Evaluating the Board: A Guide to Board Performance Reviews

Board evaluations are a cornerstone of effective governance. Done well, they can transform how your board operates, strengthen director engagement, and drive better outcomes. This guide will show you how to conduct board evaluations that make a difference.

Why Board Evaluations Matter

The Australian Institute of Company Directors (AICD) and ASX Corporate Governance Principles both recommend regular board evaluations. But beyond compliance, there are compelling practical reasons to evaluate your board:

Identify performance gaps early. Regular evaluations help you spot issues before they become serious problems. They can help to identify skills gaps, communication breakdown, or underperforming directors.

Improve board dynamics. Evaluations create a structured opportunity to address how the board works together. This includes decision-making processes, meeting effectiveness, and interpersonal relationships.

Demonstrate accountability. Evaluations show stakeholders that directors take their responsibilities seriously and are committed to continuous improvement.

Support succession planning. Understanding your board's current capabilities helps you identify what skills and experience you'll need in future directors.

Enhance director development. Individual assessments help directors understand their strengths and areas for growth, supporting their ongoing professional development.

Types of Board Evaluations

There are three main types of board evaluations, each serving a different purpose:

1. Whole Board Evaluation

This assesses the board's collective performance – how well the board functions as a unit. It typically examines areas like strategic oversight, risk management, meeting effectiveness, and board culture.

Best for: Annual comprehensive reviews, identifying systemic issues, improving board processes.

2. Individual Director Evaluation

This focuses on each director's contribution, including meeting preparation, participation quality, skill application, and alignment with board expectations.

Best for: Performance discussions, re-appointment decisions, identifying development needs.

3. Committee Evaluation

This reviews the performance of board committees (audit, risk, remuneration, etc.), including their terms of reference, composition, and effectiveness.

Best for: Ensuring committees are fulfilling their mandates, optimizing committee structures.

Most boards should conduct all three types, though not necessarily in the same year. A common approach is an annual whole-board evaluation, individual evaluations every two years, and committee evaluations as needed.

When to Conduct Board Evaluations

The ASX recommends listed companies conduct board evaluations annually, and this is good practice for all organisations. However, smaller boards or not-for-profits might opt for evaluations every two years.

Timing considerations:

• After the annual general meeting when board composition is confirmed
• Early in the financial year to inform annual planning
• Following significant events (mergers, leadership changes, crises)
• Before director re-appointments are due
• Avoid conducting evaluations during particularly busy periods or when major decisions are pending. 

The Board Evaluation Process: Step by Step

Step 1: Define Your Objectives

Before you begin, be clear about what you want to achieve. Are you looking to improve meeting efficiency? Strengthen strategic oversight? Address specific concerns? Your objectives will shape the evaluation questions and methodology.

Step 2: Choose Your Methodology

Self-assessment questionnaires are the most common approach. Directors complete structured surveys rating the board's performance across key areas. This method is cost-effective and allows for honest feedback, especially if responses are anonymous.

Peer reviews involve directors assessing each other's contributions. This provides valuable insights into individual performance but requires a high-trust environment to work well.

External facilitation brings in an independent consultant to conduct interviews, observe meetings, or facilitate discussions. This is particularly valuable for deeper reviews or when addressing sensitive issues.

Chair-led interviews involve the Chair conducting one-on-one discussions with each director. This personal approach can surface issues that written surveys miss, though it requires a skilled Chair who can create psychological safety.

You can combine these methods using questionnaires for the whole-board evaluation and interviews for individual assessments.

Step 3: Design Your Evaluation Framework

Your evaluation should cover the key dimensions of board performance:

Strategy and Direction

• Does the board set clear strategic direction?
• How effectively does the board challenge management's strategic proposals?
• Is there an appropriate focus on long-term value creation?

Risk and Compliance

• Does the board maintain effective oversight of key risks?
• Are compliance obligations well understood and monitored?
• Is the board's risk appetite clearly defined and communicated?

Board Composition and Dynamics

• Does the board have the right mix of skills and experience?
• How well do directors work together?
• Are diverse perspectives encouraged and heard?

Meeting Effectiveness

• Are board papers timely, clear, and focused on the right issues?
• Is meeting time used productively?
• Does the board spend appropriate time on strategic versus operational matters?

Relationships

• How effective is the relationship between the board and CEO?
• Are relationships with key stakeholders well managed?
• Is there constructive engagement between the Chair and directors?

Individual Contribution (for individual evaluations)

• Meeting preparation and attendance
• Quality of contributions and questions
• Application of expertise
• Commitment to development

Step 4: Conduct the Evaluation

Communicate clearly. Explain the purpose, process, and timeline to all directors. Emphasize that the goal is improvement, not criticism.

Ensure confidentiality. If using questionnaires, consider whether anonymous responses would encourage more honest feedback. For smaller boards where anonymity isn't possible, establish ground rules about confidentiality.

Allow adequate time. Give directors sufficient time to complete questionnaires thoughtfully or prepare for interviews. Rushed evaluations produce superficial results.

Use your board portal. Modern board management software can streamline the evaluation process through secure surveys, progress tracking, and centralized documentation.

Step 5: Analyze and Report Results

Look for patterns across responses rather than fixating on outliers. Identify both strengths to maintain and weaknesses to address.

The evaluation report should be concise, balanced, and actionable. It typically includes:

• Overall performance summary
• Key strengths
• Areas for improvement
• Specific recommendations
• Comparison to previous evaluations (if applicable)

Step 6: Discuss Findings with the Board

Schedule a dedicated session to discuss evaluation results. This is an opportunity for constructive dialogue about how the board can improve.

Create psychological safety. Frame the discussion around growth and improvement, not blame. Acknowledge that all boards have room to develop.

Focus on actionable insights. Don't get stuck debating scores or individual comments. Instead, identify 2-3 priority areas for improvement that will make the biggest difference.

Individual feedback. For individual evaluations, the Chair should meet privately with each director to discuss their results and development opportunities.

Step 7: Create an Action Plan

An evaluation without action is wasted effort. Develop a clear action plan that specifies:

• What will be improved
• Who is responsible
• Timeline for implementation
• How progress will be measured

Common action items include:

• Adjusting board paper formats or timing
• Revising committee terms of reference
• Scheduling director training on specific topics
• Recruiting directors with particular skills
• Changing meeting agendas or time allocation
• Improving board-management information flow

Step 8: Follow Up

Board evaluations should drive continuous improvement, not gather dust in a file. Schedule periodic check-ins to review progress on action items. Consider whether improvements should be incorporated into the next evaluation to track progress over time.

Common Pitfalls to Avoid

Going through the motions. If directors sense the evaluation is just for show, engagement will be minimal and results meaningless. Demonstrate that you're serious about acting on findings.

Being too generic. Evaluation questions that could apply to any board won't surface specific insights about your board. Tailor questions to your organisation's context and strategic priorities.

Avoiding difficult conversations. If there are known issues – an underperforming director, tension between the Chair and CEO, lack of strategic focus – the evaluation should address them directly, not dance around them.

Making it punitive. Board evaluations should be developmental, not disciplinary. If directors feel they're being judged rather than supported to improve, they'll become defensive rather than reflective.

Ignoring positive feedback. It's easy to focus solely on problems, but identifying what's working well is equally important. Acknowledge strengths and consider how to build on them.

Delaying action. Don't wait until the next evaluation to implement improvements. Act promptly on findings while momentum is high.

Special Considerations for Different Organisations

Not-for-Profit Boards: Often have volunteer directors with varying levels of governance experience. Evaluations should include education components and may need simpler formats. Consider whether evaluation questions adequately address mission fulfillment and stakeholder engagement.

ASX-Listed Companies: Face specific disclosure requirements under the Corporate Governance Principles. Ensure your evaluation process and reporting meet ASX expectations, particularly around independence and the use of external facilitators.

Small Boards: May find formal evaluation processes feel excessive. Even a simple annual discussion led by the Chair about "what's working and what's not" is better than nothing. As the organization grows, evaluation processes can become more structured.

Government Boards: Often have specific evaluation requirements under relevant legislation or ministerial guidelines. Ensure your process aligns with these mandates while still generating genuine insights.

The Role of Technology

Modern board portal software can significantly streamline the evaluation process:

• Secure surveys allow directors to provide confidential feedback directly within the platform
• Progress tracking helps ensure all directors complete evaluations on time
• Historical comparison enables year-on-year performance trending
• Action tracking keeps improvement initiatives visible and accountable
• Document management centralizes evaluation reports and related materials

Rather than cobbling together external survey tools or managing paper-based processes, integrated evaluation features save time and improve participation.

Moving Forward

Board evaluations are about building a culture of continuous improvement. They are an ongoing commitment to getting better at governance.

Start with a process that fits your board's maturity and capacity. A simple, well-executed evaluation beats an elaborate process that overwhelms directors or never gets completed. As your board becomes more comfortable with evaluation, you can expand and refine your approach.

The ultimate measure of success isn't the evaluation itself – it's whether your board operates more effectively as a result. If evaluations are leading to tangible improvements in how your board functions and the value it provides, you're on the right track.