By
Christian Schaffenberger
Mieke Weijenberg
Richard Moore
June 2024
Each year Board Directors from across Switzerland gather to discuss the most important topics. This year Board Effectiveness was in the spotlight and the MU Board & CEO Practice team ran workshops on how to evaluate and improve Board performance. (See images from the event here).
What to do – and not do – to secure an Effective and Inclusive Board for your organisation:
- What is best practice in testing and developing Board effectiveness?
- What is best practice in testing and improving Board inclusion?
- What are the ‘no ‘go’s’ when it comes to testing and developing Boad effectiveness?
To answer these key questions, participating Board Chairs and Non-Executive Directors added their insights to data collected from the MU BoardScan™ (see information box to find out more). The result of the day was a comprehensive summary of Board Effectiveness best practice.
MU BoardScan™: A Science-Based Approach to Developing Board Effectiveness
Board effectiveness, performance and impact have been variously studied and described in literature through more than 70 years of applied research.
Effective Boards are those that are successful in their unique context. As a result, no normative model describing the general characteristics of an effective Board is possible. Instead, context-related, and contingency-oriented frameworks are suggested for a better understanding of Boards.
MU BoardScan™ is a research-based framework and tool that provides a sound basis for an MU Expert to analyse a Board and work on increasing Board effectiveness.
MU BoardScan™ allows for a thorough and systematic evaluation of the situation and context of a Board and to identify gaps in required effectiveness.
Christian Schaffenberger, Mieke Weijenberg and Richard Moore from MU’s Board & CEO Practice tell us more about what was discussed – concluding on the top 3 answers to the most important questions Board Chairs and Non-Executive Directors raised.
What is best practice in testing and developing Board effectiveness?
According to our survey data, 13% of Boards don’t review their effectiveness, and most (62%) do, they do it themselves via the Chair. Only 25% do it with external support. The Participants decided this was not sufficient, and Boards need objective scrutiny and continual professional development – with a special focus on the following:
MU BoardScan Tool Framework
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Results from MU Data and Participant Discussion on EFFECTIVE Boards
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Board Task
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- Have a holistic view of potential risks
- Alignment on basic board work – follow the defined work plan
- Alignment of strategy and priorities of the business
- Clearness on what is in scope and what is not
- Focus on selecting the most effective, the right CEO – or you will always run behind
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Board Members
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- Have a strong Chair who sets clear direction.
- Have and follow up clear KPIs and contribution expectations for each Board member.
- Have a diverse Board with necessary and differing skills and track record.
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Board Teamwork
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- Strictly follow up on Board decisions and minutes
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Board Impact
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- Actively manage expectations toward owner and stakeholders
- Know the expectations of shareholder / owner
- Continuously review the impact of financial KPIs
- Regular interaction with executive – to C-2 level
- Give trust - Give exposure to C-Level as well as CEO minus 2 Level in front of the Board
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What is best practice in test and improving Board inclusion?
CEOs and owners are not always ready or open to discussing Inclusion and Diversity – it is often misunderstood as tokenism.
But they should be. Inclusive leaders outperform those who are not, and Boards set the culture:
MU BoardScan Tool Framework
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Results from MU Data and Participant Discussions on INCLUSIVE Boards
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Board Task
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- Understand that the different angles around inclusion – recruitment, culture, and belonging are the focus of the Board.
- Part of the Board's task is to effectively onboard new Board members - this includes pre-board so new Board members join meetings with Board peers before the first Board meeting.
- An effective Board starts with setting the strategy and where the business, and the Board, need to get to.
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Board Members
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- Look outside your network to find new Board members; go beyond the current club and network
- Challenging new Board members - that they bring both the right strategic and relation competence (knowledge, experience and soft skills)
- Board composition should be decided based on the requirement of the future strategy – discuss and decide on the most important capabilities needed around the Board table.
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Board Teamwork
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- Chair can make or break an inclusive Board environment – all must be invited and be expected to be involved.
- Create conditions that make Board members at ease to discuss inclusion and diversity and spend some time focussed on improving cooperation and team dynamics.
- All Board members should have time and opportunity to contribute to the Board agenda. Chair should respect all board members contributions and decision making tasks and treat decisions with necessary formality within the Board meeting.
- Ensure Board materials are accessible and adequate to allow each Board member to contribute.
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Board Impact
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- Monitor and report on deep diversity – knowledge, skills, and experiences to stakeholders.
- Monitor and widen the competencies of the Board and the Executive.
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What is the ‘no ‘go’s’ when it comes to testing and developing Board effectiveness?
Board effectiveness is difficult – and there are mistakes that participants at the Swiss Board forum had experienced. Learning from others challenges accelerates development.
MU BoardScan Tool Framework
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Results from MU Data and Participant Discussions – the NO GO’s of Board Effectiveness and Inclusion
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Board Task
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- Assessing Board effectiveness without clear and agreed goals for Board performance.
- Failure to set agreed result measures/ KPIs for the Board and for Board members.
- Lack of alignment on the Boards task or how to achieve it.
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Board Members
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- Members/ Chair’s assessing themselves – independence is needed
- Board members don’t support the Chair's wish to assess the Board.
- Board members not involved or poorly prepared for Board review and effectiveness improvement work.
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Board Teamwork
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- Conflict of interests between owners -Chairs, CEO or Owners - or between Board members themselves – being left unresolved.
- Tokenistic appointment decisions and quotas; Board members do not have the skills and experience needed for the Board's situation and context.
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Board Impact
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- Failure to review Board effectiveness.
- Board effectiveness reviews that are seen as biased or not inclusive of the whole board.
- BoaRd reviews that are stereotypical or repeated without fresh perspectives.
- Board reviews that do not consider the future requirements form Board members in terms of time and competence.
- Failing to include stakeholder perspectives (e.g. CEO/ ExCo/Owners)
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Top Three?
In conclusion, Swiss Board forum members raised a broad range of important considerations regarding both best practices and pitfalls in building effective inclusive Boards. The main takeaways will no doubt depend on your situation. However, the following top three issues were raised at this year’s event:
- Board effectiveness is very important today, and will be vital for organisations' outperformance in the future. Improving Board effectiveness is very important.
- Boards should review their performance and contribution to results in an objective and well-managed way. Boards must analyse and develop their contribution to results.
- Board members should be systematically and carefully selected, bringing relevant and diverse expertise required for the future - and then work as an effective team that is close to the organisation.