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Internal evaluations / What should be evaluated - Coggle Diagram
Internal evaluations / What should be evaluated
Usually performed using a self-assessment questionnaire
Cheaper and easier to roganise
Critics argue they are not as effective as an external evaluation as those involved may not be able or willing to identify problems
If the board is suffering from interpersonal problems, an internal review may prefer to avoid the issue
An external reviewer who is well versed in boardroom behaviour may find it easier to advise and deliver feedback on such issues
Some companies use external advisers to help prepare the self assessment questionnaires for internal evaluations and may even do so to help analyse and report on the findings
The Code requires the performance evaluation
To consider the composition of the board, its diversity and how effectively members work together to achieve objectives
For each individual to assess whether they continue to contribute effectively
The FRC Guidance suggests the following non-prescriptive and non-exhaustive list of areas which may be evaluated
The mix of skills, experience and knowledge on the board, in the context of the challenges facing the company
Clarity of and leadership given to, the purpose, direction and values of the company
Succession and development plans
How the board works together as a unit and the tone set by the chair and CEO
Key board relationships, particularly chair/CEO, chair/SID chair/CS and executive/NEDs
Effectiveness of individual directors
Clarity of the SID's role
Effectivness of board committees and how they are connected with the main board
Quality of the general information provided on the company and its performance
Quality of papers and presentations to the board
Quality of discussions around individual proposals
Process the chair uses to ensure sufficient debate for major decisions or contentious issues
Effectiveness of the company secretary/secretariat
Clarity of the decision making processes and authorities, possibly drawing on key decisions made over the year
Processes for identifying and reviewing risks
How the board communicates with and listens and responds to, shareholders and other stakeholders
Role of the company secretary
The CS will usually assist the chair in the selection of any external facilitator and for internal evaluations may also be involved in designing and performing the evaluation
Whether they are taking the lead or working with external consultants, the CS will usually be involved in the analysis of the evaluations and framing the recommendations
Once the recommendations have been presented to the board, the CS should produce a matrix of the recommendations the actions being taken on them so they can be monitoried