The board should set standards for its own performance
A governance effectiveness review is designed to serve a number of key purposes:
- It offers directors the opportunity to hold a mirror to their own practices and processes, and to identify those matters that require attention.
- It facilitates greater openness about the importance of good governance.
- The process compels directors to examine their strategic responsibilities, their decision-making processes and stakeholder relationships.
- The process encourages directors to talk openly about their various views of the board’s performance.
- It closes the loop in the organisation’s performance measurement circle.
- The peer and self-assessment provides an otherwise hidden snapshot of shared opinions about the contributions made by individual directors.
- A benchmark is developed against which future board performance reviews can be set.
- The process results in the development of performance improvement targets, objectives and action plans that become the focus of much of the board’s internal attention for the coming year.
- It is an aid to succession planning.
- It identifies areas where their personal contribution could be enhanced.
- It is an expression of accountability to stakeholders.