In this spotlight on the Non-Executive Directors’ Handbook, we explore all the elements that go into an effective board and productive board meetings, highlighting the ‘Checklist for an Effective Board’ as a prime resource for critical insights.
What makes an effective board? And what role do non-executives play in creating an effective board? Throughout NEDA’s events, training, and insights, we return time and time again to the fundamental point of maintaining an effective board.
Various provisions of the UK Corporate Governance Code are designed to produce effective boards, detailing the size and composition of the board, the function of various members, and rules of conduct in how the board operates. Beyond these requirements though, it is also necessary to build a culture of collaboration, trust, and responsible decision-making.
The role of the non-executive director is crucial, but it is just one part of a much larger machine; NEDs must operate effectively alongside the chair, CEO, senior independent director, company secretary, and executive directors, ensuring that the board functions cohesively to make sound, balanced decisions as a unit. Moreover, boards must delegate responsibility to committees, to ensure that certain decisions are not taken by executive directors where they may have a conflict of interest.
With all these elements coming together, the effectiveness of a board will depend on how its meetings are conducted, how it reaches decisions, and how it ensures that action points are implemented by the individuals responsible. All the while, it is crucial for a diverse range of skill sets and experience to be maintained across the board, ensuring varied perspectives to build an effective voice.
The Non-Executive Directors’ Handbook provides a comprehensive study of all of these critical factors in its chapter on ‘Effective boards and board meetings’, drawing from key principles of the UK Corporate Governance Code, leading expertise, and unique case studies for understanding dynamic, diverse, and effective boardrooms.
A particularly key resource in the Handbook is the Checklist for an Effective Board, a unique tool for NEDs that provides a practical framework for evaluating and enhancing board performance.
With all the essential criteria for a board’s structure, its mix of skills and background, the clarity of its objectives, and the conduct of its meetings, the checklist forms a comprehensive line of evaluation. For example:
- Does the board collectively have a suitable mix of skills and experience to take the company forward?
- Do the NEDs give the time to the company that is needed?
- Are board members given sufficient induction and relevant training?
- Does the board have a clear sense of purpose, and clear objectives for the company, with sensible strategies for the achievement of those objectives?
- Is the board focusing its attention on the relevant/correct areas? Is there an appropriate balance between short-term and long-term issues?
- Does the board meet often enough to carry out its responsibilities properly? Does the board have occasional longer meetings, away from the office, to discuss strategy?
- Is sufficient time given in board meetings for all important issues to be discussed fully before a decision is reached? Do board members receive board papers in good time before meetings?
- Do the NEDs challenge the executive directors, while still remaining supportive?
These kinds of questions, along with the plethora of others in the Checklist for an Effective Board, offer a fundamental exercise in critical thinking for NEDs and board members alike, alongside the insights provided by the chapter as a whole.
Learn More
To read the Non-Executive Director’s Handbook and its chapter on Effective boards, follow the link here (NEDA Premium required).