Despite the best intentions, board members may occasionally become disengaged from their critical oversight duties. This is usually due to dysfunctional group dynamics such as rivalries, dominance by a few directors and bad communication, that prevents the board from engaging the collective deliberation that is essential to effective decision-making.
The board might not be able to establish appropriate internal structures that will allow it to carry the responsibilities of assessing performance. It is commonplace to establish committees or officer roles which are responsible for collecting and analyzing results from evaluations before present them to the board for review. It is highly unlikely that the board will be able effectively oversee these aspects if they’re given to the CEO and management team.
Finally, the board is more likely to not be aware of its overall performance when it doesn’t consider behavioural factors when reviewing the director’s contributions and effectiveness. This is usually an exercise that is merely used to meet the requirements for listing or provide lip service to best-practice governance.
There are a variety of ways boards can enhance their performance and ensure that they’re meeting their fiduciary responsibilities. Focusing on the quality of human interactions in the boardroom is the initial step. This can be achieved when the board is flexible, resilient, and strategic. It is equally important to have the right mix of knowledge and expertise, including gender diversity. This gives the board a broad range of perspectives to be gained and allows them to more effectively tackle important issues. It can also help the board establish an environment that encourages open communication and a variety of perspectives.