New York-based Beverly Behan has been consulting to boards for 25 years and has undertaken over 200 evaluations—these figures are very similar to our own, with some 220 evaluations over the same period. Behan has written several useful books [1] and this one was interesting to us in a ‘swapping notes’ sense.
We certainly agree with her that many assessments waste the time of smart people, being cookie cutter, compliance-focused exercises. The Crown sector is notable for regular assessment being required by central agencies. Often, they then allow entities under their purview to go through tick box audit processes that are really of limited value to anyone, certainly not the board in question.
Behan notes that she commonly hears that, ‘our board is unique’ and suggests that this is probably right. By the time you work though organisation type, size, sector, stage of development and current challenges it is obvious that the template approach won’t cut it.
She has abandoned a survey component of her process, relying largely on interviews. We believe a well-constructed survey customised to the client gives excellent insight that helps focus the interviews in the necessary areas. Directors, being human, also rather like the tangible—graphs, scores, averages etc.
Behan cites the PWC annual Corporate Directors survey [2] for evidence that not all is well with director performance evaluation. The latest edition (2022) notes that nearly half of all directors think one or more of their peers should be replaced and 19% would replace two or more. This trend is apparently increasing: 20% of respondents in the 2020 report expressed the view that their director evaluation process is ineffective.
Boards expect performance assessment across the senior teams and are happy to put a chief executive’s ‘feet over the fire’ but, Behan suggests that—based on the PWC evidence—most boards don’t do a very good job when it comes to director performance management. Admittedly this is an American-skewed perspective, but our experience would support her position.
So, what—according to Behan—constitutes a good process. First, it needs a champion who is truly interested in the board being at the top of its game. It should include the perspectives of the chief executive and the senior team. The process should cover eight parameters of board effectiveness: composition, information flow, agendas and meeting structure, board leadership, work of the committees, board dynamics, relationship with the CE and senior team, and board processes (how the board engages on key issues). This largely aligns with our approach. We tend to look for consistency, starting with clarity of purpose, stated outcomes within a coherent plan and then how the board organises its work to facilitate progress towards this intent.
Behan discusses the need to reflect on the past three years—what did we learn from our reaction to Covid and do we have the shift to virtual meetings right? Most boards we work with have retained video meetings at least in part. We encourage boards to undertake this reflection. Our review of Governing in Scary Times, in Good Governance 84, canvassed various approaches to thinking around these issues.
From the assessment, she suggests only 3-5 ‘opportunities for enhancement’ should emerge. We agree. Often there is a laundry list of matters to be addressed but attention to some fundamentals will flow down and resolve second-order issues. Nonetheless we think a full but nuanced list should result.
Consistent with the PWC survey findings above, Behan notes that roughly 75% of her evaluations have resulted in changes to board composition. In many cases, difficult directors are not going to change their spots and the process has a purpose. We have this as a background brief from time to time but certainly not with this frequency. Maybe we are too nice in our corner of the world!
Consequently, Behan reflects on what a good board looks like, starting with a couple of cautions.
Just because a director has a great background and highly desirable expertise doesn’t mean they will be effective as a board member.
We couldn’t agree more. We remind boards that many people have been successful by knowing the right answer most of the time. The boardroom requires knowing the right question, and when and how to ask it. A very different skill!
She reminds us that a board is neither a shadow management team nor a focus group (representative boards). All directors should have a base requirement of sound judgement and the ability to be a ‘team player’. Beyond that, necessary skills are suggested as finance, relevant operational experience, sector experience and technology.
The technology area is a broad church and some specificity on which subset is relevant to a specific board is required—maybe just someone who can call BS on management’s fast talking.
She reminds us that diversity directors are not an add on. We should look first for skills across all possible candidates.
Confidentiality is crucial in these processes. Behan’s approach belies the potentially litigious nature of the American corporate environment. All notes are handwritten and later destroyed. Reports are saved to a USB stick and drafts are couriered in hard copy. Certainly, an abundance of caution.
The book has useful appendices covering the parameters of board effectiveness, a sample evaluation action plan, and a sample individual feedback report.
Behan’s books are always worth a read; this one included. The audience should include chairs of boards, governance secretaries, those responsible for commissioning reviews, monitoring agencies and practitioners themselves.
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Notes
[1] Behan books
