Governance and Board Performance Problems

Few governance issues are as arduous as measuring board performance. The symbiotic relationship between firm management, board results and management makes evaluating board performance more art than science -and often not clear. A board might be doing a great job of managing a business but shareholders are not happy with the low return on their investment. The board could have acquired management and governance issues and is working hard to turn the situation around. It could have also invested in new strategic initiatives and created a turnaround plan.

In other situations boards can become too involved in the operational details and make decisions that should be left to management. These situations are made even more challenging when the board fails to utilize a proper method of the evaluation of its members. Without a formalized evaluation process in place, it’s easy for mild issues to become serious problems that damage the effectiveness of the board.

The board could have cultivated an informal culture that doesn’t take its performance assessment obligations seriously. It could be because the board isn’t equipped to collect performance data or the boardroom expertise required to carry out its evaluation responsibilities.

Boards should not only have the required abilities, but they should also be open to the results of the assessment. The board should identify areas that need improvement and collaborate with the management team in developing a plan of action. This could include arranging regular board training sessions on relevant topics to increase knowledge levels across the board, and address information asymmetries.


您的电子邮箱地址不会被公开。 必填项已用*标注