Today’s investors want to know more about board evaluations than ever before. They want to see that the board has taken the process seriously - and will follow up on issues identified during the process. They want to see more disclosure about the process, the procedures - and the results. They want to know that the evaluation has focused on the board, its committees and on its directors as individuals. They are especially interested these days in hearing about changes that have been made as a result of board evaluations.
Corporate governance consultants, accounting firms, executive search firms, business consultants, management consulting firms, law firms, and membership organizations offer board evaluation and other governance services. More recently, board portal providers and providers of online board evaluation services have joined the list, some offering an array of standardized online questionnaires and reporting formats.
The website of The Society for Corporate Governance www.societycorpgov.org/ lists corporate governance consulting firms that provide various types of governance services in its Service Provider Directory and Society members often comment on and recommend firms their boards have used via the Society’s members’ only “Huddle” networking service. The websites www.thecorporatecounsel.net and www.optimizeronline.com both have lists of service providers, including corporate governance consultants who conduct board evaluations and other types of governance services.
To assist those charged with finding a governance consultant to work with the board on its board evaluation or to conduct a governance review, below are a series of questions and topics to consider.
It is worth the occasional reminder of the value and benefits to a board of having an independent third party conduct the annual board evaluation from time to time. Occasionally bringing a different perspective to the process and taking a closer look at how the board is functioning just makes sense and can lead to a more effective board.
When the same people, often using the same approach, conduct the board’s annual evaluations, we know that the process can become rote and new information is unlikely to surface. Further, the typical format and approach often doesn’t lend itself to teasing out subtleties. Bringing in a third party corporate governance consultant to conduct the evaluation changes the dynamic and can offer a different perspective.
There was a discussion recently in the Society for Corporate Governance Huddle about whether to allow board members to print board materials from the board portal. I responded gently (I thought) that board members and executives should be allowed to print board and committee materials if that made doing their work easier. In one response the company prevented board members from printing board materials and even if requested, would likely not change their policy.
My colleague Cherie Sorokin and I are in the midst of a skills assessment for a public company client, and are reminded again of the value of doing such an exercise.
While there are several ways to conduct a skills assessment, in our opinion an assessment will work best if board members themselves are actively engaged in the determination of desired board skills needed to further the company’s current strategy, and also participate in the identification and ranking of their own skills. In any event, a skills assessment needs to be tailored to the individual company and board in question.