Board Effectiveness Reviews — How They Work

What Is a Board Effectiveness Review?

A board effectiveness review is a structured assessment of how well a company’s board is doing its governance job — whether it is giving effective strategic oversight, appropriate challenge to management, and sound governance of risk, reporting and accountability. The current UK Corporate Governance Code calls it a “board performance review”, and the FRC changed the wording deliberately: the review is meant to be a continuing improvement process rather than a backward-looking assurance exercise. For UK premium-listed companies the Code expects an annual review, with FTSE 350 companies using an externally facilitated review at least every three years. For other organisations — large private companies, FCA- and PRA-regulated firms, and charities — comparable expectations sit in the Wates Principles, the regulators’ rules and supervisory approach, and the Charity Governance Code.

This guide explains how board effectiveness reviews work, the difference between internal and external reviews, what a good review process looks like, how findings should be used, and what boards should expect to get from the time and money involved. It is written from the position of an executive search firm that regularly sees the outputs of board reviews — in the form of new non-executive appointments, chair and committee chair successions, and changes to board structure — and that works with boards on the board of directors recruitment that so often follows a review.

Board effectiveness reviews are one of the most useful governance tools a board has — when they are run with real rigour and when their findings are acted on. They are also among the most frequently treated as compliance exercises: produced, filed and forgotten. The difference between a review that improves governance and one that produces a report confirming the board is performing well lies almost entirely in the quality of the process and the board’s commitment to acting on what it finds. The most practical outcome of a good review is often a sharper brief for the next board appointment — a specific gap to fill rather than a generic request for “another experienced NED”.

The UK Corporate Governance Code Requirement

The UK Corporate Governance Code 2024, published by the Financial Reporting Council in January 2024, applies to financial years beginning on or after 1 January 2025 (the revised internal controls provision, Provision 29, applies from 1 January 2026). Provision 21 sets out the review requirement: there should be a formal and rigorous annual review of the performance of the board, its committees, the chair and individual directors. The chair should commission a regular externally facilitated board performance review, and in FTSE 350 companies this should happen at least every three years. The external reviewer should be identified in the annual report, together with a statement about any other connection it has with the company or individual directors.

Two changes from the 2018 Code are worth noting. First, the language moved from “evaluation” to “performance review”. Second, the chair is now expected to commission a regular external review rather than simply consider having one — a firmer expectation that applies beyond the FTSE 350, even though the three-year minimum is specific to the FTSE 350. Because the Code works on a “comply or explain” basis, a company that does not follow a provision must explain why in its annual report, and investors and proxy advisers read those explanations closely.

The three-year external cadence creates a rhythm that most listed boards now work within: in the intervening years the board runs an internal review, usually facilitated by the company secretary or led by the chair, and in the third year it commissions an external review from a specialist provider. In practice, a listed company will commission a full external review roughly every three years, with lighter-touch internal assessments in between. Many boards use the internal years to follow up on the actions agreed after the last external review, which gives the cycle continuity rather than three unconnected exercises.

The requirement to disclose the reviewer’s other connections has increased scrutiny of governance advisers that review boards they also advise. Boards that use their existing remuneration consultants, lawyers or governance advisers as external facilitators risk investor challenge on independence grounds. The FRC’s supporting Corporate Governance Code Guidance, which replaced the separate Guidance on Board Effectiveness, includes a section on board performance reviews. It is not part of the Code and is designed to prompt board discussion rather than prescribe steps, but it is the most useful starting point for a chair planning a review.

Internal Board Effectiveness Reviews

Internal board effectiveness reviews — run by the board itself, typically facilitated by the company secretary or the senior independent director — are the most common form and are carried out annually by most listed and many large private companies.

The questionnaire approach. The most widely used internal method is a structured questionnaire completed anonymously by each board member, covering the board’s strategic focus, meeting quality, information quality, committee effectiveness, and the board’s culture and dynamics. The company secretary or senior independent director analyses the responses and presents a summary of themes and suggested improvements to the full board. This approach is efficient and gives consistent data from year to year, but its quality depends heavily on whether board members answer honestly — which in turn depends on how anonymous the process feels and how open the board’s culture is. A company secretary with standing and independence of mind makes a real difference here.

Individual director assessment. Some boards supplement the collective questionnaire with individual assessments — the chair reviewing each NED’s contribution, and the senior independent director leading a review of the chair’s performance. These assessments are more sensitive than collective reviews and need careful handling to be productive rather than creating tension. The Code expects the senior independent director to meet the non-executive directors without the chair present at least annually to appraise the chair’s performance.

Internal review limitations. Internal reviews have consistent weaknesses: board members are reluctant to name colleagues’ underperformance; the company secretary who facilitates the review may have limited independence from the chair; and the board may collectively rationalise issues rather than confronting them. These limitations are why the Code expects periodic external reviews — to provide the independent perspective that internal reviews cannot reliably deliver.

Making internal reviews work harder. Internal years are most useful when they are not simply a repeat of the same questionnaire. Rotating a deeper focus each year — one year on risk oversight, the next on board information, the next on culture — keeps the exercise fresh, and adding a short set of one-to-one conversations between the chair and each director often surfaces more than the questionnaire does. The output should be a short list of agreed actions with owners, not a long report.

External Board Effectiveness Reviews

External board effectiveness reviews are carried out by specialist board review providers who bring independence, a view of how other boards operate, and a method that internal reviews usually lack.

Selection of the external reviewer. The external reviewer should be genuinely independent of the board, without existing advisory relationships that could compromise objectivity. The market includes specialist board review firms, some law firms and consultancies with dedicated board practices, and individual reviewers. The chair, often working with the senior independent director or the nomination committee, typically leads selection — seeking proposals from two or three providers and assessing their independence, method and experience of comparable boards. The Chartered Governance Institute UK & Ireland publishes a voluntary Code of Practice for board reviewers (second edition, 2023). Reviewers who sign up commit to its principles, disclose on their websites the other services they provide and how they manage conflicts, and are expected to apply it to FTSE 350 engagements. It also treats relationships lasting beyond six years as something to avoid. Asking whether a shortlisted reviewer has signed up is a quick, useful filter.

The review process. A rigorous external review usually runs over several weeks to a few months from engagement to final report, depending on board size and scope. It typically involves structured individual interviews with every board member and key executives; observation of at least one board meeting and, often, committee meetings; review of board papers, committee minutes and the management information the board receives; and, at larger companies, conversations with major shareholders or other stakeholders. Combining interviews, document review and observation gives the reviewer a view of the board that questionnaires alone cannot provide.

The findings report. The reviewer produces a confidential report for the board covering composition and skills; dynamics and culture; strategy and risk oversight; committee effectiveness; information quality; and the board’s relationship with management. The most useful reports give specific, evidenced findings rather than general impressions, and rank recommendations by impact rather than listing every observation with equal weight. Feedback on individual directors is usually given privately, often through the chair.

Board response and action plan. The report’s value lies entirely in what the board does with it. Good practice is for the board to respond formally to the key findings — acknowledging the issues, agreeing a specific action plan, and naming who is accountable for each action. The Code expects the annual report to describe the review, its outcomes and the actions taken, including how it has influenced or will influence board composition, which creates public accountability for follow-through that informal acknowledgement does not.

What Good Board Effectiveness Reviews Assess

The most rigorous reviews assess the board across eight dimensions, each judged both on current performance and against what good practice looks like at comparable organisations.

Composition and skills. Does the board have the right mix of skills, experience and perspectives to oversee the current strategy and the challenges ahead? Are specific capability gaps affecting its effectiveness? Is its composition sufficiently diverse in background, thinking and experience? This dimension feeds most directly into nomination committee priorities for future appointments.

Time allocation and agenda management. Is the board spending its time on the right things? Are meetings dominated by management presentations and operational reporting, leaving too little time for strategic discussion and challenge? Is the agenda balanced across the board’s responsibilities? Boards that spend most of their time on operational updates are not providing the strategic oversight their role requires.

Information quality. Is the information the board receives adequate — the right level of detail, at the right frequency, in the right format? Are papers too long, too operational, or not framed around the decisions and risks the board needs to focus on? Board information is a recurring theme in reviews: papers that arrive late, run too long or bury the question the board is being asked to answer are a common complaint.

Board dynamics and culture. Is there a culture of real challenge and open debate? Do all board members feel able to raise concerns? Is the chair managing the dynamics in a way that draws out the whole board’s contribution rather than letting certain voices dominate? This dimension is often the most sensitive and the most valuable, because it is the one most likely to produce specific, actionable findings about individuals and relationships.

Committee effectiveness. Are the audit, remuneration, nomination and risk committees functioning well? Are they adequately resourced, with the right membership and appropriate terms of reference? Is reporting from committees to the main board clear and timely? Committee effectiveness is often assessed separately, and committee weaknesses are a frequent finding in external reviews.

Strategy and risk oversight. Does the board have enough time and information to engage meaningfully with strategy? Is its oversight of risk — through the risk or audit committee — providing independent challenge? Is it getting early enough warning of emerging risks?

Succession planning and talent. Is the nomination committee maintaining credible succession plans for board and executive positions? Is board composition being actively managed towards what the company will need, rather than simply maintaining what exists?

External engagement. Is the chair maintaining adequate relationships with major shareholders and other key stakeholders? Is the remuneration committee chair engaging with investors on pay? Is the board well informed about investor and analyst views on strategy and governance?

Board Effectiveness Reviews at Non-Listed Companies

Non-listed organisations — large private businesses, PE-backed companies, regulated firms and charities — are not subject to the Code’s external review provision, but most face comparable expectations under other frameworks.

The Wates Corporate Governance Principles for Large Private Companies are one of the frameworks companies can report against under the Companies (Miscellaneous Reporting) Regulations 2018. There is no requirement for an annual review under Wates, but the guidance to the principles treats regular evaluation of the board as useful, and many large private companies now run one. FCA- and PRA-regulated firms face governance requirements and supervisory scrutiny of board composition and effectiveness, covered in more detail below. For charities, the Charity Governance Code was refreshed and relaunched in November 2025, moving away from prescribed processes towards asking boards to reflect regularly and honestly on how effectively they operate; charity boards should check the current version rather than rely on the older recommended practices. Our charity trustee appointment guide covers the recruitment side.

For PE-backed companies, board effectiveness — how well the portfolio company board, and any advisory board, provides governance oversight — is a regular item in investor portfolio monitoring. A short, documented review process is increasingly common, particularly ahead of a refinancing or exit, when buyers and lenders will look at the quality of governance as well as the numbers.

The Connection Between Board Effectiveness Reviews and Board Appointments

The board effectiveness review is the most valuable input into the nomination committee’s composition planning — far more useful than a generic skills matrix or a replacement-driven brief. A rigorous review that identifies specific skill gaps, flags a committee that needs strengthening, or highlights a dynamic where the board would benefit from a different perspective gives the nomination committee the precise brief for the next appointment that generic processes cannot provide.

The connection runs both ways. A board that has recently made new appointments should use the next review to assess whether those appointments are having the intended effect. A NED appointed to bring digital expertise may not yet have found their voice; a new chair may not have the chairing style that improves the board’s dynamics. The review provides the feedback loop that shows whether appointments are delivering what they were meant to, and good onboarding — agreed early with the chair — makes that much more likely.

For context on how composition decisions connect to the wider board construction question, the Board Construction Guide sets out the foundational framework. For listed company boards, the Board Construction at UK Listed Companies guide covers the Code and Listing Rules requirements in more detail.

Turning Review Findings into a Board Recruitment Brief

Most review reports recommend “strengthening” the board in some area. That is a starting point, not a brief. Before a search begins, the nomination committee should turn each composition finding into something a search firm and a candidate can test against. In practice that means answering four questions:

• What problem is the appointment solving? “Lacks technology expertise” should become something like “the board cannot challenge management’s platform migration plan or assess cyber risk reporting”. The more specific the problem, the easier it is to judge candidates.
• Which committee seat comes with it? Many review findings are really committee findings. If the audit committee needs recent and relevant financial experience, or the risk committee needs a chair who can stand up to the chief risk officer, the brief should say so from the start.
• What does the rest of the board already cover? An updated skills matrix stops the board hiring a second version of an existing director and highlights where tenure and independence pressures will arise.
• What does the dynamics finding mean for the person? If the review found too little challenge, the board needs someone with the confidence and standing to provide it — and a chair prepared to make room for it. That is as much a selection criterion as any technical skill.

Sharing the relevant (non-confidential) findings with the search firm at the outset saves weeks. It allows the brief to be tested against the market early: whether the combination the board wants exists, what the trade-offs are, and whether the role should be a NED seat, a committee chair or, occasionally, an executive hire. Our guide on how to hire a non-executive director walks through the selection process in detail, and our NED recruitment team runs these searches across listed, private, PE-backed and regulated boards.

Where a review points at the top of the board — a chair approaching the end of their tenure, or a finding about how the board is led — the stakes are higher and the timetable longer. Chairman recruitment after a review needs careful handling: the senior independent director usually leads the process, the outgoing chair should not run their own succession, and the new chair will need to own the action plan the previous review produced.

Common Review Failures

1. The review confirms everything is fine. A review that produces no significant findings has usually been carried out by a reviewer who lacks independence, or by a board that has not answered honestly. Real boards always have room to improve; a review that does not surface it is not adding value.

2. Findings are not acted on. The most common failure is a rigorous review whose findings are acknowledged but not implemented. A formal action plan with named owners and a date to revisit progress is the minimum governance response.

3. The external reviewer is not independent. Using an existing adviser as the external facilitator — the law firm, the auditor, the remuneration consultant — creates a conflict of interest that tends to produce a less candid review. Real independence means no commercial relationship that could be affected by the review’s findings.

4. Individual director assessment is not conducted. A review of collective effectiveness without individual assessment misses one of the most important dimensions of governance quality — the contribution, or lack of it, of specific board members. Provision 21 covers individual directors as well as the board, its committees and the chair, and it should be treated as a real standard rather than an optional extra.

5. The scope is set to avoid the difficult issue. Boards sometimes agree a scope that steers around the real problem — a dominant chief executive, a strained chair relationship, a committee that is not working. The CGI Code of Practice expects reviewers to decline work where a fair and balanced scope cannot be agreed, and boards should expect a good reviewer to push back on a narrow brief.

How Exec Capital Approaches Board Effectiveness Reviews

Exec Capital is an executive search firm, not a board reviewer, and we do not facilitate reviews — that is deliberate, because a reviewer should not also be the firm that profits from the appointments a review recommends. Our work starts where the review ends. We regularly receive search briefs that come directly from a recent review: a new audit committee chair with specific sector experience, a NED with a technology background, or an additional independent NED to strengthen committee independence. The quality of the review that precedes these briefs largely determines the precision of the appointment that follows.

For boards that have completed a review and need to act on its findings through new appointments, our board appointments practice covers NEDs, chairs, senior independent directors and committee chairs across listed, private and regulated organisations. For boards thinking about how their nomination committee should run that process, the SMF13 Chair of Nominations Committee guide explains the role and its responsibilities at FCA-regulated firms.

Board Dynamics and the Value of External Perspective

The most valuable insight a well-run external review provides is a view of governance patterns that board members have come to accept as normal. A chair who dominates discussion, a CEO who presents to the board rather than engaging with it, a culture where challenge is discouraged, or a composition that lacks the skills or diversity to address the firm’s strategic challenges — these are often visible to an outside observer but invisible to those inside who have adapted to them.

The external facilitator’s ability to create space for candid reflection — through confidential interviews in which board members can say things they would not say in the boardroom — is one of the most important parts of a well-run review. Directors who are frustrated with board dynamics but have not found a constructive way to raise them will often set out their concerns clearly in a confidential conversation with a trusted facilitator. Surfacing those concerns, and framing them constructively in the report, is one of the external review’s most distinctive contributions.

Observing a board meeting provides evidence that cannot be obtained any other way. Interviews reveal what board members think about governance; observation reveals how governance works in practice. The gap between the two is often the most important finding — the board that describes itself as open to challenge but whose meetings show a culture of deference; the chair who believes they draw out all voices but who consistently steers conversation away from certain perspectives; the independent director who describes themselves as highly engaged but contributes little in the meeting itself.

Dynamics findings are also the hardest to act on, because they rarely have a procedural fix. Sometimes the answer is coaching or a change in how the chair runs meetings; sometimes it is a change in board membership. Our article on how NEDs can spot groupthink looks at the warning signs boards should watch for between reviews.

Committee Effectiveness Reviews

A comprehensive review covers not just the main board but each of its committees. The audit, risk, remuneration and nomination committees each have specific mandates, and their effectiveness can only be judged against those mandates. A committee that meets regularly and produces thorough minutes but does not provide meaningful challenge to management — one that goes through the motions without exercising independent oversight — is not effective, however procedurally compliant it is.

Committee chair effectiveness is a specific dimension of the review. The committee chair sets the agenda, manages the process and communicates the committee’s conclusions to the full board, which requires both technical knowledge of the committee’s remit and meeting leadership. A chair who lacks the expertise to challenge the committee’s executive counterparts — the CFO for audit, the chief risk officer for risk, the HR director for remuneration — will provide inadequate oversight however good their process skills. Our audit and risk committee chair guide covers what boards should look for when a review identifies a weakness here.

The interface between committees and the full board — how material issues identified at committee level are escalated — is a commonly identified weakness. Committee chairs who present comprehensive reports without clearly flagging the items that need full board attention or decision are not making good use of the board’s time and judgement. The review should specifically assess whether committee-to-board reporting creates real oversight or simply information flow that meets procedural requirements.

Using Board Effectiveness Reviews for Composition Planning

The board skills matrix — a structured map of the skills, experience, sector knowledge and attributes each director brings — is both an output of the review and an input to the nomination committee’s succession planning. The composition assessment should produce an updated skills matrix and a clear view of the gaps future appointments should address.

Sequencing appointments to address review findings requires the nomination committee chair to translate findings into specific appointment criteria. A finding that the board lacks digital expertise should produce a brief that makes digital leadership experience an essential criterion — not just a desirable one — and that looks for candidates in technology and digital businesses rather than only the traditional board network. A finding that the board lacks diversity of professional background should produce a deliberate effort to find candidates through non-traditional routes. Our board diversity appointment guide covers how to do this without lowering the bar.

The timeline for closing gaps needs realistic planning. Under the Code, serving more than nine years from first appointment is one of the circumstances that may call a NED’s independence into question, and the chair should not normally remain in post beyond nine years. A board with three NEDs reaching that point in the same two-year window, and a skills matrix showing two significant capability gaps, faces a demanding succession challenge that may require several searches running in parallel or in quick sequence. The nomination committee that spots this twelve to eighteen months ahead can plan properly; the one that spots it when the first departure is announced will be managing a crisis.

Board Effectiveness in Financial Services

Financial services firms regulated by the FCA and PRA face specific expectations on board effectiveness that go beyond the Code. Regulators assess board effectiveness as part of supervision: supervisory teams form views on whether the board provides effective oversight of risk, compliance and strategy, and those views influence how the firm is rated and how much supervisory attention it receives. A weak board is a supervisory issue, not just a governance one.

For larger banks, building societies and investment firms that are required to have a nomination committee, the rules go further. The PRA Rulebook (General Organisational Requirements), which reflects the original CRD and MiFID II requirements, requires the nomination committee periodically, and at least annually, to assess the structure, size, composition and performance of the management body, and the knowledge, skills and experience of individual members and of the board as a whole, and to report the results to the board. The FCA has equivalent provisions for the firms it regulates in its SYSC sourcebook. For these firms, an annual board review is a regulatory obligation as well as good practice, and the output should be documented well enough to show a supervisor.

Under the Senior Managers and Certification Regime, the board review should specifically address the SMCR dimensions: whether the NEDs holding senior manager functions — the chair (SMF9), the chairs of the risk (SMF10), audit (SMF11), remuneration (SMF12) and nomination (SMF13) committees, and the senior independent director (SMF14) — are providing independent oversight within their prescribed responsibilities; the quality of management information on regulatory risk and compliance; and how the board has engaged with supervisory feedback. Since the Consumer Duty came into force, boards of firms within its scope also have to review and approve an annual report on whether the firm is delivering good outcomes for retail customers, and a review should test whether the board is challenging that report rather than simply approving it. Our Consumer Duty annual board report guide covers what that challenge looks like.

These dimensions are not part of standard listed company review frameworks and should be added to the scope explicitly. They also change what happens next: if a review at a regulated firm identifies the need for a new committee chair, the appointment will need regulatory approval before the individual can perform the senior manager function. That adds time to the process, and boards should build it into their succession plans rather than discovering it after the search. The SMF9 chair hiring guide sets out how this works for the most senior seat on a regulated board.

Sector-Specific Board Effectiveness Challenges

Different sectors face different board effectiveness challenges, and the review method should be calibrated to the organisation’s context.

In technology and scale-up businesses, the most common challenge is the transition from a founder-led board to a more formally governed one as the business grows. Processes that were adequate when the board was the founder and a couple of advisers are no longer adequate when the company is preparing for significant investment, a regulatory authorisation or a listing. A review at a scaling technology business should assess whether the governance infrastructure — terms of reference, committee structure, information quality — matches its current scale and plans.

In PE-backed businesses, the most common challenge is the blurring of the line between the investor’s deal or value creation team and the portfolio company board. The portfolio company board exists to govern the management team and is subject to directors’ duties to the company; the investor’s team exists to manage the fund’s return. These roles are sometimes conflated, creating governance ambiguity that a review can usefully address — often by strengthening the role of an independent chair or NED. Our PE NED hiring guide covers these appointments.

In family businesses, the challenge is usually integrating independent oversight into a board that has mainly been a family forum. Independent NEDs joining family boards often find that formal board packs, committee structures and documented decision-making are absent or underdeveloped. A review at a family business preparing to professionalise is as much a governance development exercise as an assessment.

Frequently asked questions

How often should a board effectiveness review be carried out?

Under the UK Corporate Governance Code, companies applying the Code should review the board, its committees, the chair and individual directors every year, and FTSE 350 companies should use an externally facilitated review at least every three years. Regulated firms with a nomination committee must assess the board at least annually under PRA and FCA rules. Private companies have no fixed requirement, but an annual internal review with a periodic external one is a sensible default.

What is the difference between a board evaluation and a board performance review?

They describe the same exercise. The 2024 Code replaced “evaluation” with “performance review” to signal a continuing improvement process rather than a one-off judgement. For more on timing and method, see our guide to board evaluation: when and how.

Who should lead the review?

The chair is responsible for the board review and, under the 2024 Code, for commissioning the external review. The senior independent director leads the appraisal of the chair. The company secretary typically supports internal reviews and manages the process with an external reviewer.

How do we choose an independent external reviewer?

Invite proposals from two or three providers with no existing advisory relationship with the company or its directors. Ask about method, experience of comparable boards, who will do the interviews and observation, and whether they have signed up to the CGI Code of Practice for board reviewers. The annual report will need to name the reviewer and disclose any other connection.

What happens if the review finds we need a new director?

The nomination committee should turn the finding into a specific brief — the problem the appointment solves, any committee role, and the skills already covered — and agree a realistic timetable. At regulated firms, allow time for regulatory approval if the role is a senior manager function. A search firm can then test the brief against the market before the search begins.

Should the review results be published?

The full report stays confidential to the board. Companies applying the Code describe the review in the annual report — how it was conducted, the outcomes, the actions taken and how it has influenced or will influence board composition. The CGI Code of Practice expects reviewers to be able to comment on how the review is described before publication.

Further Reading and Authoritative Sources

The FRC’s Corporate Governance Code Guidance, which includes a section on board performance reviews, is the main reference for scope, method and the use of external reviewers. Provision 21 of the UK Corporate Governance Code 2024 sets out the review expectations for companies applying the Code, and Provision 23 covers what the annual report should say about it.

The Chartered Governance Institute UK & Ireland publishes the Code of Practice for board reviewers alongside its Principles of Good Practice for listed companies using external board reviewers, which the Code of Practice is designed to mirror. Together they are the most practical guide for a board commissioning an external review, and much of the content applies equally to private companies and regulated firms. Charity boards should read the refreshed Charity Governance Code alongside both.

Related Exec Capital guides: Senior Independent Director recruitment · How to hire a chairman · SMCR board succession planning · Board advisory