Corporate governance is much more than just compliance
Corporate governance is the system by which organizations are directed and controlled, enabling effective decision-making that creates long-term value for stakeholders.
As the ultimate decision-making body, the board is central to governance. With sound governance processes in place, boards are better informed and equipped to guide the organization toward its vision.
In essence, corporate governance is the foundation that empowers boards to make high-quality decisions, aligning management processes with oversight functions to institutionalize good governance practices.
Brief history about Board Evaluations
Board evaluations have been called for by international “best practices” for well over two decades. The UK became the first country to include this requirement in their Corporate Governance Code on a ‘comply or explain’ basis. And since then, such provisions have gradually made their way into corporate governance codes around the world.
Board evaluations are now starting to be adopted by a wider selection of companies such as:
- Smaller publicly listed companies in developed markets
- Listed companies across the emerging markets
- State and family-owned enterprises
- Government entities
- Group companies with numerous subsidiary boards
- Other organizations – football clubs, charities, universities
The idea behind board evaluations is to provide an opportunity for board members to reflect on the practices of the board and seek their views on what works and what are the areas they could improve on.
Board evaluations should help the board to:
- Improve the efficiency board’s decision making.
- Assess the balance of skills, knowledge and experience on the board.
- Identify areas of concern.
- Create awareness about the role of directors individually and collectively as board.
- Improve coordination between board and management.
In terms of scope, board evaluations usually cover one of the following:
- Board as a whole.
- Board as a whole and its committees (audit, risk, remuneration and nomination).
- Board as a whole, board committees and individual directors.
- Boards who are new to evaluations typically start by focusing on the board as a whole. Advanced boards should conduct individual level assessments.
A new approach to effective board evaluations
Traditional board evaluations often rely on directors’ self-assessment through basic yes/no or rating questions, leaving directors unclear about how to act on the results.
Hawq’s methodology addresses these issues by using a multi-layer questionnaire that maximizes information without overwhelming directors. We focus on fact-based questions to benchmark boards against best practices and provide reports with in-depth analysis and actionable recommendations.
Our approach is based on hundreds of board evaluations and interviews, allowing us to create a practical, impactful process that organizations can easily self-administer.