The reality of board reviews: Internal vs external approaches
Key insights:
- Board reviews are more important than ever, but at least 10% of boards have never done any review.
- Internal board reviews are still quite primitive, with over 25% still using paper surveys, excel or other spreadsheets.
- Internal board reviews are widely used but lack benchmarking, and directors are less likely to be candid.
- External reviews provide credibility and benchmarking but most are too costly.
- External assistance that leverages scale and technology has become compelling for Company Secretaries.
External board reviews: Are they worth it?
The most significant drawback of external reviews has been cost, with 87% of respondents stating that engaging an external provider was a significant financial investment. For smaller organisations, this can be a barrier to participation.
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While carrying out reviews in-house has been the norm for many organisations, external assistance that leverages technology, scale and benchmarking is fast becoming a compelling alternative.
In the survey, 66% of respondents indicated that they had engaged an external provider for a board review at some point, with the majority citing the desire for independent and impartial feedback as the primary reason. 79% stated this as a key factor in their decision.
A Senior Executive explained:
“It may be challenging for the board chair to follow up on issues or concerns without the assistance of an external party.”
Another major benefit of external reviews is access to benchmarking. External providers can compare a board’s performance against industry standards and peer organisations, helping to identify gaps and best practices.
Other challenges included aligning an external review with the board’s specific needs and ensuring that the findings were actionable. A respondent expressed concern that:
“The scepticism of the outcome of an external review not being fit for purpose. Also, there can be an inability/inertia to take appropriate action and determine concrete next steps to get to a pre-desired outcome.”
Despite these challenges, most respondents who had engaged an external reviewer believed it was a valuable exercise. Many boards find that alternating between internal and external reviews offers the best balance of cost, objectivity, and relevance.
Finding the right approach
Ultimately, the choice between an internal or external board review depends on the organisation’s needs, capacity, and objectives. For many boards, the most effective strategy is a combination of both approaches—using internal reviews to track progress and external reviews for broader benchmarking.
As governance expectations evolve, boards must ensure that reviews translate into meaningful action. The Governance Institute of Australia recommends aligning board evaluations with organisational purpose, strategy, and priorities to maximise impact.
The gold standard: How often should boards conduct reviews?
Best practice for board reviews follows a structured cycle—a formal external and deeper dive review every three years, with lighter touch in-house reviews in the intervening years. This approach ensures that boards receive independent, benchmarked insights on a regular basis while also maintaining yearly accountability and continuous improvement. External reviews provide an objective assessment, comparing board performance to industry best practices, while internal reviews help boards track progress on recommendations and address emerging governance issues.
A well-balanced review process should not be seen as a tick-the-box exercise but as an opportunity for genuine self-reflection and development. The most effective boards use in-house reviews as “pulse checks” to assess whether they are improving in key areas identified during external evaluations.
Company Secretaries can now gain external assistance at a compelling price to replace their manual in-house survey process with external technology. This enhances their consistent cycle of review and action helps boards stay proactive, accountable, and aligned with best-practice governance standards.
Company Secretaries, governance professionals and directors can do a free trial survey for a single user, to see how their board compares with best-practice benchmarks. To see the full range of the five board surveys and benchmarked reports click here.
About the author
Kirsten Alice Smith CGP, FCG, AICD, is a Principal at Board Benchmarking, specialising in governance effectiveness and board performance reviews.
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An external board review strengthens governance, ensures the right board composition, and drives continuous improvement. Click here to explore how we can support your board’s effectiveness, or download an overview of our Board Effectiveness Surveys here.
