Corporate Governance

Assignment

Submitted by:
Bilal Tariq Wyne MBA 2k12 (A)

Criteria of self evaluation for board of directors

Board of director self evaluation is an organized process which allows board of directors to re examine their performance as a self individual and as a whole collective board. It further identifies and assures future plans for improvement in performances as well. The process of self evaluation can be spread widely across many dimensions of corporate governance for example the aspects of governing Board linkage with moral ownership, clarity of delegation, empowerment, accountability and effective board process etc. The criteria of self evaluation of board of directors could be explained in following steps: - The first step is the planning in which board plans and decides that how the board will adopt a structured process to perform the self evaluation. Mostly the self evaluation is done by the board at the end of board meetings. The frequency of performing self evaluation is also decided in planning phase. - The self evaluation of board is basically focuses on its own performance rather than the performance of the organization so it is necessary to set the performance targets for the board which may defines the targets or goals of the board members and set criteria for compliance for better performance of the board. - Then the board should gather information about the policies to be monitored or the set of the performance target. One important thing in this step is that the purpose of this step is not to evaluate the content of the policy but to monitor the evaluation of performance of the board as per compliance with the set criteria of performance. The information gathering in this step can be done by multiple ways, for example it can be done by recording notes of the discussion by secretary in board meeting and comparing it with the set criteria of compliance for the board performance. - Then the step of discussing and interpreting the findings which are gathered in the previous step comes. This is an important step of self

evaluation of the board of directors. In this step the real purpose of self evaluation is served in which the board, after discussing and interpreting the findings, comes to know about its compliance or non compliance with decided set criteria of board performance. In case of non compliance the board tries to identify the reasons of non compliance and then tries to improve performance in future by taking appropriate actions to address those reasons. - In the last step the formulation of board work plan or governance action plan comes. After planning the evaluation, setting the target against which the board measures its performance, gathering information from board members that up to what extent they have met those targets and discussing the findings board to know the compliance or non compliance with decided set criteria of evaluation, the board identifies gaps that where the board want to be and where is the board performance. By using this gap information the board tries to formulate a board work plan or governance action plan which includes set of goals and specific pointed out targets for improvement in the board performance, it also mentions the actions required to be taken, the responsibility figure for the coordination for these required actions and the time line clearly describing the completion date.

References:

http://www.ccleague.org/files/public/BoardSelfEvalweb.pdf http://www.governancecoach.com/Resources/ArticlesTips/BoardSelfEvaluation/ tabid/1531/Default.aspx