The revelation that the suppliers of Boohoo, a fashion retailer, were making garments in sweatshops with workers paid less than half the living wage prompted the perennial post hoc question: ‘Where was the board?’
Indeed, The Guardian asked: ‘Did the board wilfully ignore abuses under its nose?’, with other analysts quick to point the finger.
This is not the first scandal where the board has been found to be asleep at the wheel, nor the last unless pre-emptive measures can be taken. In order to avoid these reputational disasters, boards need to constantly scrutinise themselves and make sure they are fit for purpose. One of the main tools for doing so is board evaluation. Best practice suggests boards should undergo regular evaluation – either self-evaluation or through the support of an external consultant.
Surprisingly, many boards are resistant to evaluation. Some, perhaps under the influence of the Dunning-Kruger effect, argue that they are doing a good job and formal evaluation is unnecessary. Others are concerned about the time and costs of evaluation. This is a particular concern for charities, who operate on very tight budgets and where evaluation is seen as a luxury. Recent research from Henley Business School suggests that around a quarter of UK charities have never undertaken board evaluation.
Board evaluation process
But board evaluation doesn’t need to be complex, time-consuming or expensive. At Libraries Unlimited, we developed an approach to board evaluation that cost nothing, took little time, and was a powerful inflection point for helping us to enhance our effectiveness.
Libraries Unlimited is a charity that spun out of Devon County Council four years ago and is now running over 50 libraries in Devon and Torbay. Its original evaluation process focused on individual trustees and whether they were ‘fit and proper people’ to hold the post. Following a new chair (William Harvey) and the arrival of several new trustees, the board was determined to develop an evaluation process that would help the board as a whole to develop and progress, rather than concentrating on individual performance. The imperatives were to:
- Develop an evaluation system that would make few demands on the time of trustees, who were already under time pressures;
- Involve no monetary cost;
- Provide the chair and the board with meaningful data about board performance and where it needed to improve.
The approach, proposed by Morgen Witzel, was to develop a series of four short online surveys, as follows:
- Trustee self-reflection, where trustees were invited to consider their own contribution to the board and where they needed to improve
- Trustee evaluation of the chair and their role and performance
- Trustee evaluation of the CEO, who is also a trustee
- Reflections on the performance of the board as a whole, what worked well and what was not working.
During this process, the chair also reflected on the performance of each trustee, again with a view to seeing what positive contributions they had made and where they might develop further. The chair and deputy chair then held one-to-one discussions with each trustee, pooling insights and reflections, and considering how each board member could develop further. As part of the process, the chair evaluated the CEO and the deputy chair evaluated the chair, drawing on data from other board members and from their own reflections of their performance.
The outcome of the board evaluation process represented an important reality check for our board as a whole and for individual board members. Following the board evaluation process, there was a frank discussion among the board, who felt that the process struck the right balance between the time/effort and the benefit/learning. The process also accelerated a conversation at the board around our performance and what steps we can take to improve.
Several positive outcomes emerged from the board evaluation process. First, we created a new committee structure alongside board meetings to ensure that more operational matters are discussed at a committee level, while strategic issues are preserved for board meetings. Second, we established how to enhance our diversity offer on the board, working more closely with a staff diversity champion. Third, we took proactive steps to build stronger ties between the board, senior managers and other staff members to ensure we are not aloof. Fourth, we provided financial training with the chair of the finance and audit committee running an interactive session for other board members.
In summary, board evaluation is a vital mechanism to help a board raise its game. We found that high quality data on board performance can be collected, analysed and acted upon at no financial cost and with limited time commitment for board members. Repeating the process episodically provides the added advantage of comparing data over a longer period of time so the board can reflect on its performance at multiple points in time. We recognise that from time to time, bringing in an external to evaluate the board can help to bring another lens through which the board can reflect and enact on its performance.
Morgen Witzel is a Board member of Libraries Unlimited, a Fellow of the Exeter Centre for Leadership, and a writer about leadership and ethics.
William Harvey is Chair of the Board of Libraries Unlimited, and Professor of Management and Associate Dean at the University of Exeter Business School.