Board analysis is an examination of the structure, composition and operation of the board. Its aim is to determine if a board has the right balance of inside and outside expertise, experience and impartiality to provide management with advice and oversight and create a plan of action. It also wants to determine if a board works as a team and whether it is assisting the CEO effectively and assisting in the growth of the business.
The best boards are defined by a sense of trust, openness, and collaboration. They have a good understanding of the company’s ecosystem, and they ask management important questions. They are focused on the long-term health of the company and can identify risks and opportunities. They work with stakeholders so that the board can understand their own interests, seek changes in corporate behaviour and make a positive contribution.
According to McKinsey’s 2021 global study of more than 800 directors, the best boards are a mix of non-executive directors (NEDs) with expertise and senior executives who have a deep understanding of the company. They have clearly defined structures and a set of policies that guide their decisions, and they are focused on improving the effectiveness of the board and its committees.
A board evaluation can be a useful instrument to help a board assess its performance and provide feedback to the Chair and CEO. However it is not the case that all boards have set aside time for this. Through conducting an objective third-party evaluation Board members can become more aware of the potential pitfalls.
