Home / performance evaluation strategic thinking / Performance Evaluation of Boards and Directors - Deloitte

Performance Evaluation of Boards and Directors - Deloitte - performance evaluation strategic thinking


Performance Evaluation of Boards and Directors - Deloitte-performance evaluation strategic thinking

Performance Evaluation of
Boards and Directors
For private circulation
March 2014
www.deloitte.com/in
2
Board Evaluation
Mounting stakeholders' expectations, challenges faced The effectiveness of the Board depends on a variety of
by companies to operate under fluctuating economic factors, some of which are:
conditions, pressures of globalisation and increased ? Board Structure: its composition, constitution and
regulatory requirements have brought the quality of diversity and that of its Committees, competencies
performance of the Boards of Directors under greater of the members, Board and Committee charters,
scrutiny. Boards have recognized that it would be frequency of meetings, procedures;
important for them to continually assess how effectively ? Dynamics and Functioning of the Board: annual
they are performing their roles against the objectives Board calendar, information availability, interactions
and the goals they have set for themselves. This growing and communication with CEO and senior executives,
recognition has resulted in Board evaluations becoming Board agenda, cohesiveness and the quality of
widely established internationally in rules-based as well participation in Board meetings;
as in principles-based jurisdictions, as a critical structural ? Business Strategy Governance: Board's role in
tool for assessing Board effectiveness and efficiency. In company strategy;
some jurisdictions, the directors are also evaluated along ? Financial Reporting Process, Internal Audit and
with the Boards. Internal Controls: The integrity and the robustness
of the financial and other controls regarding abusive
Assessing Board Effectiveness related party transactions, vigil mechanism and risk
The Board performs three major roles in a company - it management;
provides direction (i.e. sets the strategic direction of the ? Monitoring Role: Monitoring of policies, strategy
company), it controls (i.e. monitors the management) implementation and systems;
and provides support and advice (advisory role). Board ? Supporting and Advisory Role; and
evaluation typically examines these roles of the Board ? The Chairperson's Role.
and the entailing responsibilities, and assesses how
effectively these are fulfilled by the Board. The evaluation of the performance of the Boards
is essentially an assessment of how the Board has
performed on all these parameters.
Performance Evaluation of Boards and Directors 3

What is the evolution of strategic thinking? Then the evolution of strategic thinking is briefly described from the early 1940s until the present, covering budgeting method, forecasting, long-range planning, strategic planning, strategic conflict approach, resource-based perspective, and multiple perspectives.