Few governance issues are more difficult than assessing the performance of boards. The evaluation of board performance is more art than science since there is an interconnected link between management, company and board results. It’s also rarely easy to determine. For instance the board may be governing the company well however shareholders are unhappy about the poor return on investment. The board may have been inherited by governance, management and firm issues and are working to fix the problems. It could have also invested in new strategic initiatives and developed a turnaround plan.

In other instances the board could become too involved in the details of operations and make decisions that should be left to the management. This is especially true when the board is not using an ideal process to evaluate its members. It is easy for small issues to become major issues, which could compromise the effectiveness of an organization’s board.

The board might have created an informal culture, which doesn’t take its performance assessment responsibilities seriously. It could be because it doesn’t have the systems in place to collect performance data, or it’s not able to acquire the required boardroom skills needed to effectively carry out its assessment duties.

In addition to having the proper boardroom skills in place, boards should be open and willing to deal with the results of the examination. The board must identify areas that require improvement and work with management to develop a plan for action. This could include arranging regular board training sessions on relevant topics in order to increase knowledge levels across the board and address information gaps.

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