Board Assessments: Report Card or Board Team-Building Exercise?

Every year, boards of directors around the world undertake what for most is a lackluster exercise — the annual board assessment. Assessments were largely considered and designed as a compliance vehicle when they were initially mandated by the New York Stock Exchange in the early 2000s. Therein lies the real reason most board assessments are uninspiring: If you view your board assessment as a report card, you just want to get “good marks” and be done with it.

Over the past 20 years, however, many boards have come to realize that a compliance-focused board assessment represents a squandered opportunity and the state of the art has changed substantially. These changes have largely been championed by board chairs or chairs of nominating/governance committees with a genuine desire to create and maintain a board that’s truly outstanding. They came to recognize that a board assessment can become a strategic tool in board-building if it’s redesigned to achieve that objective. To a boardroom champion, the notion of a board assessment as a report card is almost childish; they view assessments as an essential team-building exercise that can take a board from good to great and keep a great board vibrant.

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