Determining Board Effectiveness: A Handbook for Directors and Officers.

• Author: BARRON, PATRICIA C.
• Position: Review

By Lucy Alexander

Published by The Conference Board, New York, 68 pages

AS IS WELL KNOWN, the pressure for corporate performance over the last 15 years, principally but not exclusively driven by institutional investors, has put a more intensive spotlight on board effectiveness. There is solid evidence of an ever improving accountability for results on the part of boards. However, there is also incontrovertible evidence that more than a few boards remain without adequate structure, process and independence, and with, perhaps, more loyalties to incumbent management than to their duties as guardians of the interests of the shareholders.

In the Conference Board's new handbook, Determining Board Effectiveness, there is now an excellent guide for all boards of well-established companies. This handbook will be especially valuable for those boards that may be in need of a serious overhaul of their practices. Boards with their governance practices sound and well-defined will find that the handbook provides a very handy and comprehensive checklist for a self audit.

Determining Board Effectiveness has benefitted from the input of two panels consisting of active directors and corporate secretaries, along with other practitioners in the supporting fields of auditing, law, and academic research, and, last but not least, the inclusion of investors (institutional) and a corporate governance "watch dog." With a predominantly American perspective, the panelists address five major questions concerning key factors that help drive performance in the boardroom:

* what standards and metrics are appropriate for assessing the effectiveness of the board?

* What impact does the board infrastructure have on its effectiveness?

* How does the board's composition relate to its effectiveness?

* How does the board evaluate itself collectively or individually?

* How does the board go about making the necessary changes in strategy, structure, and processes to improve its effectiveness?

Boardroom effectiveness is the desire and the expectation of every shareholder. But what is board effectiveness and what enables a board to fulfill its responsibilities? As in any role that has to be translated into action, the keys are found in the details of the "operation."

These details are most thoroughly covered in 14 mini-chapters with topics that include: the board clearly defining its roles and responsibilities and setting priorities; the composition of the board to bring relevant...