Board members may become disengaged despite their best intentions. This is usually due to poor group dynamics such as rivalries, dominance of a few directors and bad communication, which prevents the board from engaging in the collective decision-making process essential for effective decision-making.
It could also be unsuccessful in establishing internal structures that contribute to the board’s assessment of performance responsibility. It is typical to establish committees or officer roles which are charged with gathering and analyzing results from evaluations before present them to the board for review. It is unlikely that the board will be able to effectively manage these aspects if they’re given to the CEO and management team.
The board will likely not be able to judge the overall performance of its business if it fails to include behavioural factors in the evaluation of individual directors’ contributions. This can lead to an exercise that is merely used to meet the requirements for listing or provide lip service to best-practice governance.
There are many ways that boards can improve their performance and fulfill their fiduciary obligations. The first step is to focus on the quality of interactions between people in the boardroom. This can be achieved when the board is flexible and resilient as well as strategic. It is also important to have the proper mix of experience and expertise, including gender diversity. This lets the board have a wider array of perspectives and more effectively deal with the issues that are critical to them. This allows the board to create a more collaborative environment that encourages open dialogue and different viewpoints.
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