Why conduct a review?
Board reviews are an important part of good corporate governance. Just as a clear statement of responsibilities and a rigorous performance appraisal is important for the CEO and senior management team, it is also important for the board. A board demonstrates leadership by conducting a board effectiveness or performance review and instituting appropriate improvement initiatives.
Many countries have regulations that require a regular or an annual board performance review. The need to conduct a board performance review can include the listing requirements of stock exchanges and the regulations of government, industry and other regulators.
Many boards are also interested in how they can continually improve and how they can become more effective. A rigorous performance review, followed by appropriate improvement initiatives are an important part of this process.
Reviews are also conducted by boards that are not sure as to the extent of their effectiveness and how they stack up against other boards.