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Is your board effective?

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Whether you are a Director, Chair, or reporting to the board of an organisation, one of the questions you may consider is how effective is your board in helping the organisation achieve its objectives.

Many a discussion is had around the coffee station or water cooler about how effective the executive team is in dealing with the big strategic issues or how well the board understands the intricacies of the business.

Regular readers of this column will know of the importance of good governance, not just for governance sake, but because it assists the organisation in achieving its purpose. Whether the organisation is in the private, public or not-for-profit sectors, its governance should be firmly focused on achieving the purpose of the entity. Similarly, the governing body of the organisation should be measuring the effectiveness not just of the organisation itself, but also how it (theboard) assists in this process.

In recent years, greater focus has been placed on the performance and behaviours of boards. Whether they be informal questionnaires or formal board evaluations, this review process shines a light on the effectiveness of the board or committee while also potentially evaluating the effectiveness of individual directors or committee members. Such reviews are also highly efficient ways of determining succession planning.

With this in mind, Company Directors has recently introduced a new “Governance Analysis Tool” which assists boards to understand its existing governance standards via an online self assessment process. The tool is an adaptation of the comprehensive Corporate Governance Framework. This Governance Analysis Tool is not designed to replace the formal external board evaluation undertaken by many boards every few years. Rather, it is a tool designed to be a practical, “guided” selfassessment tool, which is non- threatening and user friendly.

It is important to recognise that boards, like other work groups, regularly evolve as new members join and external factors affect the organisation. Similarly, the election of a new chair or the appointment of a new CEO can be major catalysts for change. These changes often affect the dynamics of the board and while unsettling, it can be a perfect opportunity to review the performance of the board and set the scene for its future direction. The Governance Analysis Tool is a safe and systematic tool for boards to utilise in these circumstances.

While in its early days, the Governance Analysis Tool is another initiative of Company Directors which is designed to improve the quality of Corporate Governance in Australia. For more information, log onto companydirectors.com.au or phone us on 02 6132 3200

Phil Butler is Manager – NFP, Public Sector & ACT at the Australian Institute of Company Directors. Level 3 54 Marcus Clarke Street Canberra T: 02 6132 3200 |www.companydirectors.com.au
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