THE "RIGHTS" OF DIRECTORSHIP

BOARDROOM BOOTCAMP:

SO, YOU’RE THINKING ABOUT A “BOARD PORTAL”?

BOARD REPORTING

LESSONS FROM GOLDILOCKS

KEEPING BOARD FRESH

HIRE A DETECTIVE?

THE BOARD AND BSA

A CLOSER LOOK AT MINUTES

DIRECTOR SUCCESS SKILLS

LENDING ADVICE FROM A VETERAN

MUCH MORE ABOUT MINUTES

THE "RIGHTS" OF DIRECTORSHIP

From the November 2001 Bank Directors Briefing. Copyright Simmons Boardman Publishing. For information or to subscribe, call Steve Cocheo, editor, 212-620-7219, scocheo@sbpub.com

An old expression used to go like this: "Every day, in every way, I’m getting better and better." How well is your bank’s board doing?

Board self-evaluation is one of those ideas that periodically come back into vogue. Recently, the National Association of Corporate Directors released its Report of the Blue Ribbon Commission on Board Evaluation. A key issue explored by the report was the intent behind board evaluations.

"Boards of directors–often underused by today’s corporation–can be a powerful performance enhancer to the company," stated B. Kenneth West, chairman of the association and co-chair of the commission. "But to operate on a continuous high performance level, boards must establish a continuous-improvement culture that openly evaluates their successes, failures, and overall effectiveness. A true high-performing board seeks accountability and has adopted a rigorous process."

The report makes the point that a successful board must find a balance of the "right people, the right culture, the right issues, the right information, the right process, and the right followup." It summarizes these issues as follows:

Right people–"A board with the right people will have a substantial majority of independent directors with a wide range of talents, expertise, and occupational and personal backgrounds." The report stresses the importance of directors who are not only independent, but independent-minded, as well as willing to do what is best for their company.

Right culture–"Directors and managers must work together to achieve ‘constructive interaction’ "–in other words, "give and take."

Right issues–Both board and management "should focus on activities that will help the company maximize long-term shareholder value."

Right information–"Directors must obtain, study, and understand relevant information in order to spend their time effectively and make informed decisions."

Right process–"To evaluate itself, a board should compose a description of its specific duties, goals, and objectives, and then set about measuring its performance against those responsibilities."

Right follow-through–"After weighing the results of an evaluation, the full board should agree on and approve actions to address areas in need of improvement."