Despite their best intentions, board members may be disengaged from their crucial oversight responsibilities. This is usually due to poor group dynamics like rivalries, dominance by a few directors, and poor communication which prevents the board from engaging in the collective debate required for effective decision making.
It could also fail in establishing internal structures that are suited to the board’s performance assessment duties. It is common to form officer roles or committees that are responsible for gathering and analysing evaluation results, before giving them to the board for consideration. Delegating these issues to the board’s entire attention or even delegating them to the CEO and management team is unlikely to result in effective supervision.
The board is likely to not be able to judge the overall performance of its company if it does not include behavioural considerations when evaluating the individual director’s contributions. This typically results in a process that’s perfunctory and performed solely to satisfy listing requirements or pay lip service to best-practice governance.
Fortunately, there are many ways for boards to elevate their performance and ensure that they’re meeting their fiduciary responsibilities. Concentrating on the high-quality human interactions in the boardroom is a good first step. This can be accomplished by ensuring that the board is adaptable and resilient, as well as business performance strategic in its approach. It is also essential to have the appropriate mix of experience and skills, including gender diversity. This helps the board have a wider array of perspectives, and more effectively address critical issues. This allows the board to create an environment of collaboration that encourages open communication and diverse perspectives.