Board Evaluation: When and How

Board evaluation has a poor reputation, and largely a deserved one. A questionnaire goes round in December, the results are presented in January, a paragraph in the annual report confirms that the board considers itself effective, and nothing changes. Done that way it is a compliance exercise that uses up directors’ time and produces a document nobody reads twice.

Done properly, it is one of the few mechanisms a board has for examining its own performance, and it usually surfaces two or three things everybody privately knew and nobody had said out loud. This article covers when to run an evaluation, how to run it, whether to do it internally or bring in an external reviewer, and how to make sure the findings lead somewhere — including, where the review shows a capability gap, into a new appointment. For the mechanics of a full externally facilitated review, see our separate guide to how board effectiveness reviews work.

What the Code and the Wates Principles expect

For listed companies, the reference point is the FRC’s UK Corporate Governance Code 2024, which applies to financial years beginning on or after 1 January 2025, with the new internal controls declaration in Provision 29 following for financial years beginning on or after 1 January 2026. The 2024 Code expects a formal and rigorous annual review of the performance of the board, its committees, the chair and individual directors. One change of language is worth noticing: the 2024 edition talks about a “board performance review” rather than a “board evaluation”, a deliberate shift towards continuous improvement rather than a backward-looking sign-off.

Under Provision 21, FTSE 350 companies are expected to have an externally facilitated review at least every three years, and the chair is expected to commission regular external reviews rather than simply consider having one. Provision 22 then requires the chair to act on the results, recognising the board’s strengths and addressing its weaknesses, and each director to engage with the process. Under Provision 23 the annual report should describe how the review was conducted, the nature and extent of any external reviewer’s contact with the board and individual directors, the outcomes and actions taken, and how the review has influenced or will influence future board composition.

The FRC’s Corporate Governance Code Guidance adds the practical detail. The chair has overall responsibility for the review and acts on the results; the senior independent director leads the review of the chair; committee chairs review their own committees; and the company secretary supports the process. The Guidance encourages chairs of smaller listed companies to follow the FTSE 350 approach to external review, and it is blunt that a questionnaire on its own is unlikely to reveal how the boardroom actually works.

The Code operates on a comply-or-explain basis and applies to companies in the UK Listing Rules’ commercial companies category (what used to be premium listing). Large private companies are in a different position. Those with more than 2,000 employees, or turnover above £200 million and a balance sheet above £2 billion, must report on their governance arrangements, and many do so against the Wates Corporate Governance Principles for Large Private Companies. Board effectiveness sits under Principle Two, Board Composition, and the FRC’s reviews of Wates reporting have pushed companies to say more about how the board’s overall effectiveness has actually been evaluated.

Smaller private and investor-backed boards are bound by neither. But the Code has become the reference point for what good practice looks like, and investors, lenders and acquirers increasingly expect something equivalent. The ICAEW’s summary of what changed in the 2024 Code is a useful briefing for directors coming to it fresh.

When to run a board evaluation

Annually, as routine. Beyond the annual cycle, there are four moments when an evaluation earns its keep more than at any other time.

• Before appointing a new chair or several new directors. An evaluation run before a refresh tells you what the board is missing, rather than confirming afterwards that you hired for what you already had. This is the highest-value timing and the least used. If you are about to start a chair search, the evaluation is the best source material for the specification.
• After a significant failure. A missed forecast the board did not see coming, a governance incident, a strategy that unravelled. The temptation is to review the executive. The more useful question is what the board itself did not ask, and why.
• Ahead of investment or sale. Sophisticated investors assess boards as part of due diligence. Evidence of a board that examines its own performance is a positive signal, and the process usually improves the thing being assessed.
• When the board has changed character. Founders stepping back, investor directors joining, a first independent non-executive arriving, a move towards a listing. The board that now exists is not the board its current practices were designed for.

Timing within the year matters too. An evaluation that reports just before the annual report is drafted tends to be written for the annual report. Running it mid-year, with results discussed at a board meeting that has time on the agenda for them, gives the board a chance to act before the next reporting cycle rather than describe intentions.

Internal or externally facilitated?

The case for external facilitation is not sophistication of method. It is that directors will say things to an outsider, under confidentiality, that they will not say in a room chaired by the person they would be criticising. That candour is the whole value, and it is also why the chair’s own evaluation should always be led by someone other than the chair — normally the senior independent director.

Internal reviews have a place. They are cheaper, quicker and can be well targeted if the chair and company secretary design them around the board’s known issues. A common pattern is an external review every third year with internally led reviews in between, each one following up the actions from the last.

If you go external, the FRC Guidance points to what matters when choosing a reviewer:

• Independence. Check for conflicts. A firm that also advises the company on remuneration, audit or executive search has a commercial relationship that needs disclosing and weighing.
• Method. Prefer a reviewer who will interview each director individually, observe board and committee meetings and speak to the senior executive team, rather than one whose product is an online survey.
• Access. The chair should make sure the reviewer sees board and committee papers and minutes, and that directors cooperate fully.
• Scope agreed in advance. Objectives, scope and the form of output should be agreed with the board before work starts, so that the report addresses the questions the board actually has.

How to run it: a practical sequence

Whether internal or external, a useful evaluation follows roughly the same shape.

1. Agree the questions first. The chair, with the senior independent director and company secretary, decides what the board most needs to understand this year. Last year’s actions are the first item on that list.
2. Start with one written question. Before anything else, ask each director privately and in writing: what did we not discuss this year that we should have? The overlap in the answers is often the real finding, and it costs nothing to run.
3. Gather evidence, not just opinion. Review twelve months of agendas, papers and minutes alongside the strategy and the risk register. Surveys tell you what directors think; the record tells you what the board did.
4. Interview individually. Thirty to sixty minutes with each director, in confidence. Include the executives who attend the board — they see its behaviour from the other side of the table.
5. Discuss the findings as a board. Give the discussion proper time in a scheduled meeting, not the last fifteen minutes of a crowded agenda.
6. Agree a short action list and follow it up. Covered in more detail below.

The company secretary is central to most of this — designing the process, holding the evidence, protecting confidentiality and tracking actions. Boards without an experienced one often find the evaluation is the moment that gap becomes obvious, which is one reason company secretary recruitment frequently follows a first serious review.

What to actually examine

Questionnaires asking whether the board has the right skills produce answers everybody can agree with. Five areas produce more useful discomfort.

• What the board did not discuss. Compare twelve months of agendas with the risk register and the strategy. Items that never appeared are more revealing than items that did.
• Where decisions actually get made. If material decisions are settled before the meeting and ratified in it, the board is not governing. Directors know when this is happening.
• Whether dissent occurs. A board with no recorded disagreement in a year is not a board that agrees; it is a board that does not challenge. The minutes are evidence here.
• Whether papers support decisions. Volume is not quality. Ask directors what they actually read and what they would drop.
• Individual contribution. The uncomfortable one, and the reason external facilitation exists. Attendance, preparation, whether a director’s expertise is being used, and whether anyone has stopped contributing.

The FRC Guidance suggests a similar spread: the mix of skills and experience, succession and development plans, relationships within the board and with the executive, how committees work, the quality of information, and how the board engages with shareholders and other stakeholders. It also encourages chairs to take views from outside the boardroom — the workforce, the auditors — rather than relying only on directors’ views of themselves.

Evaluating the chair and individual directors

The board-level findings are the easy part. The individual reviews are where most evaluations go soft.

The chair’s review should be led by the senior independent director, who meets the non-executives without the chair present and takes views from the executive directors. A chair leading their own evaluation produces predictable results. Where a board has no senior independent director — common in private and investor-backed companies — another independent director should take the role, and the evaluation is often the point at which the board decides it needs a formal senior independent director appointment.

Each director should receive individual feedback from the chair, in person. Feedback aggregated into a report and never said to anyone is not feedback. Where a director’s contribution is found wanting, the chair owns that conversation: it may lead to development, a change of committee role or, at the end of a term, a decision not to put the director forward for re-election. Evaluations that produce no consequence for anyone are the reason the exercise has the reputation it does.

Turning findings into action

An evaluation is worth what it changes. Four outputs are worth insisting on.

• A short list of agreed actions with owners and dates. Three or four, not fifteen. Reviewed at the next board meeting and the one after.
• Composition implications, stated plainly. If the board lacks a capability, that becomes a brief for a board appointment, not a note in the minutes. If a director is no longer contributing, that is a conversation the chair owns.
• Changes to the agenda and the board pack. Usually the quickest win available, and the one most often identified.
• Individual feedback, delivered. Every director should leave the process knowing what the board needs more of from them.

The failure mode to guard against is the evaluation that produces a document and no consequence. If nothing changes — not the agenda, not the papers, not the composition — the board learns that the exercise is theatre, and next year’s answers become correspondingly less honest. It is better to act properly on two findings than to catalogue fifteen and address none. The Guidance makes the same point from the other direction: the board can review whether last year’s outcomes were actually acted on, and that question should open every new cycle.

When the answer is a new appointment

A good share of evaluations end in the same place: the board needs someone it does not have. It might be a non-executive with sector or technology experience, a stronger audit committee chair, a chair whose style suits a board moving from founder control to investor oversight, or a nomination committee that actually runs succession rather than reacting to departures.

The evaluation is the best possible starting point for that search, because it describes the gap in the board’s own words rather than as a generic skills matrix. Translate it into a specification that says what the new director must bring, how they need to behave in the room, and which existing strengths they should not duplicate. Our board construction guide covers how to specify what is missing, and where succession planning itself is the weakness, a capable nomination committee chair is often the first fix.

Exec Capital’s board of directors recruitment work regularly starts from exactly this kind of finding. Bringing the evaluation output into the brief means the shortlist is tested against what the board actually lacks, and the next evaluation can check whether the appointment closed the gap.

Frequently asked questions

How often should a board be evaluated?

Annually. The 2024 UK Corporate Governance Code expects a formal and rigorous annual review of the board, its committees, the chair and individual directors, with an externally facilitated review at least every three years for FTSE 350 companies.

Do private companies need to do this?

Most have no obligation to. Large private companies reporting against the Wates Principles are expected to explain how board effectiveness is evaluated, and boards with independent directors or external investors increasingly run a review anyway because investors read it as a positive signal.

Who evaluates the chair?

The senior independent director, taking views from the other non-executives and the executive directors. Where there is no senior independent director, another independent director should lead it.

Is external facilitation worth the cost?

Periodically, yes. The value is candour rather than technique: directors will tell an independent reviewer under confidentiality what they will not say in a room chaired by the person concerned. Alternating internal and external reviews across a three-year cycle is the common pattern.

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

In practice the terms overlap, and the 2024 Code now uses “board performance review”. This article focuses on timing and running the process; our board effectiveness review guide covers how a full external review is structured.

What should an evaluation produce?

Three or four agreed actions with owners and dates, any composition implications stated plainly, changes to the agenda and board pack, and individual feedback delivered by the chair in person.