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      • Grow with Governance: ESG is the umbrella for CSR, says Vedanta's Roma Balwani
      • Grow with Governance: PadUp Ventures' Rajat Jain Demystifies Correlation of Governance and Economic Growth
      • Grow with Governance: Family governance impacts the culture of a family-run business, says Equations Advisors' Mita Dixit
      • Entrepreneurial Board
      • NEW REGULATORY PROVISIONS RELATED TO INDEPENDENT DIRECTORS
      • ESG & ITS IMPORTANCE FROM THE POINT OF VIEW OF BOARD MEETING
      • Start early, don't wait till retirement to become an Independent Director, says Increate Value Advisors' Milind Sarwate
      • The winding road of leadership coaching in the post-pandemic era
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      • Re-examination of Purpose by the Boards in Post -Pandemic Era
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      • Promoter Director – Time to become Custodian of Governance!
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What Makes Great Boards Great! Performance Evaluation by Boards and Role of Independent Directors

What Makes Great Boards Great! Performance Evaluation by Boards and Role of Independent Directors

By CS Divija Dave-MentorMyBoard Team
Calendar

Feb 11 th 2021

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Board Governance is frequently discussed but often misunderstood. To my belief information asymmetry is the root of board challenges. Independence of Independent Directors is one of the major discussion stakeholders are now having before investing or being a part of any organization. When the directors are truly independent, somehow, they lack domain knowledge and ability to adopt as well as understand the senior counterparts and business environment they are stepping into. The typical engagement of Independent Directors with the rest of the Board completely lies in alignment with the meetings planned during the year i.e. somewhere around not more than 8 times a year. How can we expect that merely by meeting eight times in a year, Independent Directors will have more knowledge about the Company than the rest of the Board? Are they taking special interest to be an inclusive part of the Board or are they lacking their independence to share their viewpoints as rest of the Board has overpowered them? There are multiple questions that are triggering our mind when we try to decode how independent our Independent Directors are and what is their exact role in today’s day and age.

Talking about typical Indian Boardroom scenarios, public at large is extremely overwhelmed to get on to the position of directorship without even analyzing the consequences of accepting such position. The name ‘Director’ itself seems so fascinating that people are ready to be a part of any Board. And probably this is exactly where the problem of understanding to role of Directorship or Independent Directors starts. Therefore, choosing right Boards with right people is one of the basic steps that every Company should consider. I always say that Company is an artificial person by law, however, Board of Directors are the living human beings representing the Company. Their right attitude, right behavior, ability to take timely decisions help stakeholders to take better investment decisions and be a part of the Company. In simple words, Board of Directors are the ‘Value Creators’ of the Company. Let us discuss about few aspects that would help us realize strengths of our existing Boards.

It is important to note that Independent Directors should be the torchbearers, advocates and enforcers of sound governance principles in the Company especially during the challenging times. The real test of Board of Directors especially, Independent Directors comes when the Company is in crisis. At that point, the accumulated judgement and wisdom of Independent Directors are crucial to make sound decisions under pressure. Taking examples of COVID times when Boards especially Independent Directors adopted an entrepreneurial mindset to reassess their business and take measures to make it sustainable during these unforeseen times. All these steps and decisions were well applauded by the rest of the Board. All it takes is a good chemistry amongst the Board members and encouragement to move forward as a team.

Another important aspect to have great boards in place is to have regular performance evaluation. Boards perform their important roles in the Company, starting from providing director and advice to the Company, they initiate controls to monitor risks and growth attached to a Company. Board Evaluation as a concept typically examines these roles and responsibilities of Boards to assess whether they are functioning effectively. Since Board Evaluation comes as a mandate for listed companies, it is extremely crucial to understand that the effectiveness of Boards can never be assessed by merely following this as tick the box exercise. It is important for companies and its internal stakeholders to consider a 360 degree check on overall aspects related to the functioning of Boards. Specifically considering three major aspects i.e. Understanding of the Board about the Company, its People and Processes is vital to give a tangible shape to the entire procedure of Board Evaluation. Further, in order to fine tune the procedure, here are some of the basics that should always form a part like:

·        Assessment of Board Structure

·        Composition and Diversity

·        Board Dynamics

·        Corporate Governance aspects

·        Understanding on Business Strategies

·        Financial Reporting Mechanism & Internal Controls

·        Supporting & Advisory Roles of the Board.

Considering Performance Evaluation of Boards as one of the best practices to be followed by companies, the evaluation methodology and the process must have some degree of flexibility and international variance as well. The process should be tailored to the requirement of the company, the specific situation it is in, the stage of the company’s lifecycle, the corporate structure, the Board culture and the embedded processes. These few pre-designed criteria by Companies would help in setting wonderful boards in the long-run and certainly the desired outcome would also form a part.

About MentorMyBoard-

A platform to create enriched Boardrooms and empowered Directors.

Are you being earmarked as a succeeding Director or you are an existing Director?

We at MentorMyBoard, invite you to a journey ahead that is nurturing your professional aspirations and expectations.

MentorMyBoard is about Creating, Enabling and Empowering Directors to make sustainable and dynamic boards considering the diverse portfolio and demands of an organization. At MMB, we are offering a platform that prepares Directors towards ethical leadership, robust governance practices, borderless compliance, and insights that in turn make competitive boards potentially prevalent.

Need for Board Mentoring

Director's roles and responsibilities are also consistently demanding and changing drastically in the National and International landscape. The demand for a dynamic, visionary Directors and futuristic Boards is emerging substantially due to increased responsibilities imposed under Companies Act 2013.

In such a scenario Director should engage in -

·        Self-Assessment of Boardroom mechanics

·        Evaluating hard-wired practices and reforming

·        Understanding changing Board dynamics and staying updated.

·        Abiding by prescribed industry norms and critical responsibilities.

·        Building futuristic boards and Success Planning

·        Setting agile Board cultures

·        Building Board diversity

Click Here to Read Re-examination of Purpose by the Boards in Post - Pandemic Era

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Category

  • All
  • Boardrooms
  • BOARDROOMS
  • Independent Directors
  • Role of Board
  • Mindset Shifts of Boards
  • Independent Directors and Promoters
  • Sustainability / ESG
  • business implication
  • employee exits
  • COMMITTEE MEETINGS
  • Union Budget
  • Independent Director
  • Grow with Governance
  • Grow with Governance
  • INDEPENDENT DIRECTOR
  • Entrepreneurial Board
  • ESG & ITS IMPORTANCE
  • leadership coaching
  • Change Management
  • Advisory Boards
  • Boards
  • Boardroom
  • Brand Yourself as a Leader of the Company
  • Kindness
  • Are you hesitant to speak in the Boardroom!
  • Governance & ESG
  • Directors
  • Independent Directors
  • Corporate Governance
  • Leader development
  • Gratitude, Purpose
  • decision making
  • Systematic Investment Plans in Emotional Intelligence
  • Corporate Governance
  • The Board’s Role in ESG!
  • Balance Boards
  • Agility and Compassion
  • Governance and Board
  • Diversity and Inclusion
  • Directors,Promoter Directors
  • Board Members, Directors and Independent Directors
  • Board and Senior Management
  • New Directors
  • Cyber Insurance
  • Salary Increment
  • Economy Growth
  • Human Resources
  • Generating Wealth Beyond Money
  • Agile Mindset for Leadership
  • Aspiring Independent Directors
  • Board Leadership
  • Corporate Governance & Women on Boards
  • BOARD MEMBER
  • SME
  • WOMEN DIRECTOR
  • BOARD MEMBERS

Archive

  • 2021
    • April (3)
      • Will you drive your vehicle without a dashboard?
      • Are you making SIPs to improve your Emotional Intelligence
      • Corporate Governance needs a Moral Compass – Ethics in Indian Boardrooms!
    • August (9)
      • Grow with Governance: ESG is the umbrella for CSR, says Vedanta's Roma Balwani
      • Grow with Governance: PadUp Ventures' Rajat Jain Demystifies Correlation of Governance and Economic Growth
      • Grow with Governance: Family governance impacts the culture of a family-run business, says Equations Advisors' Mita Dixit
      • Entrepreneurial Board
      • NEW REGULATORY PROVISIONS RELATED TO INDEPENDENT DIRECTORS
      • ESG & ITS IMPORTANCE FROM THE POINT OF VIEW OF BOARD MEETING
      • Start early, don't wait till retirement to become an Independent Director, says Increate Value Advisors' Milind Sarwate
      • The winding road of leadership coaching in the post-pandemic era
      • Challenges of Organizational Culture Change
    • February (4)
      • Re-examination of Purpose by the Boards in Post -Pandemic Era
      • What Makes Great Boards Great! Performance Evaluation by Boards and Role of Independent Directors
      • Promoter Director – Time to become Custodian of Governance!
      • Diversity and Inclusion – The Board Perspective!
    • January (2)
      • New Directors - Have you done your due diligence
      • Cyber Security Insurance and Boards
    • July (7)
      • Why Advisory Boards Are Important for Indian Business Corporates?
      • Grow with Governance: ESG essential to repair the damage economic activities caused to the earth, says CA Shailesh Haribhakti
      • Top 10 areas to contribute in Boards as Independent Directors
      • Top 10 Questions to Ask in Boardrooms!
      • Essential HOWs of Boardroom!
      • Kindness is key
      • How to Brand Yourself as a Leader of the Company?
    • June (6)
      • Leading from the Boardroom
      • Are you hesitant to speak in the Boardroom!
      • The Neem Project a Leadership case study
      • Directors Liability in India
      • Why do promoters need Independent Directors?
      • Corporate Governance Deviation – Infosys Case Study
    • March (4)
      • Board Refreshment: Finding the Right Balance for your Board!
      • HR Governance and Board – How Important Is It?
      • Agility and Compassion: Two Pillars for Boards in the Post Pandemic Era!
      • Modernizing Governance: The Board’s Role in ESG!
    • May (3)
      • Restructuring appraisals in 2021 – Gratitude, Purpose & Meritocracy
      • How do you make your personal Brand?
      • Leadership Coaching: How does it help Leaders
    • October (2)
      • Are Independent Director’s required on the Board?
      • 'Ethics & Governance' lesson should start from school, says Federal Bank's Independent Director, Sankarshan Basu
    • September (3)
      • Grow with Governance: As an Independent Director ensure your voice is heard, says Apurva Purohit
      • Grow with Governance: Push for ESG agenda; pool CSR funds to maximise impact, says Ranganath NK, former MD of Grundfos Pumps
      • Grow with Governance: Boards should prepare companies for different risks, says National Insurance Academy's G Srinivasan
  • 2020
    • August (4)
      • WOMEN DIRECTOR-An Emerge
      • ARE YOUR BOARD MEMBERS SAVVY WITH FINANCIAL TERMS AND EXCEL IN FINANCIAL LITERACY QUOTIENT AS PER COMPANIES ACT 2013 MANDATES.
      • BOARD MEMBER SELECTION- A TASK OF PERFECTION
      • SME IPO – AN OPPORTUNITY TO CAPITALIZE YOUR BUSINESS
    • December (3)
      • Good or bad, Salary Increments always cause a heartburn among employees
      • Is Economic Progress Enough?
      • Emotional Intelligence
    • November (3)
      • Generating Wealth Beyond Money
      • "Agile Mindset for Leadership"
      • Tips for Aspiring Independent Directors
    • September (3)
      • Independent Director
      • Lean Thinking Boards
      • Corporate Governance & Women on Boards
  • 2022
    • August (1)
      • Liability of Independent Directors – An Important Aspect of Corporate Governance
    • February (4)
      • A Hero's Farewell: How to handle employee exits with dignity
      • Green Bonds: An Instrument for Financing a Sustainable Future
      • Tool for effectiveness of Board Committees - Ask Right Questions
      • Russia-Ukraine war and India’s Business Implication
    • July (2)
      • Stagnation or Evolution – Mindset Shifts of Boards when Company sees Stagnated Growth
      • Risk Assessment and Minimization Procedures – Role of Board
    • March (2)
      • A study on Sustainability Report of Container Shipping Companies.
      • India and The ESG impact of Crypto Currencies
    • May (1)
      • Independent Directors liability under GST
    • November (1)
      • Workplace Sexual Harassment and the Role of Board
    • October (2)
      • How many Boards are too many?
      • Women in Indian Boardrooms Vs Diversity = Inversely Proportionate
    • September (2)
      • Organizing for the Future – Important keys to becoming future ready
      • Are you ready to serve on the Board?