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Fostering accountability through board evaluation: the first step to improving the executive recruitment process

Date: 05/29/2017
Madrid, Spain – Accountability is one of those buzzwords that is often tossed about as essential in the business environment. However, in many cases only lip service is paid to an ideal that few companies actually meet. The fact is that accountability must be top-down; regardless of the company's size, industry or ownership structure, the board must assess its own performance in meeting the company’s goals.

Over the last two decades, oversight failures have been seen literally "across the board" – in listed companies, state-owned enterprises and third-generation family businesses. Board evaluation therefore needs to be more than a mere box-ticking exercise.

Many national corporate governance codes include a recommendation to conduct an annual assessment, and an external evaluation every two to three years. Directors should not approach this as a burden but as an opportunity to assess the risks to the Board in key areas in order to conduct the necessary changes.

Accountability and board evaluation are best-practice concepts that are recognised around the world in the national corporate governance codes of OECD and Non-OECD economies alike. We analysed the national corporate governance codes of 46 countries OECD Corporate Governance Factbook 2017 and found that in every case except one, there was an explicit reference to the importance of the board evaluation, whether through regulations, private initiatives or consensus between stakeholders.
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FOSTERING ACCOUNTABILTY THROUGH BOARD EVALUATION

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