Just as anyone within a company — from the interns to C-suite managers — gets evaluated based on performance, members of the corporate board should also be assessed for their effectiveness as directors. Also, with the increasing rate of shareholder activism, the pressure on directors to perform better is stronger than ever. Shareholders demand not only good performance from the corporate board as a group, but also transparency in the individual actions of its directors.
To achieve this, the corporate board should have a set of standards against which to evaluate board performance. For some companies, these standards come in the form of goals of objectives. But whatever they’re called, the purpose is the same: These standards set clear expectations so that directors know what they need to deliver.
Standards should be easily understandable, measurable, and realistic. These three factors ensure that directors will get a fair evaluation for their performance. Setting achievable goals for directors is, after all, part of good corporate governance.
But setting standards is the easy part. The challenging part is ensuring all directors adhere to those standards. Fortunately, the use of a corporate governance software makes the task much easier. A board portal like Convene facilitates, automates, and most importantly, records the whole board meeting process. Every item in a meeting agenda, every revision in a meeting document, every entry in a meeting minutes — each one are tracked and archived for later reference. Thus, the actions of a director can be easily traced, even when weeks or months have passed. For year-end evaluations, this level of transparency is invaluable.