Is your board survey a valid measure of your board’s effectiveness?
Every year, tens of thousands of boards form a view on their effectiveness, often through fireside chats with each other where the majority tend to perceive themselves as more effective than their peers —a common phenomenon where over 80% of drivers believe they are above average, much like boards.
Some boards delve deeper by conducting a board survey of their directors and, in some cases, extending the survey to senior executives. However, internally facilitated board surveys often lead to less candid responses.
Typically, responsibility for administering the board survey falls on the company secretary, although an external party may occasionally undertake this task. However, the pivotal question remains: Can we trust that the board survey utilised and the subsequent report delivered truly reflect the board’s performance and effectiveness?
The survey validation process
Larger professional service groups have validated their employee, customer and other surveys for many years with the help of a university or an appropriately qualified empirical researcher.
The validation process involves a psychometric and statistical analysis of a significant dataset of survey responses. That analysis includes an exploratory and confirmatory factor analysis to determine whether the survey factors used are reliable measures of each discrete factor. The analysis also determines whether the survey as a whole is a reliable measure of a board’s effectiveness.
The review process also includes research of literature overlayed with significant practical experience to ensure that the survey reflects contemporary practices.
The validation process is carried out with rigour, often culminating in reporting the process and the results in a peer-reviewed journal.
99% of board surveys have not been validated
There are hundreds and perhaps thousands of different board surveys that are used around the world each year. Most in-house surveys don’t purport to be valid or reliable measures of a board’s effectiveness.
Additionally, most consultants who carry out board surveys haven’t done enough to have sufficient data for validation.
Our board survey has gone through all the validation processes referred to above with the help of Deakin University. The validation process and its results have also been reported in a peer-reviewed journal.
Your board survey can only be regarded as a reliable measure of board performance and effectiveness if it has undergone an appropriate validation process. Board Benchmarking is not aware of any other board survey that has been through the same validation process.
Validation reveals the most important factors of effectiveness
A rigorous validation will identify the main factors contributing to a board’s performance and effectiveness. Those factors will be mutually exclusive and collectively exhaustive.
Our first board survey was crafted with a global governance expert, KPMG and numerous experienced directors and governance practitioners. It was designed with the help of Insync’s 20-plus years of deep survey expertise and included ten factors of a board’s effectiveness. Through rigorous validation, unsuitable or irrelevant survey items were removed, and the distinct components crucial to a board’s effectiveness were pinpointed. This process also identified the pertinent survey items corresponding to each factor.
It took over 15 years, with the help of Deakin University, to work out what most people now know are the 20 most important factors of a board’s effectiveness. All 20 factors are essential for a board’s effectiveness, leaving no critical elements unaddressed.
Figure 1: 20 most important dimensions for a board’s effectiveness
Is your survey framework and its factors valid?
Individual survey items can effectively measure specific aspects of a survey, but their inclusion into a survey factor within a survey framework is often inappropriate. Only a rigorous validation process will tell you which survey items, taken together, are a reliable measure of the board’s effectiveness overall and for each factor.
If the factors and frameworks used in your board survey have not been validated, they cannot be regarded as a reliable measure of your board’s effectiveness.
Consider this scenario: using a solitary factor to gauge board relationships and dynamics may seem convenient, but it oversimplifies a complex dynamic. Many board surveys and reports make this error. The relationships and dynamics among directors differ significantly from those between the board and management, as well as between the Chair and CEO. Attempting to encapsulate all three dynamics into a single factor intended to measure overall board dynamics results in misleading conclusions.
In the same way, a factor purporting to measure board leadership that includes the leadership of the Chair and Committee Chairs will also be misleading. The leadership of the chair and committee chairs will invariably be different.
If the framework of your board survey is not the same or very similar to that used by Board Benchmarking, you should question its validity.
Benchmarking is still the key
A reliable measure of board effectiveness is crucial. However, the true value lies in benchmarking board survey responses against those of comparable boards, enhancing the insights gained.
Benchmarking boards against those of similar-sized organisations and in similar industries is essential. Benchmarking a financial services organisation board against those not-for-profits or government entities and vice versa would be misleading. At Board Benchmarking, we offer over 500 boards for comparison, ensuring relevance and accuracy in your benchmarking efforts.
For a validated board survey coupled with comprehensive benchmarking, explore our range of fit-for-purpose, affordable, and world-class survey options. Reach out to us today to learn more.