Board Evaluation: Value and Performance

Board Evaluation: art or science? Qualitative or quantitative? Tick of approval or forward-looking?

The reality is that Board Evaluation is evolving rapidly. It’s all of the above and today there is no standard experience common across all Boardrooms.

Fidelio has carried out Board Evaluations for major quoted companies since 2016. Our approach has always been built around in-depth interviews with the Board and the Executive as well as observation and analysis of Board Meetings and Board material.

Chairs have chosen to work with us because of our understanding of shareholder and stakeholder expectations, the breadth of our experience, and the quality of our reports and recommendations. None of that has changed but we have noted in particular over the last couple of years that:

  • A much broader range of organisations are turning to Board Evaluation including quoted companies outside the UK, regulated subsidiaries, regulatory bodies, and major non-profit institutions
  • Chairs are seeing Board Evaluation as much more than a compliance exercise and are increasingly focused on (i) deriving meaningful insights on key issues and (ii) using the recommendations and findings to align the Board and increase effectiveness
  • The link between Board Evaluation, ESG, and access to capital is becoming more explicit

As such it is not surprising that Chairs are increasingly engaging to shape and develop Board Evaluation and that we find ourselves at an important juncture.

ADDING VALUE

Of course, Board Evaluation should provide comfort that the Board is alert to its duties and diligent in the performance of those duties. However, we are increasingly seeing higher expectations regarding Board Evaluation outputs focused on purpose and value. In short, is the Board helping the organisation to achieve its purpose and generate value both for shareholders and for stakeholders?

A well-structured and thoughtfully conducted Board Evaluation should shine a light on this key question and also provide recommendations and a pathway as to how the Board can increase its effectiveness and value contribution.

At Fidelio we are very pleased to be tailoring Board Evaluation to deliver this result. This is surely the future – Evaluation as a valuable tool for Chairs, shareholders, and all stakeholders who have strong interest in enhancing the Board’s contribution to value and purpose.

In this Overture we look at some of the features and trends in Board Evaluation and how this increasingly important governance tool is evolving.

To continue reading, please click here.

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