Demystifying Board Performance Reviews

In today's challenging business environment, the effectiveness of a board can significantly influence an organisation's success in achieving its strategic goals. While many boards operate efficiently in directing and supervising the affairs of the business, there is always room for improvement. One tool to elevate a board from Solid to Spectacular is having regular board performance reviews. But what are they?

Board performance reviews are evaluations of how a board operates and its effectiveness to achieve the strategic objectives of the organisation. These reviews involve assessing individual board members, the board as a collective group and its relevant committees in order to identify their strengths, any areas for improvement and develop strategies to enhance overall performance.

        Key Benefits of Board Performance Reviews 

Regular performance reviews foster a culture of accountability. By knowing their contributions will be evaluated, board members will become more aware of their responsibilities and as a result be motivated to perform at their best.

By identifying gaps in knowledge or skills, performance reviews help boards focus on addressing these deficiencies either as individuals or as a group. This should lead to more informed and effective decision-making processes.
Performance reviews ensure that the board's activities align with the organisation's strategic goals. This is crucial for driving long-term success and achieving organisational objectives.
The Guernsey Code of Corporate Governance requires a board to regularly evaluate the performance of its members giving it the opportunity to enhance governance and ensure the board is functioning effectively. Many of the recent enforcement actions taken by the Financial Services Commission have stemmed from a culture of poor governance and as such how the board is assessing its effectiveness has become a key focus during their regulatory visits.
Performance reviews provide a structured approach for continuous improvement. Boards can track progress over time, celebrate successes and address challenges proactively.
The review process encourages open communication and collaboration among board members. This can lead to stronger relationships and a more cohesive board.








        BDO’s approach to an Effective Board Performance Review

            To maximise the benefits of a board performance review, we help boards follow these best practices:

    What are the drivers for the review? The board should save time at the outset by following our guidance in defining the purpose and goals of the performance review, e.g. continuous improvement, board development, strategic business success, regulatory pressures. This clarity will guide the process and ensure it remains focused and productive while avoiding any pitfalls.
    This should be adopted when conducting the reviews. BDO’s reviews can include director self-assessments questionnaires, interviews with board members, review of board/committee agendas, minutes and papers, board meeting observation, skills gap analysis, succession plans, tenure, diversity, etc.
    Following the review, the BDO as facilitator will create actionable plans to address the identified areas for improvement. Responsibilities are assigned and timelines set to ensure follow-up and implementation.
    An independent external facilitator such as BDO will use a structured framework based on your objectives to provide an unbiased perspective tailored to your budget and ensure the review process is objective, comprehensive and achieves the goals set at the outset.
    BDO helps the board regularly monitor and review progress against the action plans. This ongoing evaluation helps maintain momentum and strengthens collaboration between board members to achieve their shared goals.




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Conclusion


Board performance reviews are a vital mechanism for enhancing the function of a board. By identifying the key benefits regular performance reviews by an experienced facilitator like BDO can transform a Solid board into a Spectacular one allowing it to be better prepared to navigate challenge, seize opportunities and achieve sustained success. 

If you need further guidance on how to elevate your board’s performance or assistance with director duties, reviewing your compliance with the Code of Corporate Governance, internal audit, liquidations, business restructuring or regulatory compliance advisory services, then please send your enquiry to advisory@bdo.gg or email your usual contact at BDO Guernsey.