As a board member, you should know how to deal with outside counsel. Your board members should not be compelled to divulge sensitive information, such as director names or compensation levels. As a board member, you can take advantage of attorney-client privilege to keep your responses confidential.
Data consulting services are usually provided by attorneys. To ensure that you get the best possible service, ask for references from previous companies. In addition, inquire about the time frame of the project and the quality of references.
Audit of current practices
The Board of Directors should conduct an audit of its current practices to improve the effectiveness of its governance structure. Governance audits may focus on specific areas, such as the effectiveness of the board's compensation system, or they may evaluate the effectiveness of committees.
The results of a governance audit may include recommendations for change, and implementation assistance. Other services include research and comparison of practices with peers and a written report that summarizes the findings.
A governance consulting service may include a variety of advisory or consultative activities, such as interpreting policies and procedures, conducting board evaluations, participating on standing committees, conducting limited-life projects, responding to routine questions, and participating in meetings.
These services may include working with UNC System Office and several professional organizations and serving as liaisons between the University and outside groups. Some of these activities may involve the use of standardized online questionnaires.
Analysis of current board effectiveness
The analysis of current board effectiveness by Data Consulting Services included a survey of the members' self-assessment of performance and maturity. This survey included questions related to board performance, process, documentation, and expectations.
The results revealed six factors: four were primarily "how" factors, two were primarily "what" factors, and one was a combination of the two. In other words, the study found that each component of the effectiveness score contributed to its rating of the effectiveness of the board.
The survey was administered by a large Australian consulting firm specializing in research and evaluation of boards. It measures four broad dimensions of board effectiveness: structure, role clarity, board composition, and process.
Its findings correlate with previously suggested categories of effective board performance. The survey also assesses how the board meets and conducts business. The data was anonymous. Further, the survey was approved by the ethics committee of the second author's university.
Director peer evaluation
Boards are increasingly utilizing director peer evaluation tools to formalize the assessment of individual directors. Peer reviews rate a director's knowledge, input, and interaction with fellow board members on a one to five scales.
Each director's peers evaluate him or her on the quality of their input and interactions during meetings. The independent chairman also uses the peer assessment results to guide discussions at annual director reviews. But peer evaluations are not without problems.
To make sure that the process is a success, board members must first determine the purpose of the peer review. In some cases, a director may find that they do not feel as though they're being evaluated as they should be.
Boards that want to improve their effectiveness can use director peer evaluations as an opportunity to learn how their peers evaluate their performance. They can also use peer evaluations to decide whether they should remove a director, increase the number of board members, or change the composition of the board.
Education of the board on governance trends
The focus of board education sessions should be on the current state and future of the industry, addressing the most pressing challenges and opportunities. Board members should also be encouraged to participate in such sessions to share their experiences and learn from each other.
Board education sessions should be anchored in full board sessions, but committee leaders should also set the expectation that all members will participate in continuing education programs. Continuing education programs can enhance director performance and help them oversee emerging challenges and issues.
In addition to attending formal educational programs, directors can choose to participate in webcasts and academic programs sponsored by governance-focused associations.
Investing in ongoing education is crucial for all directors. Today's corporate boards are faced with an increasingly complex governance landscape - balancing an uncertain risk landscape with evolving reporting and disclosure requirements. In addition, their directors are expected to manage heightened expectations from investors and stakeholders.
The education of board members is an investment in their skill set and can help ensure that boards meet those expectations. However, if board members are not prepared for such changes, it may be too late to implement change.
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