Board Evaluation — an Introduction

It has been called by many different names: board review, board assessment, board evaluation, performance evaluation, board appraisal, and board effectiveness… now it is to be referred to as board performance review, when the new FRC Corporate Governance Code comes in to use, from 2025.

It is undertaken in a sometimes bewildering variety of ways, and by multiple providers. Chairs, senior independent directors, and company secretaries do it. Psychologists and academics do it. Headhunters do it. Even accountants and remuneration consultants do it.

Despite the urging of Sir David Walker as long ago as 2010, to date there is still no official or mandatory text or ‘bible’ which governs this area or sets standards and norms, aside from what is contained in the Code itself, since it is rightly felt that there are dangers in being too prescriptive.

Against this background, the purpose of this website is to offer a guide to our firm, its philosophy and approach, and its personality.

In fact, the subject of board evaluation used to be viewed by some board members with trepidation, with many by indifference or resignation, and only by a few with real enthusiasm. But for boards to undertake evaluation is now an established part of their annual schedule of activity, whether internally or with external assistance.

From 2010, with the publication of the new UK Corporate Governance Code, FTSE 350 companies whose primary listing of shares is on the London Stock Exchange were required to evaluate their own performance with external assistance at least once in every three years.

They must also declare how they have chosen to undertake such an exercise, whom they have used to do it (and if any other relationships exist between the company and that provider), and most choose to give some account of the process and agreed actions for future improvement in their annual report.

The Financial Reporting Council has issued helpful guidance to accompany its latest Code, even though – as before –  it  makes clear this advice “is not part of the Code and should not be seen as a requirement of the FRC. It is aimed at contributing helpful context to a Board’s consideration of how they might go about complying with the Code.”

The section of this guidance which deals with board performance review is therefore incorporated in the Resources section of this website.

 

For more information on TIRBR, and the principles we uphold, please refer to our members’ website (www.tirbr.com)