IoD - The Southern African Chapter of the Institute of Directors

Board Services Update 2009

The IoDSA continues to be a service leader in the area of Board effectiveness reviews and is able to boast some of the country’s most experienced facilitators in this field of expertise.

Stakeholders are increasingly demanding that companies boards which have the most power to influence are properly skilled, adequately experienced, have the combined knowledge to adequately address issues pertinent to the business and able to provide the level of direction and oversight necessary to engender increasing shareholder confidence in the organisation. The basic requirement for effective governance is firstly an effective board and secondly an effective management team and staff. It is an indictment that such an important body is usually poorly selected, rarely critically evaluated and not held to suitable account.

From the IoDSAs experience an internal self evaluation is flawed and represents form over substance. Just as you would not recommend that management or staff review their own performance so too you would not expect the one body that has the most influence and control over an organisation to assess its own effectiveness.

The board appraisal process is an interactive and complex process that should ideally be conducted by an independent third party with the required expertise and experience. This improves the qualitative aspect of the process considerably and enables board members to discuss more openly and freely the concerns they may have regarding board effectiveness. King II and King III support this.

An effective chair is a key element of an effective board and if the problem starts there which is often the case, then a self appraisal approach will not bring this to the fore as board members will generally fear reprisal or will not want to be seen to be critical. An independent facilitator is better equipped to deal with this aspect than a board member who might feel compromised.

The evaluation of a Board’s effectiveness in itself does not constitute good governance. It is the action plan that arises out of the process that improves board effectiveness and efficiencies.

We have found that regular and properly conducted board evaluations can contribute significantly to board dynamics, board focus and effectiveness as well as enhance individual director performance levels and can strengthen the importance of the board’s role within the organisation.

The IoDSAs methodology and the results of the evaluation comprise both a quantitative and qualitative analysis which we are able to benchmark against a comprehensive database of rankings we have developed over the past three years. This enables an organisation to assess the quality of its board processes and procedures in relation to other similar organisations.

This service is closely aligned to the IoDSAs quest to facilitate the increasing improvement of director and board effectiveness to ensure better run enterprises and to contribute more positively to the economy.