Few governance issues are more difficult than assessing the performance of boards. The interplay between firm management, board results and management makes assessing board performance more art than science — and rarely clear-cut. The board might be doing a good job of governing a company, but shareholders are unhappy about the low return on their investment. The board may have inherited the company’s management, governance and firm issues and are working to turn things around. It could also have invested in new strategic initiatives or formulated the turnaround plan.

In other instances, the board might be too involved with operational details and making decisions that should be left to the management team. These issues are made worse when the board is not making use of a suitable process to assess its members. It is easy for small issues to become major problems, which can damage the effectiveness of a board.

The board could have developed an informal culture that doesn’t consider its responsibilities for performance assessment seriously. It could be because the board lacks the systems to gather performance data or the boardroom expertise required for executing its responsibilities in evaluating.

In addition to having the right boardroom skills in place Boards must be willing and open to deal with the results of the evaluation. The board should identify areas for improvement and work with the management team to develop a plan of action. This could include regular board meetings to improve the knowledge of the board.

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