Board Dynamics and the Politics of Appraisal

Abstract

While the management literature is accepting of the value of a performance appraisal, there is disagreement in the governance literature as to the role, value and contribution of board appraisals to board effectiveness. This disagreement centres on the politics associated with the “horizontal” appraisal of colleagues implied by board assessment as opposed to the “vertical” appraisal implicit in management. Such disagreement is complicated by the degree of discomfort board members may feel when encountering the more subjective issues of interpersonal dynamics and process as opposed to the more objective measures of performance. However, subjective measures are frequently vital in determining board effectiveness. This paper proposes a conceptual model for the evaluation of boards. It then explores the implications of different approaches to the evaluation of board effectiveness by highlighting selected methodologies for the evaluation of board processes and procedures, individual directors, the chair and the chief executive. In this, the implications of different types of performance measure are considered in the context of the type of organisation, its purpose, reporting requirements, ethos and style of operation. A set of suggestions as to approaches to board evaluation is provided together with reactions of experienced directors to these ideas.