In today’s complex governance landscape, boards face increasing scrutiny from stakeholders, regulators, and the public. While many organisations conduct internal board evaluations annually, there’s compelling value in engaging an external consultant for a comprehensive board effectiveness review every three years.
The Power of External Perspective
Internal evaluations, while valuable, can sometimes miss crucial dynamics that an external consultant can readily identify. Board members and executives are naturally immersed in their organisation’s culture and ways of working, which can make it challenging to spot inefficiencies or areas for improvement. An external consultant brings fresh eyes and independence to the evaluation process, and board members often feel more comfortable sharing candid feedback with them.
Beyond Compliance: Driving Real Change
While regulatory requirements often mandate regular board evaluations, the true value lies in using these reviews as catalysts for positive change. A well-structured external review examines crucial areas such as:
- Board dynamics and performance
- Committee effectiveness and structure
- Strategy development and implementation
- Risk management and compliance frameworks
- Stakeholder engagement and communication
Additionally, organisations can opt to include skills audits and succession planning in their review, providing valuable insights for future board composition and development.
The Three-Year Cycle: A Strategic Approach
The recommendation for external reviews every three years allows boards to implement recommendations, measure their impact, respond to evolving governance requirements, and address new strategic challenges. Between external reviews, boards can conduct internal evaluations to maintain momentum and track progress.
Maximising Value from External Reviews
To get the most from an external board effectiveness review, organisations should:
- Choose a consultant with relevant sector experience and strong governance credentials
- Ensure full board buy-in to the process
- Be open to feedback and willing to implement change
- Set clear objectives for the review
- Follow through on recommendations
Investment in Excellence
While engaging an external consultant requires investment, the returns in terms of improved board effectiveness, better decision-making, and enhanced stakeholder confidence make it worthwhile. The cost of poor governance far outweighs the investment in regular external reviews.
Remember, effective governance isn’t a destination but a journey of continuous improvement. External board effectiveness reviews provide the insights and guidance needed to navigate an increasingly complex governance landscape.
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This article was written by Jillian van Turnhout, a Chartered Director (IoD UK) and INSEAD-certified corporate governance expert with over 30 years of board experience. For more information about board effectiveness reviews, visit www.jillianvanturnhout.ie.