Despite their best intentions, board members may sometimes be disengaged from their critical oversight obligations. This is usually due to dysfunctional group dynamics, like rivalries, the dominance by a small number of directors and bad communication, which prevents the board from engaging the collective deliberation required for effective decision making.
The board could not be able to establish appropriate internal structures that allow it to carry its web duties of performance assessment. This typically means establishing officers or committees which are responsible for gathering, analysing and presenting evaluation results to the board for discussion. It is unlikely that the board will be able to effectively manage these issues if they are left to the CEO and the management team.
The board is more likely to miss the overall performance of its board when it doesn’t consider behavioral factors into its review of the director’s contributions and effectiveness. This results in a routine process that is carried out in order to satisfy listing requirements or to make a statement to good governance.
There are a variety of ways boards can improve their performance and meet their fiduciary obligations. Focusing on the quality human interactions in the boardroom is a good first step. This can be accomplished by making sure that the board is adaptable and resilient as well as strategic in nature. It is also vital to provide the right mix of abilities and experiences and gender diversity. This gives the board a greater variety of perspectives to be gained and enables them to more effectively address crucial issues. This helps the board create an environment of collaboration that encourages open communication and diverse perspectives.
