Nowhere is the practice of conducting board evaluations more advanced than in the UK, and more boards of listed organisations conduct board evaluations here regularly than anywhere else.

In the second part of this podcast, Dr Sabine Dembkowski (Founder and Managing Partner of Better Boards) talks to Maureen Beresford, Head of Corporate Governance at the Financial Reporting Council (FRC), this time discussing how to analyse the results of board evaluations. Maureen’s team is responsible for the UK Corporate Governance Code and its supporting guidance.  As part of her current role, she produces the FRC report each year on how companies have complied with the Code.  For the last three years, board evaluations have formed part of this review.

Some of the key takeaways of the conversation include:

“The output has to be agreed at the beginning of the exercise.”
Maureen believes that when gathering data for a board evaluation, it must first be established what the evaluation is – for example, is it to be a report or a presentation?  She warns against boards and board members homing in too narrowly on specific details and issues, stating that it is better to allow the evaluators to explain their conclusions, ideally with a meeting where the findings from the evaluation can be outlined.

“It’s important to look at what’s behind what is disclosed in a report”
Board evaluations can provide great data and insight, but this does not always translate into subsequent action, and Maureen suggests that people look at what is behind that which is disclosed in a report. Some details may not be emphasised enough, or some actions may be overly ‘bigged up’. She stresses that although companies do comply with corporate governance, there is always the risk of ‘boiler plate’ language, citing clichéd terms such as ‘working closely together’.

“The Company Secretary plays a pivotal role”
For Maureen, the role of Company Secretary is pivotal, as company secretaries are in a position to drive forward some of the actions that can come from a board evaluation.  It also helps that they know what agendas are coming up, they discuss what should be on the agenda with the Chair, and they collect information.

“It’s important to be positive- if you don’t achieve a target, set one in place you can achieve”
Maureen believes that companies need to look both backward and forward. One example she gives is company culture a board should look at how this can affect issues such as ESG, employee relations and remuneration policies.  She believes it is important for companies to highlight positive action in their evaluations, as well as being honest, citing good examples of companies who highlighted failures, but also explaining the steps they were taking to address those failures. She emphasises the importance of continuous monitoring of action plans, setting targets, and also making sure that recommendations are followed after the completion of the evaluation.

Clarity is key
In terms of board disclosures, Maureen suggests including an outline of how the evaluation was conducted, what the objective was, identifying the processes behind the valuation (data, interviews, etc), who oversaw the process andwho undertook the evaluation.

The three top takeaways from our conversation are:
1.      Use the company secretary to assist in reporting to the board and make sure data is translated into later action.
2.
     Be specific and avoid boilerplate catch-all phrases.  Specific details help action.
3.
     Be clear and transparent about the evaluation and provide detailed insights into the results and action planning.

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Author

Dr Sabine Dembkowski

Dr Sabine Dembkowski is a trusted board advisor who has worked with and alongside companies listed on the FTSE and DAX, global organisations and leading Private Equity and Professional Service firms. Her research into board effectiveness has been peer-reviewed and published internationally.

With a PhD in business management Dr Sabine has established two successful businesses, The Coaching Centre and Better Boards. Alongside her academic qualifications and business acumen, Sabine is also a trained Executive Coach and certified to perform a wide range of psychometric tests.

In her own words she is “Driven by a passion to get down to the nuts and bolts and create real, long-lasting change in organisations”

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