ICSA Ireland


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How effective is the board evaluation process in listed companies?

04 June 2019

Board evaluation in listed companies

ICSA: The Governance Institute has opened a consultation into the effectiveness of independent board evaluation in the UK listed sector. The review, which is being carried out at the request of the Department of Business, Energy and Industrial Strategy, will assess the quality of evaluations and identify ways in which board evaluation might be improved.

Simon Osborne, chief executive of ICSA says: “Board evaluation, when done properly, can help companies to identify skills gaps or behaviours which might have a negative impact on the effectiveness of that board. Not all companies are currently embracing good practice in seeking to deal with issues identified in evaluations, however. What is more, the standard of evaluations can vary considerably. The consultation seeks, therefore, to identify ways of improving the quality and effectiveness of board evaluations, including the potential development of a code of practice for external board evaluation.”

The consultation, which will run until 5 July 2019, is seeking views on whether there is a need for:

  • A code of practice for the providers of board evaluation services, and formal arrangements for implementing and monitoring such a code
  • Voluntary principles to be applied by listed companies when engaging external reviewers to undertake board evaluations
  • Guidance for listed companies on disclosure of the conduct and outcomes of their board evaluation, in accordance with the 2018 UK Corporate Governance Code.

“Board evaluation not only provides a robust and objective view of the board’s effectiveness, it also demonstrates to shareholders and other stakeholders that the board is committed to performing to a high standard. It is essential that boards understand and are able to address any areas of weakness, which is why effective board evaluation plays such a crucial role in allowing boards to improve their own performance and that of the company,” concludes ICSA Policy and Research Director Peter Swabey, who chaired the steering group which helped ICSA draft the consultation.

The consultation document can be viewed here. Alternatively, more information can be obtained by contacting policy@icsa.org.uk 

For Irish members and students, our forthcoming CPD event in KPMG, Dublin on Tuesday morning 11th June will look in detail at 'board effectiveness and performance beyond the annual evaluation to understand the DNA of the board’s performance'. Led by David O'Callaghan, Partner at Board Excellence, this promises to be a worthwhile event for all those involved with board evaluation.

John Burns

Business Development Manager, ICSA Ireland