The Importance of Board Analysis

Board analysis is a study of the organization, structure and composition of a board. Its aim is to determine whether the board is composed of experience, expertise as well as impartiality from both inside and outside to oversee and advise the management and formulate strategy. It also aims to determine whether the board functions as a group and whether it is assisting the CEO effectively and guiding the company’s growth.

The best boards are distinguished by a sense of trust, openness, and collaboration. They are well-versed in the organization’s structure and can challenge management with difficult questions. They are focused on the long-term health of the company and are able to identify risks and opportunities. They work with stakeholders so that the board is able to understand their own stake, work towards changes in corporate behavior and make a positive contribution.

According to McKinsey’s world-wide study of more than 800 directors, the best boards are a mix of non-executive directors (NEDs) with years of experience and executives who have an in-depth understanding of the business. They have a clear structure and set of guidelines to determine their decisions, and they’re focused on improving the effectiveness of the board and its committees.

A board assessment can be an excellent tool for a board to evaluate its performance and give feedback to the Chairperson or CEO. Some boards do not have this as a top priority. The time taken to conduct an objective, third party evaluation will open the eyes of board members to the possibility of pitfalls and encourage them to evolve from good to great.

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