The current Covid-19 pandemic has presented unprecedented challenges for boards and management teams. Every organization has been wrestling with how the health and economic crisis have impacted their company, including the way the board and management team have navigated the threats and opportunities. A recent Corporate Board Member article highlighted the ways some boards have responded to these challenges. One recommendation the directors who were interviewed offered is to conduct an after-action review of the board and management team’s responses to the Covid crisis. One approach to doing this is to incorporate the review into the board’s annual evaluation process. Here are some suggestions about how to do that.
What to Include in the Board Evaluation
A standard board evaluation, to be thorough, should include inquiry about each dimension of governance that contributes to effective discharge of a board’s oversight responsibility. The blog below outlines seven areas to include in an annual board evaluation.
With the unique circumstances presented by the Covid-19 pandemic, this year’s evaluation of these dimensions can be conducted through a lens focused on how effectively the board functioned in meeting the challenges posed by the pandemic. Here are a few areas for the board to examine:
• What value did the company need our board to contribute, and how well did we deliver that value?
• What did the pandemic teach us about our company’s strategy, business model, capital structure, and supply chain dependencies?
• What, if any, adjustments need to be made in our company’s emergency preparedness?
• Are our IT infrastructure and cybersecurity protections adequate for what we will need in the future?
• What have we learned about the strengths and development needs of mission-critical talent?
• What have we learned about the strengths and development implications for our board’s composition? (E.g., requisite expertise and acumen relevant to our business or strength of the director’s networks to access resources on behalf of the company.)
• What are the lessons we can apply in the future about our board’s culture and how we communicated and made decisions in a virtual operating mode?
• First and foremost, as with any standard board evaluation, ensuring the utmost candor from directors is critical. Whether performed by a lead director, nominating and governance committee chair, or an outside facilitator, board members must feel that their evaluation input will be kept in confidence. Given that board evaluations this year will most likely need to be conducted virtually rather than in-person, the video or audio technology selected must be completely secure.
• Second, it is recommended that confidential management input be included from those members of the management team who have interacted with the board and its committees. That input can be collected through both an online survey and interviews conducted by the point person doing the evaluation.
• Third, it is recommended that a self-evaluation be completed by each director assessing how they contributed during the year and how they might add more value in the future.
• Finally, the board should discuss the results of the evaluation, identify action steps for the future, and build in a follow-up process to track the execution of the action steps.
Implementing these recommendations will enable a board to do a meaningful assessment of both its strengths and opportunities to further its value and contribution in guiding and overseeing the organization it is charged with directing.