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Performance evaluation - Coggle Diagram
Performance evaluation
The Code requires boards to undertake a formal and rigorous annual evaluation of the performance of the board, its committees, the chair and individual directors
The Code also provides that the NEDs, led by the SID, should be responsible for the performance evaluation of the chair and should meet without the chair present at list annually
The Code states that
The annual evaluation of the board should consider its composition, diversity and how effectively members work together to achieve objectives
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The chair is expected to act on the results of the performance evaluation by recognising the strengths and addressing the weaknesses of the board
The evaluation is expected to feed into company's succession policies by helping to identify any skill gaps
The Code also states that each director should engage with the process and take appropriate action when development needs have been identified
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Geneal guidance
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The chair has overall resposniliy for the process and should select an appropriate approach, involving the SID as appropriate
The SID should lead the process which evaluates the performance of the chair, and in certain circumstances, may lead the entire evaluation process (this could include where the chair also acts as the CEO)
The chair should consider ways to obtain feedback from the workforce and other stakeholders, for example, the auditors on the performance of the board and individual directors
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Board evaluations should inform and influence succession planning. They are an opportunity for boards to review skills, assess their composition and agree plans for filling skills gaps and increasing diversity. They can help companies identify when new board appointments may be needed and the types of skills that are required to maximise board effectiveness
The outcomes from board evaluations should be shared with and discussed by the board. They should be fed back into the board's work on composition, the design of induction and development programmes and other relevant areas
Companies should review how effective the board evaluation has been and how well the outcomes have been acted upon
The chair should give a summary of the outcomes and actions of the board evaluation process in their statement in the annual report
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