The Boards of Directors have a significant responsibility to ensure that their organizations thrive. They have the legal obligation to safeguard and grow their businesses (as as defined by those who give them a charter or tax exempt status). If boards fail to perform, it can damage the reputation of a company and cost it money. The majority of the time, this is the result of a lack of clarity around the role and responsibilities for both the board and the executive team.
If there is uncertainty about the kind and quantity of assessment a board must be conducting, it could hinder its effectiveness. This could be because the board lacks internal structures that can gather and report information on performance, or because it isn’t certain of what it is seeking in its assessments. This could also be due to the fact that the board isn’t aware of the importance of incorporating specific behaviours in the evaluation of performance.
Some boards are too involved in operational issues and making decisions that are supposed to be made by the management. This happens most often due to an absence of clear communication between the executive team and board members, or if the root philosophical differences about the role of a board have not been addressed in a direct manner.
A board’s inability to meet its performance assessment obligations could be a sign that it is not engaged in its responsibilities. Many reasons can be attributed to dysfunctional group dynamics that inhibit collective deliberation and decision-making in the absence of effective communication, as well as the absence of a strategic agenda.