The board is ultimately responsible for the ongoing performance and stability of the organisation. The board should have a system for regular evaluation and oversight of the performance of the organisation against its strategic goals. The board should also monitor the financial position of the organisation, the performance of the CEO, the effectiveness of its own performance, as well as the overall governance of the organisation.

The board should define measures, which can be both qualitative and quantitative, which provide meaningful insight for the board to act. Regular evaluation against such measures allows for oversight of the organisation’s current state and monitoring to safeguard the future of the organisation.

By developing a system of internal controls, the board can assure itself that organisational performance and strategic progress are being regularly reviewed and done so in a way that can be compared over time. A system should include a collection of policies, schedules, measures, and reports which, when combined, provide the board with the tools needed to ensure continuous improvement.

Importantly, the board should not simply observe. Where a system of evaluation identifies gaps, deficiencies, issues, or other concerns, the board must act. As defined by policy, action could be as simple as getting additional information, but could also include reallocating resources, readjusting targets, and reviewing the responsibilities and deliverables of the CEO.

A process to review the contribution of individual directors, board processes, and interpersonal and group dynamics is important to ensure continuous improvement of the board. The process can and should involve members and stakeholders of the organisation.

There are many ways to evaluate board performance. At a minimum, at a board meeting once per year, boards should include an agenda item to formally discuss the board’s performance. A more in-depth process can include a formal evaluation by an external party. The evaluation process should consider not only the performance of the board as a whole, but also the performance of individual directors and the chair, and should put in place action plans for continual improvement.