A board evaluation is a vital process that every board should conduct annually. Not only does it hold all directors accountable for their performance, it drives continuous improvement, allowing the board to evaluate what is working well and what could be improved. A key component of this is the board evaluation questionnaire, which serves as an essential mechanism for helping to identify challenges and opportunities for the board to increase its effectiveness.
But what should be included in a board evaluation questionnaire? It’s important to understand the scope of your board evaluation prior to creating your questionnaire. This means reviewing what the key objectives are within the context of the board and organisation’s maturity.
Does the boat have a leaky hull that needs fixing, or are you simply wanting to make it go faster? Is the boat a small yacht, or perhaps a cruise liner? In this article, we’ll provide insights on how to define the scope of your board evaluation, as well as sample questions and key areas of focus to include in your questionnaire.
Defining the scope of your board evaluation
The first stage of your board evaluation process is to establish what the board and particularly the Chair hopes to achieve. Clearly identified objectives enable the board to set specific goals for the evaluation and make decisions about the scope of the review.
Things to consider include:
- Complexity of the performance problem, if any identified (the leaky hull, for example)
- Size and maturity of the board (yacht or cruise liner?)
- Board composition including newly formed boards or substantial turnover (the dynamics of the crew)
Once these considerations have been reviewed, the objectives will become clearer. From there, it’s relatively easy to determine the scope of the evaluation. It will also become apparent whether it can be conducted internally, with the support of an external partner and/or with the support of purpose-built board performance software.
Newly formed boards
If the board is newly formed or there has been substantial turnover, it’s recommended to wait at least twelve months before running a longer form questionnaire as part of your board evaluation. At this stage, the board has worked together for a sufficient period and has a better understanding of deeper, more material issues. Trying to go too deep before the board is ready can result in superficial feedback, as well as frustrations with the process overall.
Newly appointed Chairs
Where the board has a new Chair, we suggest the following guidelines:
- A detailed board evaluation questionnaire can provide a strong foundation for understanding areas of focus in the first year as Chair. There will often be low hanging fruit that can be easily actioned to improve board effectiveness.
- Conducting an early review can give the Chair the ability to clean out old issues and provide clear air for the operations of the board moving forward
- A thorough questionnaire can be a good way to put a line in the sand between old and new. The Chair will be able to understand quickly any frustrations the directors may have and identify any issues that need to be addressed.
- Depending on the last Chair, it can be important to make a very clear statement of intent around seriousness in the review process.
Areas to cover in a board evaluation questionnaire
When determining the right questions to ask in a board evaluation questionnaire, it’s important to bring it back to the objectives. The best practice in this scenario is research-supported questions that help to uncover all perspectives. BoardOutlook’s board evaluation software utilises these types of questions, tested for efficacy across hundreds of organisations, with multiple frameworks available for boards of all challenges and maturity levels.
Download our free board evaluation templates for access to our research-supported questions.
Some areas to cover in a board evaluation questionnaire include:
Performance
Is the board focused on the areas and issues that will add greatest value to the organisation? What areas are strengths? What areas could be improved? Performance questions should review the core responsibilities of the board.
Strategy & risk
Does the board collectively support the organisation’s current strategy? These questions can include the current stage of the strategy, the strategy process, priorities and time allocation. When it comes to risk, questions relating to risk management, awareness and appetite should be included.
Board/management relationship
Does the board receive the right information, at the right time, from the CEO and executive team? In this section, the questions should cover transparency, information disclosure, guidance and management receptivity to board input.
Board culture
Does the board have a healthy culture which is consistent with its expectations for management on key areas such as collaboration, preparation and decision making? Questions to include would be centred around behaviours, preparation and robustness of debate.
Chair leadership
Does the Chair provide effective leadership to the board? Review the effectiveness of board leadership including relationships, planning, facilitation, feedback, conduct of meetings, synthesis of debate, availability and readiness.
Stakeholder management
Does the board have a clear understanding of the organisation’s major shareholders’ perceptions of its performance? Questions should cover engagement with key stakeholders, including reputation management, communication, transparency and planning.
Developing an action plan from the board evaluation questionnaire’s results
Once the board evaluation questionnaire has been completed, the end goal is to have a holistic picture of the board’s performance. Even if the board is making use of an external facilitator for its performance evaluation, the board should still own the process of improving its performance post-review. Core challenges can take months to work through, and without board engagement in the action plan, those same challenges could end up being identified in next year’s board evaluation questionnaire too.
Some key data points that help to inform the board’s action plan include:
Qualitative vs quantitative
A healthy balance of qualitative and quantitative data should be supplied that tests alignment between board and management on key areas such as strategy, risk and stakeholder management. Understanding what is driving any misalignment is critical for getting ahead of underlying issues that, if left unsurfaced, may exacerbate over time.
Furthermore, quantitative data allows for benchmarking against peers. Understanding whether the board is finding any key areas of focus more or less challenging than peers can be helpful in determining what needs to be included in the board’s action plan moving forward.
Longitudinal data
Arguably one of the most important elements of the performance process is ensuring there is the ability to track progress over time. Designing a process that allows easy comparison from one year to the next helps the board to identify which areas have made progress and which areas may have slipped.
Prioritisation
Lastly, when it comes to making an action plan, an understanding of the key priorities is essential. While it’s noble to want to resolve every challenge identified right away, now is the time to be realistic and focus on quick wins, as well as one or two core challenges. This ensures meaningful action can be taken following the review and provides all participants with a sense of momentum.
One way to determine key priorities is by overlaying prioritisation frameworks to the questionnaire, asking directors to identify two or three quick wins and core challenges that they feel the board should focus upon. Benchmarking again becomes helpful in this scenario, as it can offer insight into what is a common issue in similar entities versus what is a challenge specific to the organisation.
Asking the right questions for your organisation
Board evaluations are more than filling out the same questionnaire each year to fulfil governance and regulatory requirements – they’re an essential tool for measuring board effectiveness. That’s why ensuring the questions asked of the board are relevant and benchmarkable, with a healthy balance between qualitative and quantitative, are key to the process.
If the right questions are asked, it’s much easier to figure out whether the cruise liner could do with a new engine, or whether the yacht is keeping pace with the others. Boards that are provided with data-driven insights to inform decision-making can see big improvements to performance over the long term, making the boat go very fast indeed.