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Why is a board skills matrix important?
If you want a high–performance and highly effective board you better start by having the right composition of directors on your board. This includes having the right mix of skills and experiences for the current and future strategic needs of your organisation. It also means having the right diversity, behavioural attributes and ongoing renewal.
Developing a fit-for-purpose board skills matrix and keeping it up to date will help you determine whether you have the right mix of skills, experiences and attributes or if there are important skill and experience gaps that need to be filled. As the strategic needs of your organisation change then so will the skills and experiences needed by your board to oversee and add value to your organisation. This is why your board skills matrix needs to be continually adapted and evolved.
Most stock exchanges, securities commissions and prudential regulators have identified the importance of a board developing and adapting a board skills matrix that is fit-for-purpose and uniquely relevant to each organisation. Using an off-the shelf-template is no longer good enough. Shareholders and proxy advisors are also demanding that more rigour and sophistication be applied in developing and adapting board skills matrixes.
Good boards & governance structures also ensure that the bios of directors that are included on their organisation’s website are adapted to align well with their board skills matrix. Board effectiveness, director effectiveness and all manner of compliance, productivity and wellbeing based metrics tend to skew positive with increases in appraisal and action on results based data.
Developing and adding rigour to your board skills matrix
Insync has helped many boards to develop and/or to add rigour and sophistication to their board skills matrix. This has often involved taking some or all of the following steps to develop and/or adapt their board skills matrix. Several of these steps can be achieved by using Insync’s online board skills matrix survey.
- Agree to a short but comprehensive list of the skills, experiences and attributes that are essential for the board as a whole
- Ensure that the board is clear on the personal attributes and diversity that are important for the board and ensure those elements are reflected in the Matrix
- Agree to a rigorous and descriptive rating scale that will be used to rate each director
- Identify the number of directors that should have the highest rating (eg. highly skilled or expert) on each dimension of the Matrix
- Ask each director to rate themselves on each dimension of the Matrix using the agreed rating scale and where they rate themselves with the highest rating to add commentary as to why
- Facilitate a rigorous discussion with the board concerning the board skills matrix to test the validity of each of the dimensions of the Matrix and the ratings set out above – and adapt the Matrix accordingly
- Use the matrix to align the board in relation to any skill gaps that need to be filled when recruiting the next director(s) and how any skill gaps will be mitigated until the new director(s) is appointed
- Help each director adapt their bio to ensure it is aligned well with the board skills matrix
The facilitation of a robust discussion with the board concerning its board skills matrix and any potential gaps in skills and experiences is invaluable in aligning the board around the skills and experiences needed for their next director appointment. Updating the Matrix as directors retire, including just before they step down, is equally important in aligning the board with any missing skills and experiences.
Common board skill matrix mistakes
Being aware of the most common board skills matrix mistakes can help ensure that you don’t make those same mistakes too. Here are some of the most common mistakes we tend to see:
- Being too prescriptive and having too long a list of skills and attributes is a trap that many less sophisticated boards fall into. We have seen lists of skills and experiences in the high 20s. Such lists and the resulting Matrix become extremely cumbersome and of little practical value
- Being so focused on a long list of particular skills and experiences that the critical importance of several directors having experience in the core business of the organisation is missed. We have seen this happen too often to the organisation and board’s significant detriment
- Not keeping your board skills matrix up to date and adapting it as the direction and focus of the organisation and its industry evolves
- Copying the board skills matrix used by another company as your template and just replacing the names of your directors. Whilst using another company’s list of skills, experiences and attributes can help a new board kick-start the process the list will almost certainly need to be adapted to the specific strategic needs and requirements of your organisation
- Overly focusing on the extent of experience gained as an executive with little focus on experience gained as a director on multiple and large company boards over an extended period
- Outsourcing the process to your Company Secretary or a consultant and not engaging and getting your board’s buy-in to your board skills matrix
Need help? Contact us
Please contact us if you would like practical help or advice in developing and/or adding rigour and sophistication to your board skills matrix
What our clients say
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Insync completed a Board Benchmarking Survey for Youthrive Victoria in 2022 which was excellent in analysing what was going well and areas for improvement. I highly recommend Insync's survey for any board wanting to review its current effectiveness and identify how and where it could improve.