Saturday, November 23, 2013

An Effective & Efficient Board

The Effective Board can Connect all the Right Dots Well.

The Board’s main responsibilities include, but not limit to strategy oversight, governance, and it needs to touch the key topic such as talent management, information management, GRC disciplines, etc. However, how to evaluate the effectiveness & efficiency of Board?

Assessing Board effectiveness and efficiency through questioning: As a Board of Directors is responsible for oversight and direction of a business or organization so evaluating the performance of a Board of Directors comes down to two questions: 1) Is the Board of Directors directing management effectively and appropriately by establishing objectives and defining operational and management parameters limiting management authority? 2) Is the Board of Directors monitoring and evaluating management and operational performance to ensure efficient and effective progress toward objectives and compliance with operational and management parameters?

The Effective Board can connect all the right dots well: If the board is effective and efficient by results and by how well the organization is connecting all the right dots (people dots, awareness dots, policy dots, regulatory dots, lessons-learned dots, information dots, process & capability dots. etc.). Why is connecting all the right dots critical? Because strong evidence from business studies revealed these organizations had handbooks, policies, incident reporting, annual/general training, threat assessment teams, but they failed to prevent preventable incidents because their organization was not equipped to connect all the right dots and their people were not equipped to do the right things and not equipped to do all the things their policies, obligations, and regulations say they should do.

Qualifying and Quantifying the efficiency and effectiveness of a Board of Directors are a little more complex: On the surface it is outcomes. Going a little deeper though it is the effectiveness of the Board of Directors in delegating to the senior management team and holding them accountable that supports the management team in achieving outcomes. Furthermore, organizational performance may not always be a good indicator of Board performance. An exceptional management team or an organization that provides a service or product in high demand may mask a weak or dysfunctional Board behind organizational success. This becomes very trying when the non-Board reasons for success are weakened or lost.

It takes the time to test Board effectiveness: If there is a crisis or visible material decision with immediate consequences, you can see if the decisions and actions of the board were done right with good results. Otherwise, there needs to be the long-term alignment of measuring board effectiveness by sharing responsibility for how well the organization performs. An effective board enables and directs management towards good outcomes, and monitors performance. If the results are lacking then the board effectiveness must be questioned. 

An effective and efficient Board can identify and mind the gaps on their own Boardroom turf: Such as purpose, culture, leadership, information, advice, debate, and self-renewal. The boards should develop policies and practices to ensure ongoing evaluation and education of current directors. Its board members need to be "willing" to change. Utilizing new technology can be helpful but if some members are not interested in receiving feedback or don't want to change the way they work or how the Board functions, then you're likely wasting your time and money.

An effective and efficient Board has a clear understanding of the provenance of the inoculation(s) from "silos thinking”: The BoDs share collective insight upon key issues, with the ability to address the critical differences between governance and policy issues, practice board rejuvenation processes etc. The measurability should be measured at the board member level to see how each individual is performing according to their roles and responsibilities, as well as the board’s performance as a whole based on a well set of governance principles.  


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