Board Performance Evaluation and Director Appraisal

Board Performance Evaluation and Director Appraisal

Sep 10, 2021

Annual Board Review

Good governance requires boards to have effective processes and to evaluate their performance and appraise directors at least once a year. The board should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors.


Evaluation of the board should consider the balance of skills, experience, independence and knowledge of the company on the board, its diversity, including gender, how the board works together as a unit and other factors relevant to its effectiveness.


The application of simple standards at board level can radically improve performance.

  • Audits of board processes against external benchmarks
  • Audits of director skills against external benchmarks
  • Psychometric profiling and 360 degree feedback to discover strengths and development needs of individual directors and managers
  • Facilitation of corporate retreats for both strategy and budget planning
  • Executive coaching and appraisals of executive and non-executive directors to improve individual and group performance

These processes will enable you and your board to significantly raise your game, increase your professionalism and improve corporate performance.


Benefits of a well conducted board evaluation

The evaluation process is a constructive mechanism for improving board effectiveness, maximising strengths and tackling weaknesses, leading to an immediate improvement in performance throughout the organisation.


It will check that there are proper board procedures in place, with all directors fully understanding their role and having the special skills that directors need.


A well conducted evaluation helps the board, committees and individual directors perform to their maximum capabilities.

A quick and simple audit against established standards for directors and board processes (followed by appropriate action!), can lead to an immediate improvement of performance throughout the organisation.


What should the evaluation include?

Assess the balance and currency of skills within the board

  • Identify attributes required for any new appointments
  • Review practice and process to improve efficiency and effectiveness
  • Consider the effectiveness of the board’s decision making processes
  • Recognise the board’s outputs and achievements

The evaluation process is a mechanism to improve board effectiveness, maximise strengths and tackle weaknesses, leading to an immediate improvement of performance throughout the organisation.

Director appraisals

Individual evaluations should aim to demonstrate whether each director continues to contribute effectively and to demonstrate commitment to the role (including commitment of time for board and committee meetings and any other duties).


The non-executive directors led by the senior independent director, should be responsible for performance evaluation of the chairman, taking into account the views of executive directors.


The chairman should act on the results of the performance evaluation by recognising the strengths and addressing the weaknesses of the board and, where appropriate, proposing new members to be appointed or seeking the resignation of directors.


The board should state in the annual report how performance evaluation of the board and its committees and individual directors has been conducted.


A performance evaluation can play a key role in helping give the board: -

  • Clarity of purpose that can be communicated throughout the organisation
  • More productive board meetings that look forwards and outwards rather than inwards and backwards
  • Faster and more effective decision-making, that can be translated onto the bottom line
  • Better personal relationships and appreciation of individual roles, leading to a more collaborative approach within the board and with internal and external stakeholders
  • Better succession planning, recruitment, induction and appraisal of directors
  • Increased personal satisfaction with less stress

Reporting requirements

The UK Corporate Governance Code requires evaluation of boards of FTSE 350 companies to be externally facilitated at least every three years and for the external facilitator to be identified in the annual report with a statement as to whether they have any other connection with the company.


The New York Stock Exchange requires annual board evaluations, although companies retain great flexibility around what to assess and how, as well as how to apply the results.

What to do next

If you would like to know more about how we can support your personal development as a director, facilitate an away day or corporate retreat, or assist with your board's corporate governance, contact us or call +44 (0) 7970 891 343.