The Importance of Board Analysis

Board analysis is a study of the composition, structure and operations of a board. Its aim is to find out if a board has the appropriate balance of inside and outside expertise, experience and impartiality to advise and monitor management and formulate a strategy. It also aims at understanding how a board operates as a collective and if the board is in fact supporting the CEO and assisting in driving the company’s growth.

The most effective boards have a dynamic of openness, trust and collaboration. They have a good understanding of the ecosystem of the company, and they are able to ask management crucial questions. They are focused on the long-term health of the company and are able to recognize risk and opportunities. They work with the stakeholders to ensure that the board is aware of their interests, and can push for changes in corporate behavior, and can make a positive impact.

According to McKinsey’s 2021 global survey of more than 800 directors and executives the most effective boards have an experienced mix of non-executives (NEDs) and executives who have a deep understanding of the business. They have an organized structure and a set of guidelines to guide their decision-making process, and they’re committed to improving the effectiveness of the board and its committees.

A board evaluation can be a useful tool to help a board evaluate its performance and give feedback to the CEO and Chair. It is not the case that all boards have this as a top priority. Through conducting an objective third-party evaluation board members will be more aware of the potential pitfalls.

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