When Elaine Weinstein, executive vice president of Mullin & Associates, served on KeySpan’s board, a self-evaluation of the board revealed that some directors didn’t feel comfortable contributing because they were so intimidated by chairman and CEO Robert Catell’s reputation as an industry legend. After learning the results of the board evaluation, Catell, who Weinstein notes was widely admired for his inclusiveness, made an adjustment – he took greater pains to personally ask directors for their opinions. The evaluation uncovered what was behind the directors’ silence and gave the board chairman new insights for improving overall board effectiveness.
The evaluations also revealed that some directors felt they lacked the technical knowledge of the energy sector necessary for them to contribute fully, says Weinstein. KeySpan therefore identified internal experts to help get newer directors up to speed. Weinstein, who now sits on the boards of the Brooklyn Academy of Music and the Nature Conservancy, maintains: ‘Board evaluations have tremendous power, if done well.’
Although board evaluations are mandatory for NYSE-listed companies, they’re still relatively uncharted territory for many, and getting them right isn’t easy. According to a 2009 survey by Corporate Board Member and PricewaterhouseCoopers, 46 per cent of directors felt that board evaluations were effective at improving board performance, while one in 10 directors found evaluations ineffective.
Even though the board evaluation process may need some fine-tuning, the general consensus is that it has tremendous potential. Sylvia Groves, founder of Calgary-based GG Consulting, helped Nexen do its own internal evaluations when she was chief governance adviser there.
‘If people are thoughtful as to the approach, I think a good evaluation can add value in almost any circumstance and at any company,’ says Groves. ‘In bad times it can be instrumental in helping to clarify what’s really happening, and in good times it can help to make sure nothing is starting to slip off the page.’