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Board Evaluation

by | Dec 7, 2021

An effective board is the cornerstone of every organization as it is the driving force behind the implementation of good governance practices. A Board Evaluation is an effective tool in assessing the running of the board and identifying areas that need improvement to ensure that the board is effective.

Why should companies consider it?

Boards sit at the heart of the company and are tasked with protecting stakeholders’ interests in the company by keeping management accountable. A board evaluation levels the playing field and puts to account both the executive and non-executive directors in regards to their contribution to the company and ensures overall accountability of the board.

Board evaluation are a regulatory requirement for listed companies. In Kenya, the Capital Markets Authority provides in the Corporate Governance Code for issuers of securities to the public that companies should undertake a board evaluation annually and by an external party every three (3) years.

What to expect from the process?

Once we answer the why we must then see the benefit of undertaking the process. The benefits of the process are in three parts: To the organization, the entire board and at the individual director level.

The organizational benefits include setting the performance culture of the organization, assessing the effectiveness of directors and enabling growth through the implementation of the recommendations.

At the board level, it encourages leadership behavior, develops a culture of respect in the board room, clarifies a director’s role on the board and committees, encourages continuous contribution by directors and enhances a culture of accountability.

At individual director level, the evaluation creates a clear understanding of the organization’s expectations, recognizes their individual competencies and how the same are best utilized and identifies areas where competencies can be developed and overall promotes trust among board members.

Each company is different and so are the various boards, in carrying out a board evaluation, we analyse the board charter, terms of reference, policies and industry requirements in order to provide a full bodied evaluation tool kit that custom fits the requirements of each organization.

Board evaluation is an important tool for company prosperity and at Scribe, we believe in enabling governance for all entities including publicly listed companies, public companies, large private firms and SME’s with active boards.

#enablinggovernance #activeboards #corporategovernance #boardevaluation