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New ground-breaking research conducted by Board Benchmarking and Insync with the assistance of Deakin University reveals that Board roles are much more complex than previously thought.
Previously, it was thought that there were around 10 main areas in which boards needed to excel to be highly effective. The new research now shows that there are 20 discrete areas which contribute to the effectiveness of boards and the new research has also identified exactly what those 20 areas are.
Boards can be great at certain aspects of their roles but if they are not proficient in most of the many areas that impact their effectiveness they are likely to let down themselves and their organisation.
For example, your board members can have all the right skills and attributes but they just may not work together well. A team of champions, for example, won’t always gel together to create a champion team. If you gel as a team and don’t have a robust relationship with the CEO and management that won’t work well either. You can gel well as a team and have great relationships with the CEO and management but if the hard work of strategy, oversight of culture and risk management is not done well the board will fail to be effective. And the real life examples go on and on.
How the research was conducted?
Board Benchmarking and Insync developed a world class benchmarked Board Effectiveness Survey (BES) over 10 years ago with the help of a global governance expert, KPMG Australia and many experienced directors.
That survey has since been used as part of a process to review the effectiveness of around 250 boards of organisations in Australia and by some in New Zealand and Mauritius, including by a large range of clients of Insync, KPMG Australia, Gerard Daniels, Westlake Governance in New Zealand and BDO in Mauritius. The boards reviewed include many ASX listed, private, government and not-for-profit organisations including several large banks, airport, land and treasury corporations, universities, health networks and hospitals, health care, mining, resources and construction companies, insurance, superannuation, funds management and service companies, retailers, a zoo, water authorities, numerous credit unions, schools and not-for-profit organisations.
A comprehensive review of the benchmarked BES was completed in early 2020 with the assistance of Deakin University. The review included a psychometric and statistical analysis, a detailed literature review and input from several practitioners and governance experts. The results of Deakin’s research was published in Frontiers in Psychology in November 2018 in an article titled, Boards of directors: Assessing their functioning and validation of a multi-dimensional measure.
The research identified 20 discrete dimensions (factors) of board effectiveness and the most appropriate matters and therefore survey items that should be included with each factor. A greater focus was also added to some of the more recent measures of a board’s effectiveness including organisational culture and integrity, organisational purpose, crisis management and better prioritisation of the board’s time.
The newly researched 20 discrete factors of a board’s effectiveness continue to fit well within the world class WhatWhoHowDo framework for board effectiveness.
The images below are an extract from the report for the board of Sample Company. This is how the board benchmarks overall:
This is how the board of Sample Company benchmarks against other boards in each of the 20 most important areas of a board’s effectiveness:
The 20 board effectiveness factors explained
The 20 areas of a board’s effectiveness are explained in detail on our Board and Director Effectiveness Review page.