As reported in last week's Society Alert, action plans are among the key board and individual director evaluation components addressed in this new Practical Guide for Governance Committees from Board Advisor's: "Board & Director Evaluations in the 21st Century."
The comprehensive guide - which is equally instructive for corporate secretaries and other governance professionals supporting the governance or other board committee or directors charged with the evaluation processes - walks through and compares/contrasts various potential evaluation objectives and methodologies - including evaluation formats, content and participant scope, and internal vs. external facilitation; the evaluation debrief and discussion of results; and development of associated action plans.
Notably, author (former Merca Delta partner and Hay Group's Board Effectiveness practice Managing Director) Beverly Behan's 20 years of experience working with boards informs her view that a comprehensive board evaluation should generate at least 3 - 5 suggestions for improvement (i.e., action items), with "the most thoughtful and highly engaged boards" generating 8 - 10. Compare this suggested benchmark to the results of PwC's just-released Annual Corporate Directors Survey, indicating that just 68% of director respondents' boards actually made changes this year as a result of their board/committee evaluation process. While this is a huge increase from last year's PwC survey where just 49% of director respondents indicated responsive action, the percentage still lags the suggested range of action items assuming a robust evaluation process.
The guide includes instructive sample board evaluation action plans (Appendix A), sample board-established director and senior management expectations that may be used as standards for individual director evaluations and guidance to senior management (Appendix B), and a sample individual director feedback report (Appendix C). For those less familiar with the context, the guide also provides a helpful historical overview of board evaluations, including NYSE/Nasdaq positions, investor interest, and evolving corporate practices.