Regular board evaluation can help boards to improve both their own performance and the performance of the company. Engaging an independent reviewer can bring greater objectivity and fresh insights to the process, and to help the board identify any issues that it might need to address. It can also provide some reassurance to stakeholders that the board takes its responsibilities seriously.
In August 2018 the Department of Business, Energy and Industrial Strategy (BEIS) asked the Institute to review the quality of independent board evaluation in the UK listed sector and identify ways in which it might be improved. Following a public consultation exercise in 2019, we published our final report and recommendations in January 2021.
Review of the effectiveness of independent board evaluation in the UK listed sector
Summary of responses to the public consultation
A summary of responses to the consultation and copies of individual responses can be found:
Conclusion
Our conclusion is that there is scope for broader adoption of existing good practice in the way some external reviews are conducted, and greater transparency about the process that was followed. We also conclude that this is best done through a voluntary rather than a regulatory approach.
To that end, we have published a series of documents for board reviewers and their clients. While they have all have been written primarily with FTSE 350 companies in mind, we hope they will also be of use to other organisations. They are:
Code of Practice for board reviewers
Principles of Good Practice for listed companies using external board reviewers
Companies are encouraged to apply these principles when engaging an external board reviewer.
Download the Principles of Good Practice
Reporting on board performance reviews
Guidance for listed companies designed to assist companies with their reporting obligations under the UK Corporate Governance Code.
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