Measuring and improving individual company director effectiveness is essential to improving overall board effectiveness. However, the process can be extremely disruptive and even de-motivating for directors if it is done poorly. The following is a brief guide, derived from decades of experience and hundreds of company director and board effectiveness surveys and reviews.
1. Design the company director effectiveness review process for success
a. Start by ensuring the review is done for the purpose of development and improvement – not as a “tick-the-box” exercise. Get director buy-in to this. This will ensure it is a constructive process.
b. Explain the process to directors so they all know what to expect and when. Explain that director anonymity will be protected. Explain who will see the company director effectiveness reports and who will provide a debrief of the results – this will normally be the Chair.
c. Stick to the agreed process – ensure there are no surprises.
2. Use a well-designed effectiveness survey tool
a. Ensure you use an online tool like Board Benchmarking’s that enables directors to rate themselves and each other, all on one webpage. This saves time and keeps it simple for company directors. The same company director effectiveness survey can be completed by executives who know the directors well if this was agreed as part of the process in Step 1.
b. Your company director effectiveness survey should rate directors on the most important attributes for them to exhibit. Those attributes should be in the areas of teamwork, leadership and oversight as well as personal attributes such as reliability, ability and courage to critically and constructively challenge others, and sound commercial judgement.
c. Company directors should not be rated on too many or too few attributes. In Board Benchmarking’s experience around 14 attributes are about right. The company director effectiveness survey should also provide space for comments on director strengths and suggestions for each company director.
3. Provide an insightful company director effectiveness report to each director
The Report for each director should show:
a. A comparison of the director’s self-rating versus the average rating of the director’s effectiveness by others and the gap. This will show the extent of the self-awareness of the director
b. A comparison of the average rating of the company director’s effectiveness compared to the average rating of all directors and the gap. This will show the director’s strengths and areas for improvement relative to other company directors.
4. Engage directors deeply with their own company director effectiveness report
Asking directors to determine what others are saying to them in relation to their main strengths and main areas for improvement, in advance of a debrief with the Chair, forces directors to engage deeply with their effectiveness Report.
5. Share lessons learned and actions with the whole board
The best way to complete the individual director effectiveness review process is for each director to share with the whole board what they have learned from the review in terms of what others see as their main strengths and main suggestions for them, as well as their intended actions for improvement. If a whole of board review has been done at the same time as the company director effectiveness review, directors should do what they can to align their intended actions with the recommended actions arising from the whole of board review.
Measuring and improving the performance and company director effectiveness can make a positive difference to the individual company directors and the whole board. This article shared our top 5, expert tips on getting the most out of your company director effectiveness review.