How to master internal board evaluations that generate real insights for Directors

The Better Boards Podcast Series

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Corporate Governance Codes worldwide state that an internal board evaluation shall be conducted in years one and two after a fully facilitated external evaluation. It is one of those tasks on a Company Secretariat's calendar that has to be done. But how?

In this podcast, Dr Sabine Dembkowski, Founder and Managing Partner of Better Boards, discusses mastering internal board evaluation with Chloe Barry. Chloe is Group Company Secretary at Kingfisher, an FTSE100 organisation.

“I'm fortunate to have moved from one engaged chair to another”
Chloe starts by explaining her board evaluation process, with the next one planned for the autumn, which will be conducted internally. She outlined how this is notable for two reasons: it is the first led by the new board chair. Chloe is excited to work with them on what she is certain is a robust process. Secondly, they will use most of last year's question set, allowing them to measure progress.

“We want the directors to leave the process feeling assured that they have identified the appropriate actions”
Chloe admits that board evaluations can be seen as unnecessary and time-consuming. However, her experience with engaged boards and directors shows that they often appreciate the outcome. Despite the time it takes, directors recognise that meaningful participation enhances the quality of subsequent reporting and discussions, and by engaging honestly and sharing views on potential obstacles, board effectiveness can significantly improve. In her opinion, a good evaluation process is measured by the practical actions it identifies for improvement.

“Perhaps counterintuitively, my starting point is always to look back and reflect on the previous few years' reviews”
To prepare for an internal evaluation, Chloe explains that she starts by reflecting on past reviews, considering the format, tone, actions set in the previous years, and feedback from directors. This helps her decide on the type of review to propose, whether internal or external and if it aligns with their three-year cycle. If changing the mechanism or provider, she will always create a shortlist, benchmark with peers, and possibly conduct a full tender. She explains that while board evaluations, particularly internal ones, can take almost any form – verbal, paper or online - the most important thing is to ensure that you are evolving and improving in all respects.

“You need to be honest with your chair”
Chloe emphasises that honesty with your chair about past successes and areas for improvement is essential when making proposals. She relates that she introduced Better Boards for their interim evaluation last year to focus on peer reviews. Considerations included various factors such as the new platform, question set, reporting format, timetable, and communication plan. The most positive feedback from last year's review was about the display of the results and the insightful peer review section.

The three top takeaways from our conversation are:
1. Learn from past evaluations by reviewing agreed actions, feedback, and the process. Show directors you are improving the experience to maintain their engagement.
2. Inform and engage individual directors early about the process and any new provider, and ensure they complete the evaluation.
3. Test the survey, whether homegrown or external and ask others to do the same. Check for clarity, insightfulness, and practical usability. A thoughtful process leads to more engaged directors and valuable insights.