10 Ways To Measure The Tone At The Top
By Donna Epps
To complete our series on Governance especially Board evaluation, let me show you an comprehensive article on the corporatecomplianceinsights.com website. Donna Epps, the author write about the management’s ”tone at the top” and the Dodd-Frank Act’s.
What is the Dodd-Franck Act’s?
The author explain, “The Dodd-Franck Act’s is offering potentially large rewards for tips about possible securities law violations, this could be an opportune time for compliance executives to consider new ways to evaluate their company’s tone at the top.”
In other words, directors in Boardroom have today many ways and tools in their hands to limit the risks’ management . Donna Epps going further that and lists 10 ways to assess the current state of an organization or a Board of Directors.
1- Extent and nature of wrongdoing
2- Anonymous incident reporting
3- Social media reputation assessment
4- Employee surveys
5- Tone of management communications
6- Group discussion
7- Facility visits
8- Exit interviews
9- Interviews and focus groups
10- Customer complaints
Read the article on corporatecomplianceinsights.com
To read more:
Board Evaluation: What areas of operation are evaluated regularly or annually?
In CAMERA Board Session… Why?
Source : leadingboards.com
In CAMERA Board Session… Why?
One of the most delicate topics in governance is the ability to control any contentious agenda items. As the Board and committees are intended to oversee the management by the executive team in place, it may be difficult in their presence to address openly certain subjects in Council, especially when they pertain to or affect their performance.
The governance practice “in-camera meeting” is designed to help board to manage these delicates cases.
A definition of what constitutes an in session camera is probably valuable at this point: it’s when directors meet on their own, without management or any other non-Board member present.
The legal term is “recused,” which means to disqualify someone from participation in a decision on grounds that they cannot, because of a particular interest or position, objectively discuss the matter.
Currently accepted principles of good governance provide that all boards and committees should regularly hold scheduled in camera sessions for board members only and also that boards should regularly meet without senior management present.
We find several references to this practice to hold a session at the end of CA with only independent outside directors. It’s providing them, the opportunity to talk about more sensitive elements:
• To provide an opportunity for the board to discuss particularly sensitive matters within the jurisdiction of the board (such as litigation, work relations, or management/CEO’s performance )
• To provide an opportunity for the board to discuss sensitive internal board governance matters
• To provide an opportunity for the board to review the performance and compensation of the president, in the absence of executive officers or others not on the board.
In case of salaried ‘problem with the CEO, employee may contact one director and explain his problem. The administrator wills the choice to propose an “in camera” session and talks about the CEO issue without any obligation of keeping him informed.
In conclusion, we need to dissociate two elements for Boards in camera.
The first is allowing full and open debate on different topics without any possible interference. The second is to exclude people of the debate which may have a potential conflict of interest with the decision.
Source : bit.ly
Board Evaluation: What areas of operation are evaluated regularly or annually?
“74% of Board members are very satisfied with their own understanding of the role of the board, but only 24% were very satisfied with their colleague’s understanding of the role of the board.”
Source: Nonprofit Governance Index 2002
The need for credible high quality independent evaluations has increased, many companies are engaged in evaluating their own performances.
The board of directors should periodically assess its performance as a collegial body as well as the performance of its individual directors. Many boards undertake this evaluation exercise annually.
If done well, appraisals help boards: become more effective by clarifying the individual and collective responsibilities, improve the working relationship with managers, keep an appropriate balance of power between the board and the CEO and take a developmental perspective.
The six steps of the evaluation process
- Determining the Purpose of Environmental Assessment
- Establishing an evaluation structure
- Preparing the assessment concept
- Collecting information
- Analyzing information
- Actions and Implementation
This allows judging if the board had fulfilled its missions and checked the quality of materials and processes that influence its performance.
Evaluation should focus on 3 goals:
- Evaluate on the operational procedures of the board
- Check in the major questions has been properly prepared and negotiated
- Measure the actual contribution of each director Board’s work through his or her competence and involvement in discussions.
To evaluate boards, the most appropriate tools are the questionnaires.
The questionnaire might be uses daily or annually.
- Once a year, the Board should dedicate one of the points on its agenda to a debate concerning its operation.
- Most of time, the meeting questionnaire is more concerned with orders of day.
For example, how Well Has the Board Conducted Itself?
The questionnaire should be anonymous and board members should know what will happen with the information once collected. Therefore, access to individual evaluation reports should be limited to administrator to which they relate, generally the President.
The advantage of using a Board portal like Leading Boards ensures total anonymity for each director and interprets results automatically.
Example for the annual self-assessment:
Example for the meeting self-assessment:
Source : bit.ly
The Governance vocabulary
We thought you should be curious to visit a list of most used word in the governance field. Note the mix of accounting and legal terms, but also some specifics to boards like Code of Conduct, Conflict of interest, meeting procedures or board evaluation. We will update this vocabulary on a regular basis, kindly send your comment and addition to complete it.
Ad hoc committee
Task Force
Advisory trustees
Agenda
Annual Report
Audit
Audit committee
Auditor
Financial statements
External auditor
Internal auditor
Internal audits
Qualified opinion
“True and fair view”
Reporting procedures
Unqualified opinion
Body corporate status
Charitable
Company
Cooperative
Non profit
Chair
Chair
Chairperson
Chairman
Charter
Breach of contract
Civil Action
Damages for breaches
Proceedings
Recovery of debt
Code of Conduct
Conflict of interest
Ethical
Legal duties
Obligations
Good faith
Compliance
Liability
Governing entity
Constituency
Election
Representative
Constitution
Meeting procedures
Annual reporting
Terms of appointment
General meetings
Voting
Evaluation
Board evaluation
Feedback
Succession
Chair
Individual members
Expenses
Advances
Allowances
Direct expenses
Reimbursement
Management
Chief Executive
Chief Executive (CE)
Chief Executive Officer (CEO)
Director-General
Managing-Director (M-D)
Principal
Secretary
Vice Chancellor
Standing committee
Succession planning
Continuity
Appropriate skills
Vote
Casting vote
Deliberative vote
Quorum
Resolution
Simple majority
Tied vote
To read more, follow the glossary of Stanford website :
Corporate Governance
Source : gsb.stanford.edu
Evaluer la performance du conseil d’administration :
L’évaluation de la performance du conseil d’administration ou de chaque administrateur de façon individuelle est une tâche qui peut s’avérer complexe. En effet, on ne peut pas évaluer les performances du conseil comme on évalue celle d’un employé ou d’une entreprise. Il faut alors trouver d’autres bases d’évaluation.
L’auto-évaluation :
Il est souvent difficile de prendre du recul sur les décisions ou le travail effectués. Cependant une auto-évaluation régulière du conseil est nécessaire. En effet ceci permet à celui-ci de s’interroger sur ses performances et la qualité de son travail. Pour être pertinente cette auto-évaluation doit avoir lieu au moins une fois par an. Elle peut être menée par la secrétaire corporative ou par un comité de gouvernance suivant la taille de l’organisation. Elle peut porter sur le rôle du Conseil d’administration, ses activités, ses membres. Elle permet de décider si celui-ci a bien rempli sa mission et de juger de la qualité des documents et processus qui influencent sa performance. Cependant une auto-évaluation n’est pas suffisante pour évaluer de manière précise la performance du conseil.
Une évaluation indépendante :
Faire appel à un consultant indépendant permettra une meilleur évaluation de la performance du conseil et de ses membres. Une évaluation indépendante donne au conseil un point de vue extérieur qui n’est pas permis par l’auto-évaluation. Encore une fois par nécessité de pertinence, une évaluation indépendante devrait être effectuée au moins tous les deux ans (la durée d’un mandat étant de trois ans).
Quelques critères d’évaluation :
Voici une liste non exhaustive de critères pouvant être utilisés pour évaluer la performance du conseil :
Le taux de participation aux réunions.
La fréquence et la durée des réunions (respect des critères préétablis).
Qualité du travail d’équipe (qualité des échanges, fréquence des échanges, partage d’informations, etc.).
Le travail des comités a-t-il lieu suffisamment en amont pour permettre une réunion du conseil efficace ?
La taille du conseil et le nombre de comités est-il en accord avec la taille de l’organisation ?
Voici deux documents vous permettant d’effectuer une évaluation de votre conseil d’administration (peut être utilisé également pour un comité). Les évaluations du conseil d’administration sont plus une tradition anglo-saxonne que latine.
Comment améliorer l’efficacité de votre conseil d’administration ?
Création d’un comité
Source : leadingboards.com
