Overall board responsibility is primarily down to its Chairman. This role is twofold.
Firstly, they will be accountable for making sure that individual board members are competent.
Secondly, they will also be liable for ensuring that the board collectively has the requisite skills, know-how and experience to fulfil its obligations.
A Chairman will also have one eye on competency and succession planning.
Each director can play their part by maintaining and improving their own competence as well as recognising and addressing gaps in the board’s collective competence.
The guidelines have been devised to help ensure that boards work more effectively and also cover critical analysis, board communication and board culture.
The quest for competence
Each board and their directors should know what is expected of them. Their skills, knowledge and ethics sets are clearly documented.
These standards are employed not only in the director selection procedure, but in the director performance assessment process and in board succession planning.
Any new board member candidate will have to undergo a comprehensive competency assessment.
There will be periodic performance assessment of directors.
Are we up to the job?
Individual and collective boardroom competence is monitored regularly and simply to make sure the board has the right blend of skills, capabilities and experience to deliver successful outcomes to stakeholders. Remediation plans are in place to address recognised gaps.
These may include board membership alterations, enlisting of specialist help, and development of existing director capabilities.
Boards should review their collective performance at least annually.
Competence maintenance and development is key to avoiding a slide in standards. This means ensuring that board members keep their market knowledge, professional skills and technical knowledge up to speed.
Any gaps can be rectified by actions taken under a formalised development plan.
Ongoing competence ensures that the board and its members can react swiftly to changes in the market and technology.
If you stand still, you go backwards
Boards should have a three-pronged assessment strategy to ensure continuous improvement.
This means often reviewing its competence throughout every aspect of its obligations, exploring strategies for betterment and deciding on steps to be taken. Such reviews could vary from informal talks to holistic reviews undertaken by outsiders or insiders.
In-depth reviews should be conducted at least annually to assess collective and individual director performance. Such assessments will be undertaken by a qualified outside party at least once every three years.
Board assessment results will be used by directors in preparing their development plans and discussed in an open forum. Agreed actions will be stipulated within specified time limits not to exceed one year.
Copies of competency records need to be made and maintained in a secure environment and held there for an appropriate timescale to show compliance with standards.
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