Board analysis is the examination of the composition of a board, its structure, and operations. Its goal is to determine if the board has a balance of expertise, experience, as well as impartiality from both inside and outside to oversee and advise the management and formulate strategies. It also aims at understanding how a board operates as a unit and if the board is effectively supporting the CEO and assisting in driving the company’s growth.
The best boards are those that have a dynamic of openness, trust and collaboration. They have a clear understanding of the business’s ecosystem and they are able to ask management crucial questions. They are focused on the long-term health of the company and can spot risks and opportunities. They work with stakeholders to ensure that the board understands their interests, and can push for changes in corporate behaviour and make an impact.
According to McKinsey’s global survey of more than 800 executives and directors The most effective boards are comprised of a mix of experienced non-executives (NEDs) and executives who have a deep understanding of the business. They have a set of policies and a structure that guides their decision making, and are focused on enhancing the effectiveness of the board.
A board evaluation is an important tool for a board to evaluate its performance as well as provide feedback to the Chair and CEO. However there are many boards that have not taken this as a top priority. By conducting an objective third-party evaluation Board members can become more aware of the potential pitfalls.
