As more boards come to know and trust Trewstar, we are increasingly asked to conduct independent board evaluations. In contrast to the traditional approach of filling out standard questionnaires, our process begins with detailed company research and extensive confidential interviews with directors and key management team members. Very importantly, we support the board in its execution of recommended actions based on key findings.
In this contemplative season, as we reflect on how our work has been useful and where it can be improved, we are sharing Three Truths and a Lie about board evaluations. We will explore this topic as a series over the next few days. We hope that our thoughts resonate with your own experiences. As always, we encourage you to share your ideas, questions and insights in return. Happy New Year!
Truth #1: It’s about effectiveness
A director once asked cynically whether we do evaluations because they trigger new search assignments to replace directors whose skills are no longer needed. While that can happen, it is more common to hear that the board is too big. No search assignment there!
The real purpose of a board evaluation is not to change board composition, but to improve the board’s effectiveness as a group and make each of its members a more valuable director. As one chairman said, “I want all the directors to leave every meeting feeling we made the best possible use of everyone’s time.”
Functioning successfully on a board is quite different from executive teamwork or sitting on a committee. Most new directors do not automatically know how to be effective and find themselves needing to learn quickly on the job. Every board is unique, and even successful experience on a given board does not automatically translate into success on the next one. The transition from a private to a public board can be challenging. And, joining a board with a mix of investors and independent directors can feel like a culture clash.
A meaningful board evaluation provides specific recommendations for adjusting board practices, fostering a better culture and optimizing the use of each director’s skills, experience and time. When this is done tactfully and illustrated with anonymous, verbatim comments from the directors themselves, everybody is a winner.