Board Evaluation

Revolutionize Your Governance: Board Evaluation Unveiled – Igniting Success Through Insight and Empowerment

Our services on Board evaluation give an idea of how the board should approach its position in corporate governance; fully prepared, for the benefit of achieving the desired outcomes and results outlined in the board’s overall strategic plan.

The board, its composition and evaluation of performance is central to corporate governance. By increasing scrutiny to board evaluation, we focus on the activities of the board and its committees particularly post the banking crisis and experience, which may show a successful board, is not guaranteed by just bringing together successful people.

All boards, and their committees, can benefit from evaluations: particularly subsidiary boards which are often training grounds for listed companies. They get an early expose to good governance that may equal a good pay of dividends later on.

It can bring remarkable benefits and a properly conducted assessment can contribute notably to performance improvements on three levels: organisational; board and individual member level.

A quick and simple audit against the basics standards for directors and board processes with a suitable action can lead to an immediate improvement of corporate performance.

One of the main goal of board evaluations is to enable boards to identify and overcome the barriers that hinder their effectiveness. Establishing an effective process for board evaluation can send a positive signal to the organization that board members are committed to doing their best.

We will check that there are clear board procedures in place, with all board members fully understanding their role and having the special skills that directors need.

These processes will enable you and your board to significantly raise your game and eventually increase your professionalism.

Understanding Board Evaluation

It is not merely a box-ticking exercise; it’s a strategic tool for enhancing board effectiveness and accountability. Through a structured evaluation process, boards can identify strengths, weaknesses, and areas for improvement, ultimately leading to better decision-making and organizational performance.

The Board Evaluation Process

1. Selection of the external facilitator;
2. Planning of the evaluation process, including briefing the board;
3. Gathering of evidence by the external facilitator, typically using board governance analysis questionnaire;
4. Drafting of the report by the external facilitator;
5. Delivery of the assessment report to the R&N and Board chairs;
6. Discussion of the  evaluation report by the entire board;
7. Meetings between the chairman and individual directors to discuss individual director evaluations; meeting between the R&N Committee Chair and the chairman to discuss the chairman’s personal evaluation;
8. Determination of a board development strategy by the board

The nature of the assessment process for boards of directors varies widely:

Best Practices for Board Evaluations

1. The participation of all individual directors to ensure a shared understanding and acceptance of the benefits of the it.
2. A well thought-out, systematic process to establish an effective board evaluation timeline.
3. Carefully selected board evaluation instruments to ensure that resulting information is valid, efficient and accurate.
4. A thorough follow-up to confirm that areas of concern have been addressed, and board evaluation information has reached the right people.

Challenges Facing Board Evaluation in Kenya

Despite its importance, board evaluation in Kenya encounters several challenges, including:

1.Lack of Awareness: Many companies in Kenya are unaware of the benefits of board evaluation or perceive it as a regulatory requirement rather than a strategic imperative.

2.Resource Constraints: Smaller companies, in particular, may lack the resources or expertise to conduct thorough board evaluations, leading to superficial assessments.

3. Resistance to Change: Some board members may resist evaluation, fearing personal scrutiny or viewing it as a threat to their authority.

4.Limited Independence: The independence of evaluators can be compromised, especially when evaluations are conducted internally without external facilitation.

 Optimizing Board Evaluation Practices

To overcome these challenges and optimize board evaluation in Kenya, companies can consider the following strategies:

1.Education and Awareness: Companies should educate board members about the importance and benefits of evaluation, emphasizing its role in driving strategic alignment and performance improvement.

2.Professional Facilitation: Engage independent third-party facilitators with expertise in corporate governance to conduct evaluations, ensuring objectivity and impartiality.

3.Tailored Approach: Customize evaluation processes to suit the unique needs and circumstances of each organization, rather than adopting a one-size-fits-all approach.

4.Focus on Development: Position evaluation as a tool for continuous improvement rather than a judgemental exercise, encouraging constructive feedback and professional development opportunities for board members.

5.Regular Review: Implement a regular schedule for board evaluations, ensuring that they are conducted at least annually and integrated into the company’s governance framework.

6.Transparency and Accountability: Share evaluation outcomes with relevant stakeholders, demonstrating the company’s commitment to transparency and accountability

Conclusion

In conclusion, board evaluation plays a pivotal role in promoting good corporate governance in Kenya. By addressing the challenges and adopting optimized practices outlined in this post, companies can enhance board effectiveness, strengthen stakeholder trust, and drive long-term value creation. Embracing it as a strategic imperative will not only benefit individual companies but also contribute to the overall growth and stability of Kenya’s business ecosystem.