities for improvement. This type of meeting is ideally led by the chairman of the board and is a valuable tool for adjusting practices over time.
• A collection of cross-opinions
  This method broadens the scope of evaluations by soliciting feedback from various parties: senior management, managers, and even external stakeholders. It makes it possible to obtain a more global perception of the functioning of the board and its impact in the organization.
• Independent external evaluation
  Calling on governance experts to carry out an external evaluation offers a critical and objective look at board habits. These experts can make innovative recommendations, and their neutrality often facilitates more candid exchanges between directors.

Do you want to ask for experts who can assist you in your turnover assessment?

Do not hesitate to contact Visconti Partners for its offer of board coaching carried out by coaches who know your problems very well, having themselves experienced as business CEOs.

What precautions should you take to pass a board evaluation?

The evaluation of the board of directors requires some prerequisites to improve performance and avoid pitfalls.

Use adapted technologies

Using dedicated digital tools facilitates the collection and analysis of data, while simplifying the communication of results. These solutions make the process smoother and more efficient.

Highlight a continuous improvement approach

Assessment should not be a simple one-off formality, but a tool integrated into a constant dynamic of evolution.

Based on the results, develop concrete action plans and monitor their implementation regularly to encourage steady progress and greater accountability.

Ensuring confidentiality and anonymity

To obtain genuine and constructive feedback, it is essential that the evaluation process remains strictly confidential and that participants' responses are anonymous.

This creates an environment where everyone feels free to express their opinion without fear of consequences.

Involve all the actors concerned

Involving all stakeholders — board members, management, external experts — in the assessment ensures a wealth of perspectives and a more comprehensive understanding of the functioning and performance of the board.

Offer clear and useful feedback

For feedback to be useful, it must be specific, oriented towards concrete ways of progress, and highlight both the successes and the areas to be strengthened.

Feedback that is too general may not lead to real change.

Which indicators should be preferred for the evaluation of the Board of Directors?

An effective board of directors relies on a dynamic of constant improvement, where methods are regularly questioned to optimize its overall business.

This approach is based on a set of indicators that serve as a reference during the evaluation.

Collective board assessment

• Relevance of group size and composition
• Active contribution of members in the preparation of the agenda
• Respect for the responsibilities defined in the charter
• Aligning the goals of the board with those of the organization
• Appropriateness of meeting time and frequency
• Quality and relevance of information provided by management
• Cohesion between directors, fluidity of exchanges, and ability to find consensus on major issues
• Overall usefulness of advice
• Added value of advice for management.

Individual performance of directors

• Attendance and active participation in meetings
• Adequate preparation before each meeting
• Ability to communicate clearly and get ideas heard
• Ability to collaborate harmoniously with other members and management
• Willingness to listen and recognize divergent opinions
• In-depth understanding of the business sector and organizational challenges
• Overall contribution to board success
• Strengths and areas for improvement.

Source: Inspired by PricewaterhouseCoopers, Board Effectiveness: What Works Best (2nd edition).

Optimizing the functioning of its Board of Directors through tailor-made support

Calling on an external perspective can be valuable in order to better identify the dysfunctions or obstacles that affect a company, especially within its Board of Directors (Board of Directors).

It is precisely in this perspective that a specialized coach comes in — whether he is a Board of Directors, Executive or Organization coach.

Her role? Objectively assess the activity of the Board and support its members in a dynamic of continuous progress in order to unleash its full potential.

This support can involve several levers:

• Forming the Board of Directors : in fact, even with competent and motivated administrators, the proper functioning of a board can be compromised by relational biases or communication issues.
• Preparing new directors for their role : allowing newcomers to understand the responsibilities related to their mandate is essential, as is helping the President of the Board to master his various hats.
• Strengthen collaboration between authorities : in particular, it is a question of streamlining exchanges between the Board and executive management to ensure coherent and effective governance.

When deeper transformations are needed, strategic coaching can also help:

• Redefining the mission of the Board of Directors so that it becomes a real driver of performance and resilience in the face of current challenges.
• Identify the key skills to integrate to build a CA aligned with the strategic needs of the organization.
• Finding the right administrator profiles, whether internal or external, in order to complement the skills of current CEOs and create dynamic and efficient governance.

Visconti Partners offers tailor-made collective or individual support, for the Board of Directors, Management Committee or Company CEOs, which allow each company to assess its turnover and make it perform.

More generally, the Visconti Partners business executive coaches all put their own experience as entrepreneurs at the service of organizations that require them to enable them to develop strong governance, which is essential to the success of their strategy.