Performance measurement and boardroom evaluation - beyond term limits

The Institute of Corporate Directors in Canada has published a document called Beyond Term Limits: Using Performance Management to Guide Board Renewal.  A performance based approach is recommended here as a means of pursuing best practice and encouraging further boardroom diversity.  It also purposes measures which go beyond the usual blunt tool used by corporations to address boardroom renewal, (e.g., term limits).  

As recently reported on the Harvard Law School Forum on Corporate Governance and Financial Regulation website, board renewal is growing in importance as investors seek further clarity on director term limits and are now sending the message that "companies must renew the board or they will seek to do it instead".  

Key techniques to follow a performance based approach include:

- A regular review of staffing and skills in the boardroom mapped against organisational needs, 

- Board evaluations (full - focusing on the board as a whole and also at the individual level), 

- Peer to peer evaluations considering contribution and preparedness, 

- Evaluation methods may include surveys or open-ended questions presented by the chairperson, 

- Term limits (with 53% of Canadian firms reporting a 15-year limit), and

- Encouragement of a performance based culture for execs and NEDs alike. 

The paper can be found on its website at https://www.icd.ca/Home.aspx which also includes other useful information on governance practices.