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Accountability For Board Performance

Last month we asked – "Are leaders ever told the truth?" If we believe the truth to lie in 'they are only being told what they want to hear', then, how can we as shareholders/employees hold our leaders accountable for their actions.

Whose decision is it when a Board Member is to be appointed? Do they have 3-month trial periods before being made permanent? Are they then subject to annual performance appraisals? Aside from the annual or bi annual election by shareholders, how are Boards and Board members appraised?

Do we assume that if you are 'invited', 'nominated' or 'elected' to a board that you have the qualifications and will do a competent job? Recent corporate upheavals would certainly suggest otherwise.

We do take comfort in hearing about people like the new CEO for McDonalds Mr Bell, who "started with McDonalds at Kingsford while still at school…. was an assistant manager at 18 and store manager at 19… vice president at 27… has been promoted to chief executive and president of McDonald's International" Sydney Morning Herald – April 21 These are facts that we can relate to - starting at the bottom and working your way up. Never the less when Mr Bell ascends to the Board as a non-executive member he will be beyond having his personal performance scrutinised.

Employees are subject to performance appraisals. The most effective parts of that process are a Performance Scorecard and a 360 degree assessment that involves feedback from all our work colleagues. When the 360 degree process is conducted effectively with a well structured pre-brief followed by a de-brief, the results for both employee and company are very positive.

With the increasing focus on the performance of CEO's and Boards, it is refreshing to see that there is emerging support for more structured performance reviews.

Helen Lynch AM, director of Westpac, Southcorp and the deputy chairman of Pacific Brands is: "a strong advocate for one-on-one annual board evaluations, which have been conducted for several years at Westpac. These involve self-evaluation, an assessment of individual directors by other directors and key executives. The process is not widely embraced – Southcorp for example, does a collective review – but Lynch is certain about the benefits. "For a NED to get on a board and think they know it all is very old-fashioned. We have to be into continuing education to keep ourselves up to date and one way of reinforcing that is knowing that the value that you add is going to be appraised annually."" - Company Director, No 3 April – Helen Lynch – A time for balance.

Our article Board Performance - Who Cares? outlines the prevalence of and processes used to appraise Board performance.

What Next?

If you are interested in more information please give us a call on +61 412 026 909 and ask to speak to one of our consultants. 

Alternatively e-mail us at info@emdgroup.com.au or use the form on our Contact Us page.

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