Much of a company or an organization’s success is directly attributable to the effectiveness of the board of directors, which can be equated through figuring out the board effectiveness score. Boards that work toward improving their composition and effectiveness demonstrate to shareholders and stakeholders that they’re committed to due diligence. A strong board effectiveness score helps to keep the board refreshed and maintains the focus on a strong, well-composed board.
Board self-evaluations help to ensure that the board is skilled, and that its members are doing their best. Technology makes it possible to complete whole board and individual board director evaluations in the quickest, most cost-effective way possible. One of the challenges in doing board self-evaluations is how to interpret the results in a meaningful way. Technology offers the solution to this problem as well.
How to Interpret a Board Effectiveness Score
While board self-evaluations can be an important key to a board’s effectiveness, boards can only achieve their best results when they use the survey results in a meaningful way. Getting good results that help plan for good future leadership can be difficult to evaluate when boards have nothing to compare them with.
A good self-evaluation process for boards or individuals begins with good questions. To get the most authentic results, boards need a way of benchmarking the results against past results, the competition’s performance or the results of a similar survey. There are various ways of assessing the scores, most of which tend to generate fairly similar results. The challenge for many boards is that they either don’t have the past results or they’re too difficult or expensive to get. The best that the evaluation facilitator can do in that situation is to do their best to interpret raw results.
A survey that’s composed of multiple-choice questions yields a closed-ended rating scale. The results of this type of survey are easy to summarize, yet difficult to interpret. The disadvantage of this type of survey is that it limits the possible responses. As a result, the answers may not reflect the most accurate answers and the facilitator doesn’t have the means to explore the respondents’ answers further. On a positive note, a closed-ended rating scale doesn’t take vast amounts of time. It’s easy to code and interpret the results, and it’s a good source of quantitative research.
Computing the Mean and the Standard Deviation for Board Effectiveness
After the survey ends, there are several ways to compute the mean and the standard deviation.
Percent agree is a simple method of computing the mean. Figure the number of responses that fall into the category of agree and divide it by the total number of responders.
Top Box or Top Two Box Scoring
This format typically uses a 5-point scale where the top box refers to comments where respondents strongly agree. In top two box scoring, the top two scores equate to the agree score.
Net Top Box Scoring
In this type of scoring, count the number that strongly agree and subtract the number that disagree.
The z-score system is a Six Sigma technique that converts the raw score into a normal score that results in a reasonable benchmark for comparing the mean. The z-score is the only metric that includes variability in the scores, which makes it one of the more accurate measures.
Co-efficient of Variation
Unlike the first four methods for discovering the mean, in this method, facilitators can measure variability in addition to central tendency, and it can successfully be used with other approaches.
Co-efficient of variation is a measure of variability, unlike the first four methods, which are measures of central tendency and can be successfully used with other approaches.
Using Technology Is the Modern Approach to Determining a Board Effectiveness Score
Manual processes for determining a board effectiveness score are time-consuming, inefficient, costly and outdated. Diligent Corporation has designed a digital tool that helps boards streamline the process for measuring their effectiveness. The tool is efficient, timely and cost-effective, leaving boards without valid reasons for skipping the important annual board self-evaluations.
Diligent Evaluations is a beneficial alternative to cumbersome spreadsheets and off-the-shelf surveys. The results support best practices for governance, help to refresh board composition, and align the board’s culture with the organization’s goals and mission. It’s of equal importance that the Evaluations tool makes it easy for board assessment facilitators to compare past results with current and future results, which gives the results more meaning.
The functionality behind Diligent Evaluations is guided by Diligent’s firsthand experience with numerous corporate, nonprofit, healthcare, financial and banking boards the world over.
Diligent Evaluations gives facilitators the flexibility to set up various types of questions in order to get the most valuable results. The multiple question types have all been user-tested. The electronic process makes it possible for the evaluation administrator to add online links for references and appendices to enhance the context. The facilitator or board administrator can also set up automatic submission monitoring so that they get notified as to the status of survey completion.
In addition, Diligent Evaluations automatically creates visual graphics and Excel reports for further analysis. Boards can also share their reports quickly and easily using an export wizard. Boards can use the program to create custom reports using just a few clicks. The program simplifies the analysis process by automatically reporting the averages.
From a user’s standpoint, board directors will appreciate how easy and intuitive the program is and the fact that it doesn’t require any additional training. They can access their surveys anywhere, anytime and use the electronic device of their choosing. The convenience and efficiency of the program set the stage for board directors to complete their surveys expediently, which will move the process along for interpreting and disclosing results. The other benefit in getting faster, better results is that boards can make plans for board development and succession planning sooner.
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