We sat patiently in our Client’s state of the art Boardroom overlooking the newly constructed Nairobi Expressway, waiting for the Project Team to arrive. Within no time, the Managing Director, Chief Finance Officer and the Company Secretary in tow, arrived and sat across the table from us.
After a quick round of introduction, the MD invited us to make a presentation of the Work Plan, and expound on the methodology and approach we would use to tackle the task at hand.
After the brief presentation, our Client, a Bank, sought reassurance that we would deliver on the assignment in time to beat the Central Bank of Kenya (CBK) deadline of submitting the report by 31 March. The instruction was very clear, the aim of conducting the assessment was to ensure compliance with the Prudential Guidelines. Brusquely put, to check the box, and avoid any penalties relating to non-compliance.
In as much as the above process would help our Client comply, it was very unlikely that it would make a difference or add value to the Board.
Locally, regular, board performance evaluations are either a requirement, as is the case with Public listed companies, Banks, Insurance Companies and State Corporations or, corporate governance best practice recommended by Stakeholders, as is the case of Water bodies, SACCOs or Non-Governmental-Organizations.
In Kenya, annual board evaluations have been part of the governance framework for about six years since they were introduced into the Code of Corporate Governance for Issuers of Securities to the Public, 2015 and the Code of Governance for State Corporations (Mwongozo). Under the ‘apply and explain’ regime, the CMA Code currently requires that boards should be evaluated every year, as this is one of the principle methods for building board effectiveness.
So, what makes a great board performance assessment? Evaluations that make a difference not only have sound methodologies but are conducted in an effective and efficient way. Great evaluations are like an adventure where the Board goes beyond focusing on compliance, to assisting the Board to find process gaps, create strategic action plans, and foster a culture of continuous improvement.
Ensuring the backing of strong, independent leadership e.g. independent board chairs, the chair of the nomination and governance committee and basically the goodwill of all directors. The role of the lead director would be to ensure that the right people are involved, participation by all directors, and adequate time is scheduled to discuss the process and results.
Scheduling an inception meeting to set and communicate goals. Questions the Client can ask at the onset of an assessment include who to participate, the approach to be used, critical themes to cover, and gaps in the current assessment process. This ensures accountability and encourages board members to commit to the time and process. Oftentimes, if objectives aren’t communicated, the assessment will not elicit the desired results.
Additionally, there is a need to develop a comprehensive toolkit/questionnaire while ensuring that the questions are tailored to the organization’s own governance practices, industry, relevant issues, and board composition. Review the toolkit with a client for completeness, ensuring that you are asking the correct questions, which will elicit candid responses.
When it comes to this process, due care should be taken to ensure that the exercise is not tedious and time-consuming. Service providers like Scribe Services have developed cutting-edge technology that ensures a fully integrated solution that simplifies the process while also providing cost savings. The exclusive tool is accessible on any device, which gives users the ability to navigate through an elegant platform, save answers for later, and return the assessment at a convenient time.
Finally, the board must set aside time to review the results. Any impactful assessment has to be concluded by discussing and dealing with the findings. Reviewing results is often the place where boards fall short. Allowing for ample time to review the board assessment, identify concerns raised, and overall outcomes are critical for future planning and implementing global best practices.
Progressive Boards plan for a retreat around the results stage of a board assessment or training. This is a great way for boards to brainstorm and collaborate on agenda items that find themselves shelved from regular board meetings thereby ensuring that the board assessment makes a difference.