Director Tools

Improving board effectiveness

Board performance is vital to the success of an organisation. To ensure the board is a strategic asset, it must have the right mix of skills and knowledge as well as the ability to work effectively as a team.

Today's rapidly changing business environment also requires boards to be flexible and responsive in order to meet unexpected needs and challenges.

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Board evaluation and director appraisal

With attention on corporate governance and accountability increased by the global financial crisis, there is an expectation that the performance of boards and individual directors will be regularly evaluated.

This is reflected in Recommendation 1.6 (a) of the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations 3e (2014)

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Checklist for assessing board composition

The ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations 3e (2014), introduced a number of substantive changes, including a number of governance practices that were previously noted only in the publication’s commentary being elevated to recommendations, meaning that they must now be reported against on an if not, why not basis.

One such change, under Recommendation 2.2, is the need to disclose the company’s board skills matrix which shows the mix of skills and diversity that the board currently has or is looking to achieve in its membership.

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Directors' fees

It is becoming more important for boards to have a clear and transparent remuneration process due to heavy scrutiny from an organisation’s shareholders, stakeholders and the media.

Transparency encourages market confidence and allows comparisons between organisations.

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Board charter

Board charters can facilitate the discussion and documentation of governance policies and guidelines.

The role and responsibility of the board could be set out in a board charter or in some other document published on the entity’s website or in its annual report

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Board committees

The boards of larger organisations often delegate work to committees of directors to more effectively deal with complex or specialised issues and to use directors’ time more efficiently.

Committees make recommendations for action to the full board, which retains collective responsibility for decision making.

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Annual board calendar

A well-planned meeting schedule identifies the year’s key issues and helps directors to ensure that matters requiring their attention are addressed in a timely and logical manner.

A board calendar is unique to every organisation. It will vary according to the industry sector, the organisation's own process of governance, the size and governance maturity of the organisation and its stage of evolution.

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Board meeting agenda

The purpose of a board meeting agenda is to improve the effectiveness of board meetings. It is the tool the chair uses to keep boardroom discussions focused.

Although each board will have an agenda that reflects specific topics of relevance to a company at that time, a number of general items will be included on most agendas.

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