The Investment Association in the UK and EY have published a joint report Board Effectiveness: Continuing the Journey, based on a series of individual meetings and roundtables held jointly by the joint project partners, which brought together chairmen, directors and senior investors to debate the issue.
The report confirms that each board is unique and there is no one-size-fits-all template for an effective board. But what did emerge that is relevant to all boards is the need for boards to keep their finger on the pulse of evolving practices, and the importance of individual board members sharing their ideas and experiences.
Some clear recommendations highlighted in the report include the importance of having a robust board evaluation strategy; the need to create a strong pipeline of future boardroom talent by getting talent further down the organisation ‘board-ready’; and the requirement for both chairmen and non-executive directors to balance their portfolio of roles, bearing in mind the possibility that a time-consuming corporate event could occur at one of their companies at any time.
Other key points include: the benefits of regularly discussing the CEO’s tenure or setting the expectation at the time of appointment that the CEO’s tenure is for a particular phase of the company’s development or duration; the need to structure the board’s information flows so they are relevant and useful, prioritising quality over quantity; and the value of involving investors in defining the board’s focus areas and the attributes to be sought in new board appointments.
The report covers the role of the chairman and non-executive directors; progress on diversity; board succession and the work of the nomination committee; the purpose and impact of board evaluations; information flows to the board; and the role of investors and be found here.