9 Steps to a better board review questionnaire

by Richard Sheath

Development

How to avoid the annual board evaluation turning into a compliance chore

For Chairs and Company Secretaries, it can seem that as soon one board evaluation is over, it’s time to start thinking about the next one. When everyone’s busy, it’s tempting just to issue directors with the questionnaire you used last time and consider the job done. This approach soon becomes a self-fulfilling prophecy: if directors believe the board questionnaire will be a waste of time, they invest little time or effort in it and, unsurprisingly, it gives them no insight or value.

It becomes a chore.  And getting people to engage – to consider carefully their responses, seek opportunities for improvement and provide insightful comments – is no easy task.

Here are a few thoughts on how you can prevent questionnaire fatigue and get the most out of the process.

Good practices to consider...

Be realistic. It’s about making the Board effective, not checking compliance with a dry and predictable set of standards. The questionnaire needs to capture all the main factors: composition, dynamics and information…. And strategy, executive succession, risk and controls. This year, with the new Code, assessing and influencing culture should be in there too.

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Things to avoid...

Don’t try to cover everything. It can’t be exhaustive – or it will just end up becoming exhausting. But a simplistic list of ten questions just won’t cover the ground. And overly-short questionnaires quickly turn into generalisations: asking “To what extent do you feel the Board is meeting its responsibilities?” is likely to produce little insight.

Good practices to consider...

Balance consistency with freshness. On top of the established elements of board effectiveness , think about where the business is today and what that means for the Board’s direction. You might want to add in a few questions covering the Board’s hot topics – how it’s handling a major acquisition, a change in geographic focus or the implications of a cyber breach – along with a couple of questions specifically following up on the last review.

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Things to avoid...

Don’t tailor it too much. A few “fresh” questions should be enough to stave off staleness. Ask a core set of consistent questions every time so you can compare progress year on year (and to benchmark against other boards if you’re using our Thinking Board® platform).

Good practices to consider...

Include the right people in the board evaluation. Extend the respondent list to include senior managers and advisors who regularly interact with the Board and committees. Casting the net wider will give the Board a better understanding of its value and help you to spot practical opportunities for doing things differently. And divergences in views can be telling: non-executive directors may think they understand the business well, for instance, while the management team beg to differ…

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Things to avoid...

Don’t keep the results just for the Board. The golden rule for any questionnaire – whether it’s an employee engagement one or a board review – is to report back to those who took the time to participate. It’s a question of respect and motivation for next time round. And don’t rush things. Set aside enough time to debate the results thoughtfully and work out what’s going to change.

Good practices to consider...

Use a convenient questionnaire platform. An online governance platform saves valuable time, makes it easy to distribute questionnaires widely and, critically, ensures responses are kept secure. Automated reporting provides a set of visual and clear results, helping the Company Secretary to rapidly draw out the main messages into a clear narrative to set up a constructive discussion at the Board.

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Things to avoid...

Don’t struggle with a paper-based review which takes up considerable time in inputting scores and manually preparing the results. The hassle of dealing with a review done in this way can lead to an overly simplistic questionnaire being used in the first place.

Good practices to consider...

Consider a committee deep dive. If you’ve been using questionnaires for a while, now may be a good time to focus more deeply on a particular area of board performance. The committees lend themselves well to this approach, and it’s often worth covering one committee a year in more detail. The Audit Committee in particular lends itself to this: it’s complex and has to cover a lot of ground. But the other committees will also benefit from a detailed check-up from time to time.

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Things to avoid...

Don’t just tack a generic question onto the end of the board review questionnaire, asking, “How effective are our committees?” They are a vital ingredient in the board effectiveness mix with the Board relying on them for detailed scrutiny and to fulfil major responsibilities. Every year, you should at least check on the dynamics, chairing and the main aspects of each committee’s remit – and how they’re interacting with the main Board.

Good practices to consider...

Get the questions right. Make an effort to get engagement. That means questions which force respondents to think. Open questions such as, “How satisfied are you with the standard of board information?” for more specific answers than, “Are you satisfied with the board papers?”

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Things to avoid...

Beware of slipping into “regulator speak” or jargon; it quickly becomes predictable or causes eyes to glaze over. Avoid leading questions and phrase questions carefully to avoid obtaining answers that might unsettle fragile relationships. Also watch for response scales that are too detailed or too narrow, pushing everyone to opt for various shades of “Good”

Good practices to consider...

Consider the reporting. How you weight answers and present the results of your questionnaire can be the difference between a superficial, tick-box exercise and a valuable review that sparks a useful discussion. If an area has been marked low, try to understand from comments why or, if there aren’t enough, make sure it’s explored at the board discussion

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Things to avoid...

When you present the results, don’t just display average scores. Look at the range of responses and the underlying detail that gives you the richer picture and helps identify development opportunities. Don’t automatically discount an outlier: could they be highlighting an issue the others aren’t willing to call out? Or perhaps only one person needs help with a specific problem.

Good practices to consider...

Give it a rest. Use an interview-based external board evaluation as an opportunity to rest the questionnaires for a year. Interviews give the external reviewer time to probe views and to triangulate between directors. The questionnaires can be resumed the following year, taking into account the insights of the external review.

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Things to avoid...

Avoid an external review that feels too similar to your internal reviews. Increasingly, even when facilitating a questionnaire-based review, we are recommending that it should include observation of a meeting, as this allows us to evaluate the Board in action and to see the information going to the directors.

Good practices to consider...

Make the annual board evaluation part of a consistent board development plan. Use the annual evaluation as an opportunity to stop and reflect. We haven’t yet come across the perfect Board. Even the best ones have areas they can improve on, and they are the ones who risk slipping into complacency or hubris.

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Things to avoid...

Avoid seeing it as a standalone review. What’s gone well and not so well is helpful, but the real benefit is in knowing what needs to change in future. It needn’t be a long list. Try to pin down a few quick wins – a topic to include in the agenda (better still, to remove) or clearer breaks. But the bigger impact improvements take time and will probably be a complicated equation, needing consistent work on the root causes.

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