Top Practices for Board Development, Evaluation, and Composition

Today’s boards have a tall order. The demands of oversight are significant and top performing boards are expected to contribute generatively to shaping organizations that are future-focused, resilient, and agile enough to respond in a complex and changing world.

Boards that effectively navigate today’s opportunities and challenges start with an intentional approach to building and maintaining a strong and resilient board. The following four practices are key to meaningful board evolution:

• Board Composition and Leadership: An intentional approach to curating a group of directors with strong leadership and the right skills, experience, diversity and competencies to work together effectively; includes regular renewal to bring fresh perspectives as the organization evolves
• Board Evaluation: Helps the board target and prioritize opportunities for focus and improvement
• Director Feedback: Helps each director bring their best and approach their work with a learning mindset
• Board and Director Development: Supports a culture of continuous learning and growth in both the hard skills (e.g., knowledge, experience) and the soft skills (e.g., preparation, dynamics and alignment)

Watson’s View: A Layered Approach to Governance

Developing and maintaining the right board starts with considering the board’s world. Composition, feedback and learning are all about readying the board to shape the future of the organization.

At Watson, we recognize that three layers make up the world of the board and apply to everything it does. When all three layers are healthy and aligned, directors feel confident, prepared, and engaged to shape the organization’s future and tackle its most important issues. Board effectiveness in the real world means qualified, diverse leaders at the board and management levels, supported by sound structures and practices, who work collaboratively with the right focus. Our three-layered model helps explain how all these elements interact.

A strong board experiences at the core of the model for a reason. The board requires the skills, experience, competencies, leadership and dynamics to engage in a healthy and productive relationship with the CEO and management and undertake the board’s work across a wide range of areas.

Each of the practices below contributes to building and maintaining a strong, effective board.

1.   Board Composition and Leadership: Building a Strong Board

Think beyond the skills matrix. Competencies, dynamics, diversity, and deliberate renewal are key.

As the layered model indicates, Directors & Dynamics are at the heart of effective governance. Boards (often via their Governance Committees) need strong practices, rigour, and a strategic approach to renewal and recruitment to ensure the board has:

• The right skills and experience around the table to address the matters at hand as well as the future unknowns, to safeguard and support your purpose for the long term
• Multi-dimensional diversity of perspectives that improves the quality of dialogue and decision-making
• Director competencies that strengthen the collective effectiveness of the board and the organization
• Positive and constructive dynamics that create the conditions for candour, courage, and analysis
• Prepared board leaders who can be effective as committee or board chairs, because the right chair makes a significant difference
• Regular and deliberate board succession that brings fresh perspectives to the work, without leaving gaps
• Practices to regularly re-examine board composition and leadership, and take action to evolve the board

All of the above is underpinned by purpose; it starts with knowing why the organization exists, and then translating that into the real context of the organization and its board, at this particular time.

Intentional forward planning with a good renewal and recruitment process enables the board to find exceptional directors who add value to the board, keep pace with a changing context and provide resilient, effective oversight, insight, and foresight.

Ask yourself:

• Have you reviewed the matrix of skills, experience, and diversity in light of the organization’s purpose, context, and forward-looking strategy?
• Is there a process to understand not just how today’s directors contribute to the matrix, but how that mix will evolve with expected renewal, and where the risks might be?
• Do your practices for finding and vetting directors deliver the skills, experience, competencies, and diversity your board needs? If not, what can be done to address this, for the short term and long term?^[1]
• Do you pay enough attention not just to “what” a director brings (skills, experience, diversity) but “how” they bring it, including director competencies and contributions to trust, relationships, inclusion, and dynamics?
• Is there an appropriately paced rate of change through board turnover, so the board environment remains one of fresh ideas and courageous thought? Are the right terms, limits, and practices in place to support this?
• Are there enough directors who are interested in and prepared in their skills and capabilities to undertake committee or board leadership? If not, do you need to adjust how you find directors, or how you develop them?

2.   Board Evaluation: Understanding Your Board’s Performance

Feedback helps boards prioritize and learn. A strong board evaluation that feeds forward into planned and prioritized action keeps boards at their best.

Although governance is rarely one-size-fits-all, it is universally acknowledged that regular, purposeful and meaningful evaluation is important to all governing bodies. Done wrong, an evaluation can be a waste of resources and potentially harmful. Done right, it can take a board from good to great.

So how does a board get evaluation right? The keys to a successful process are to ensure the evaluation is carried out with clear purpose, is engaging for board members and management, follows a thoughtful process specific to the organization’s stage of development, and produces meaningful results that can be acted on.

A well conducted board evaluation provides a platform for discussion where board members as a group can review their functioning and explore everything from role clarity to alignment on key issues to quality of materials and meetings, and more. A good evaluation explores all the layers in the Watson governance model, as well as the ways they are connected around purpose, strategy and risk.

Because a board evaluation requires connecting the dots and understanding nuance and complexity, a strong process includes multiple perspectives (directors as well as management) and a combination of methods. A survey alone is rarely enough; it might identify things that can improve, but miss exactly what, or how, or the ways things are interconnected. Interviews make a big difference, and they also set the stage for the human part of feedback, building trust and buy-in for the process.

Ask yourself:

• Does your board have a regular practice of meaningful evaluations, beyond a tick-box exercise?
• At least every three years, if not more often, is that process led by an external resource, to ensure objectivity and calibration, and draw out things that people may not surface through an internally-led process?
• Does the process consider the full range of areas that are key to the board’s effectiveness, paying balanced attention to the human side and the structural side?^[1]
• Do directors bring their best to the process, investing the time, engagement and candour?
• Does the process include gathering insights from those in management who work closely with the board (and potentially others), to ensure the picture of board effectiveness goes beyond the board’s own view?
• Is the process designed to craft real insights and an actionable plan, and build buy-in and accountability?
• Is there a rich debrief dialogue, where the board digs into the feedback and aligns on next steps?

3.   Director Feedback: Enhancing Board Contributions and Accountability

Directors deserve feedback. A director feedback process helps directors grow, learn and bring their best selves to the board. It also helps the collective board with development and succession planning.

In today’s governance environment, it is common for board members to participate in individual director feedback processes. This is about giving directors direct and personalized feedback to help them reflect on their individual responsibilities and contributions and understand how they are perceived in the boardroom. Some boards invite Management to provide feedback, which can provide insight on the director’s impact on management. Done well, a director feedback process helps a director continuously strengthen their contribution and provides a sense of accountability.

Director feedback helps the board at the collective level too, by identifying where there are collective or individual gaps, which can inform board development or recruitment. It also gives directors an opportunity to share their own plans, including timing on the board or interests in board leadership.Just as with a board evaluation, there is no “one right way” to gather and provide director feedback. The process should match the stage of development of the board, and the expectations of the directors and the previous experiences of directors with feedback. For example, if a board has never done either board evaluation or director evaluation, we might encourage the board to start with the collective evaluation and build some muscle and comfort with that kind of reflection, rather than going straight to personalized feedback. Or, if a board is struggling with matters of trust amongst directors, inviting director feedback might require a different process. One thing to always consider is the importance of giving feedback not only on what the director does but how they contribute to positive and effective dynamics, dialogue and decision-making.

Ask yourself:

• Do your directors receive individualized feedback? Does the feedback include both the “what” and the “how” of their contributions? Are there development suggestions?
• Is the feedback constructive and useful? Are directors skilled in how to give good feedback? Does the process give an avenue, such as an external resource, so directors can be entirely open and candid in their feedback?
• Does the feedback recognize the unique and specific contributions of a given director, while also holding each director accountable for shared norms and expectations?
• Does the process give each director the opportunity to discuss their feedback in a confidential and supportive discussion (often with the chair and/or Governance Committee chair)?
• Is each director asked to confirm their priorities for development and improvement?
• Are collective strengths, gaps and development needs fed into board succession and development priorities?

4.   Board and Director Development: A Continuous Learning Process

A board’s context is always changing. The best directors adopt a continuous growth mindset. From onboarding to just-in-time insights on emerging issues, continuous learning is key to an effective board.

Board development is not just about keeping up to date on industry trends and specific areas of expertise. Development and learning in areas such as board dynamics, alignment and board practices are just as important to an effective board.

Board evaluation, director feedback and a continuous learning mindset all contribute to help the board craft an approach to board and director development.

Onboarding is the starting point for director development; the faster new directors are up to speed, the faster they can contribute. A strong orientation program provides directors with more than binders of information; it allows new directors to understand the current context, build relationships with key members of management, and understand where they can contribute here and now. Onboarding is also a chance to set expectations around director engagement and performance expectations.

Good boards are committed to continuous learning. Valuable board education can include deep dives (such as retreat sessions), just-in-time learning, external speakers, internal speakers, curated readings, case studies, tabletop exercises and external education. Regardless of the avenue chosen for education, the key is to ensure the education is relevant, timely and engaging.

Directors have a personal role to play in development too; effective directors are curious, active learners who seek new knowledge relevant to the needs of the board, whether macro trends, sector challenges or specific governance areas.

Ask yourself:

• Is your onboarding effective? Are new directors able to contribute in a meaningful way early in their tenure?
• Does the board have an annual learning plan that prioritizes areas where the board needs to go deeper together? Does it combine organization-specific learning with outside-in views and expertise?
• Does the board’s learning get hands-on, with tabletop and scenario exercises that can build skills, preparedness and agile mindsets (i.e., not just information or expertise)?
• Are directors encouraged and expected to learn on an ongoing basis, in a variety of modes? For example, do directors and management actively seek and distribute interesting articles, podcasts, or learning opportunities?

Start here

You’ve reached the end of this article, but it might just be the beginning of evolving your board to the next level.

A top performing board rarely happens by chance. And as the world continues to evolve, so must the board continue to evolve to remain effective in providing oversight and leading in a complex and changing environment.

The four practices discussed in this article provide a framework for shaping, evaluating and developing your board. You owe it to your organization to ensure your board is ready to shape the future.

Want to ensure your board is ready for the future? Contact Watson today to learn how we can help your board evolve and lead in a complex world.