The New York Stock Exchange requires listed companies to participate in some form of annual self-evaluation, so many organizations already have a board surveys in place. But for some of these companies, board self-assessments are met with an attitude of obligation instead of embracing the potential benefits of a well-executed survey. For other smaller companies, this practice has simply been overlooked in the past.
However, there are many reasons why all boards should view annual self-assessments as an outstanding resource for bettering their overall functionality. For example:
- Board surveys can help identify group strengths and weaknesses.
- Willingness to self-assess sets the tone for the organization at large; it shows that board members are taking their roles seriously by reviewing their own performances through a critical lens.
- Discussing board members’ responsibilities and goals can create a more unified and collaborative working environment.
- Tracking year-over-year changes in board members’ responses can provide meaningful insight into a changing board landscape.
Who Should Create & Administer the Survey?
For NYSE companies, the nominating and corporate governance committee is charged with the duty of administering board assessments, so the chair of this committee will usually oversee the process. In other situations, the presiding board chairman, the CEO, the liaison between the board and the company, or a third party can direct the self-assessment.
If you’re initiating a survey process for the first time, make sure that current board members have an opportunity to discuss the creation of the procedures involved. It’s important that they feel like it is established in a way that objectively serves the betterment of the board.
Board surveys should also be created and managed in a way that upholds the highest levels of confidentiality. Anonymity among responders is important, so board members can respond honestly to the questions without fear of creating excessive finger pointing or corroding board collegiality.
What Should Be in Board Surveys?
Ultimately, deciding what questions will be in your survey is up to your company and whoever is deemed responsible for creating the survey. Take some time to consider what information will be most relevant and helpful to your organization in both the short term and the long.
Click here to read some suggestions for topics to cover—courtesy of Shearman & Sterling, a leading international advisory company. Some recommendations include:
- “whether the board has adequately addressed strategic planning and the risks facing the company without “micromanaging” the company’s operations
- whether the board is provided with the appropriate materials from management in a timely manner so as to be sufficiently prepared for board decisions
- whether the board has the right committees and they are functioning effectively”
Additionally, this board questionnaire, which was designed by Dalhousie University, gives a good example of how surveys can be broken up into sections to address individual board member performance and collective board performance—as well as the working relationships with executive directors and board chairs.
We encourage the survey-maker to craft questions in a way that will allow the use of scaled options for most answers. Oftentimes, board members will connect more with incremental choices like “mostly agree” or “slightly disagree” rather than black or white answers like “yes” or “no.”
Work to create a simple scale that can be used across a wide array of questions. Here’s an example of a survey that utilizes a scale from 1 to 5. Several other sample surveys can be viewed here, here, and here. The National Association for Corporate Directors also offers its own sample elements for members here.
How Often Should We Survey?
The short answer is: as often as you believe will be beneficial to your board. According to the NYSE’s current policy, the industry standard for self-assessment is at least once per year, but shorter topical surveys could easily be utilized on a more frequent basis.
At Directorpoint, we recognize the value of surveys and self-assessments for board members, so that’s why we have a survey tool built right into our board of directors software and iPad app. Board admins or secretaries can easily create a survey with accompanying documents and send it out to all members.
This is just one more way that we’ve streamlined board communications while encouraging board efficiency and advancement. Reach out to us today to schedule a demo! We’d love to show you even more ways that Directorpoint can revolutionize your boardroom experience.