By Inderpreet Kaur Bedi, Principal and Governance & Secretariat Lead at Barnett Waddingham
This shift is reflected in the UK Corporate Governance Code 2024, which underscores the need for transparent, well-functioning boards at the heart of effective organisations. A truly effective board review exercise today should include key components, regulatory requirements, and common challenges. It should also cover how technology - such as our new data-driven analytics tool like BoardClic - can reshape the evaluation process. Let’s take a closer look.
Key components of board effectiveness
Clear roles and responsibilities
Clarity in roles and responsibilities strengthens board function. When board members understand their remit and how it aligns with the organisation’s broader strategy, accountability becomes embedded in the governance framework.
Effective leadership
Effective leadership is also central to board performance. The Chair, in particular, has a pivotal role in shaping the board’s tone, encouraging open dialogue, and nurturing a collaborative culture that trickles down further. Leadership that is grounded in integrity and guided by ethical principles ensures that governance is not just procedural but principled.
Strategic oversight and risk management
These are two critical areas where boards must demonstrate competence. In today’s rapidly shifting landscape, the ability to anticipate, evaluate, and respond to emerging risks is a hallmark of resilient organisations. Boards must engage deeply with strategy, not merely to endorse it, but to help shape and course-correct it when necessary. Risk, when understood and managed well, becomes a source of strength rather than vulnerability.
Measuring board effectiveness
To remain effective, boards must assess their performance regularly and rigorously. Traditional methods - such as self-assessments, meeting observations, and external evaluations - remain valuable, offering opportunities for introspection and independent feedback. However, as the scope and complexity of governance expand, these methods alone are no longer sufficient and need to be supplemented with innovative approaches.
Technological tools like BoardClic are now playing a transformative role in this space. Through real-time data and benchmarking, digital platforms provide nuanced insights into board dynamics, effectiveness, skills gap analysis and areas for improvement. This data-driven approach moves evaluations beyond subjective perceptions to evidence-based understanding, helping boards enhance their evaluations by leveraging data driven analytics to assess performance with greater accuracy and objectivity.
The role of the board across the different sectors
The responsibilities of boards vary slightly across sectors but are united by common governance principles aligned with the various governance codes. In the corporate world, boards oversee executive performance, guide strategic direction, and ensure shareholder interests are upheld. In charities and sports governance, the emphasis may shift to mission alignment and ethical integrity, yet the core tasks - risk management, transparency, and accountability - remain consistent. Each sector has unique challenges but shares common governance requirements such as transparency and accountability. What binds these sectors together is the universal need for boards to be both informed and independent, agile yet principled.
Challenges to effective board performance
Despite these standards, boards can often face ongoing challenges. The main ones include:
Differing information - information asymmetry is a frequent barrier, where decision-making suffers due to gaps in timely or accurate data.
Conflicts of interest - this can compromise the board’s independence.
Overboarding – this can dilute their effectiveness when directors serve on too many boards.
Statistics from a recent PwC survey of 51 companies underscore the issues above - only 6% of AIM-listed companies use independent board evaluators, and while many leaders support diversity in theory, far fewer believe their boards are truly diverse in practice.
Overcoming challenges
Overcoming these challenges takes intentional effort. Companies can follow several best practices to make their boards more effective:
Include diversity: a mix of diverse skills, experiences, and perspectives not only enriches decision-making but also reflects the diverse stakeholder base organisations serve. Diversity in gender, ethnicity, and expertise fosters a culture where constructive challenge is encouraged, and innovative solutions can thrive. Companies that prioritise diversity benefit from a broader range of insights and more innovative approaches to problem solving.
Continuous director education: Regular training on industry trends, governance practices, an emerging risk ensures that board members are well equipped to address current and future challenges.
Effective use of committees: Specialised committees - for example audit, risk, and remuneration - enable directors to focus on specific areas, thereby increasing the overall efficiency and expertise of the board oversight.
Regular evaluations: Instituting a routine of both self-assessments and external evaluations keeps the board aligned with evolving best practises and enhances its overall performance.
The role of technology in board effectiveness
Technology is now an essential enabler of the process of enhancing board effectiveness, making the process of evaluating and continuously improving a board easier.
BoardClic, for example, equips boards with the digital tools to assess performance against both internal expectations and external benchmarks. With its focus on analytics and real-time insights, it allows boards to uncover blind spots, understand behavioural dynamics, and take action to improve governance quality.
The transformative role of BoardClic
This shift toward a more dynamic, data-driven, and consultancy-oriented evaluation process is changing the landscape of board governance, empowering boards to not only assess but to actively improve their effectiveness. With BoardClic, Barnett Waddingham is providing boards with the tools and expertise to make more informed, actionable decisions, enhancing governance standards across sectors, including corporate, charity, and sports governance. By integrating technology into the evaluation process, BW is not just responding to the needs of modern boards; they are shaping the future of board governance.
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