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Appraising Boardroom Performance

A recent Harvard Business Review article (January-February 1998) nicely addresses the question of appraising boardroom performance. Based on "best practices" research, the article suggests many issues to appraise, which we summarize with the following questions:

  • Is the board make-up consistent with the company's current needs?
  • Does the board ensure that there is a strategic planning process in place?
  • Does the board monitor implementation of current strategic initiatives?
  • Does the board examine up-to-date information on competitors and possible acquisition targets?
  • Does the board have enough time to discuss strategy?
  • Is the board assuring that the company has the highest caliber CEO and executive team?
  • Are some top managers being groomed to assume the CEO's responsibilities in the future?
  • Does the company have adequate information, control, and audit systems?
  • Is the company in compliance with legal and its own ethical standards?
  • Does the board work to help prevent risks?
  • Is the frequency of meetings adequate?
  • Is meeting time used efficiently?
  • Does the board receive preparation materials well enough in advance?

The bottom line is straight forward: Boards should set objectives for themselves each year and evaluate their achievement of those objectives.

The questions above, of course, apply to most all companies. We'd like to add some for family businesses:

  • Are the directors and family shareholders well known to each other?
  • Does the board know the owning family's mission, values, and family continuity planning process?
  • Does the board know the family's goals for the future as shareholders?
  • Is the board aware of the family estate plans?

Our readers are welcome to contact us with any further criteria for evaluating a family business board, and we'll share what we hear in future columns.

 

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