Despite best intentions, board members may occasionally become disengaged from their critical oversight responsibility. This is usually due to dysfunctional group dynamics, including rivalries, dominance by a few directors, and poor communication which hinders the board from engaging in the collective discussion necessary for effective decision making.
The board may also not have the proper internal structures that facilitate carrying its responsibilities for performance assessment. It is commonplace to establish officers or committees whose duties include gathering and analysing evaluation results, before making them available to the board for consideration. The decision-making process of transferring these tasks to the board’s entire attention or even confining them to the CEO and management team is unlikely to produce effective supervision.
The board will likely not be able to judge the overall performance of their company if it doesn’t consider behavioural aspects when evaluating the individual director’s contributions. This results in a perfunctory procedure that is used to satisfy listing requirements, or to make a statement to good governance.
There are many ways boards can enhance their performance and fulfill their fiduciary responsibilities. The starting point is to focus on the quality of the human interactions that occur in the boardroom. This can be achieved by ensuring that the board is flexible and resilient, as well as strategic in its approach. It’s also essential to provide the right mix of abilities and experiences and gender diversity. This allows the board to have a wider range of perspectives to be gained and allows them to better address crucial issues. This helps the board to create an environment of collaboration that encourages open dialogue and different perspectives.
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