Monday, September 07, 2009

The Combined Code review – board evaluation and external facilitation

Another issue in the Financial Reporting Council’s Second Consultation on its Review of the Effectiveness of the Combined Code is the suggestion that the Code be amended to recommend that board evaluations should be externally facilitated at least every two or three years for some or all companies.

This proposal follows the Walker Review of the governance of the banks. The Walker Report recommended:

The board should undertake a formal and rigorous evaluation of its performance with external facilitation of the process every second or third year.

I certainly believe this is relevant to the public sector and third sector. (And its not just because I would happily facilitate, support or validate board evaluation.) While many organisations in these sectors have adopted board self-assessment (and in the case of housing associations board member appraisal), these processes can be lacking in rigour. Too many board members are asleep either metaphorically or literally. An outsider can more easily challenge a board member than his or her peers. Moreover, an external facilitator can bring an independent perspective and wider experience when some boards may not realise that they are not performing as well as they could or should.

No comments: