Why I Call It a Board Performance Review, Not an Effectiveness Review

By Kirsten Smith, Chartered Governance Professional

And why the distinction matters more than most boards realise.

The governance sector talks a lot about board effectiveness. I use the term too, to a point. But I increasingly prefer board performance review, because effectiveness is relative.

An effective board for a major listed company is not going to look the same as an effective board for a medium sized aged care provider, a community organisation, a family owned business or a statutory body. Nor should it.

Harvard Law School's Forum on Corporate Governance put the question well in a 2022 paper: directors and executive leaders want their boards to be effective, but what makes a board not just competent, but truly high performing? That definition, they noted, is much more elusive than most people assume. And at too many organisations, effectiveness is only evaluated in the past tense, and sometimes only after something has gone wrong.

That matches everything I see in my review work.

Board Effectiveness Against What?

The ASX Corporate Governance Principles require listed entities to have a process for periodically evaluating the performance of the board, its committees and individual directors. Importantly, even the ASX framework is principles based. It expressly allows organisations to adopt different governance practices where their particular circumstances warrant it.

That distinction matters.

I am wary of conducting a board review against an abstract idea of what a "good board" should look like. There are certainly governance fundamentals that matter across organisations. Directors need the information required to fulfil their responsibilities. The relationship between board and management needs to work. The board needs to spend its time on the right things, challenge appropriately, oversee risk, understand strategy and periodically assess its own performance. The AICD includes all of these within its guidance on board effectiveness and performance evaluation.

But the way those things work in practice should depend on the organisation.

A board meeting that is entirely appropriate for a small organisation would probably be inadequate for a large regulated entity. A committee structure that makes perfect sense for one board could create unnecessary governance machinery for another. The level of reporting, frequency of meetings, skills required around the table and appropriate level of director involvement can all change considerably depending on size, complexity, regulation, risk, resources and organisational maturity.

The Problem With Governance "Best Practice"

This is why I very rarely talk about best practice. Best for whom?

The phrase implies a universal standard, a set of governance arrangements that every board should aspire to regardless of context. But research into governance design consistently challenges that assumption. NASDAQ's governance division has made the point explicitly: a one-size-fits-all questionnaire will not suffice, and organisations should design evaluation questions that probe beyond surface level compliance and consider the specific challenges their board is actually facing.

Academic literature on system and programme design goes further, arguing that rather than attempting to define a single best practice, which may actually limit experimentation with approaches tailored to a local context, a "fit for purpose" lens ensures that governance arrangements are optimally adapted to their specific environment.

I am much more interested in whether governance is fit for purpose than whether it conforms to someone else's model of what good governance should look like.

A board that has adopted every piece of conventional best practice guidance and still doesn't function well has a governance problem that no checklist will solve. Meanwhile, a board that has never heard of the ASX Corporate Governance Principles but runs tight meetings, asks good questions, and holds management to account may be governing more effectively than many boards in the ASX 300. Governance is what happens in the room, not what's written in the charter.

The Board Review Benchmarking Trap

Many board review providers use a benchmarked methodology. They administer a standardised survey, aggregate the responses, and compare your board's scores against a database of other boards that have completed the same survey. The result is a report that tells you whether your board is above or below average across a range of governance dimensions.

On the surface, this sounds useful. In practice, I think it often tells boards very little of value.

The database typically includes boards of wildly different sizes, sectors, regulatory environments, and levels of maturity. Being told that your board scores in the 60th percentile for "strategic oversight" compared to 200 other boards you share nothing in common with doesn't tell you whether your strategic oversight is actually adequate for your organisation. It might confirm that you're "above average," which feels reassuring and changes nothing, or "below average," which feels concerning and tells you nothing about why, or what to do about it.

Benchmarking creates the illusion of objectivity. But a number without context is just a number. And a board that treats a benchmark score as evidence of good governance is a board that has confused measurement with understanding.

What a Board Performance Review Actually Looks At

When I undertake a board performance review through Governance in Focus, I am not trying to turn the organisation into someone else's idea of the perfect board. I am looking at how this board performs in the context of this organisation.

What is working well and should be protected? Where is the board spending time that adds little value? Does the information reaching directors allow them to govern properly? Are the committees doing useful work, or are they duplicating the board's conversations with a different agenda cover page? Does the board have the skills it needs for where the organisation is going, not just where it has been? Are directors able to challenge and contribute, or has the culture settled into a pattern of politeness that avoids the difficult conversations? Is the relationship between the board, Chair, CEO and management working as it should? And, importantly, what could realistically be improved, given the organisation's resources, constraints, and stage of development?

The survey is customised to the organisation's governance context rather than pulled from a generic template. The interview questions are shaped by the sector, the regulatory environment, and the specific challenges the board is navigating. And the recommendations are practical actions the board can actually implement rather than aspirational statements borrowed from a guidance document written for a different kind of organisation entirely.

AICD guidance makes a similar point in describing board evaluation as a way of identifying strengths, weaknesses and opportunities for development across processes, capabilities, dynamics and composition. It also emphasises that a review should lead to practical action rather than simply completing an evaluation exercise.

A Forward-Looking Board Evaluation, Not Backward Scoring

A performance review done well is forward looking. It doesn't just ask "how did we go?" It asks "are we set up for what's coming?" The distinction matters because the governance challenges a board will face in the next two years are rarely the same as the ones it faced in the last two.

A board that was perfectly adequate for a stable organisation in a settled regulatory environment may not be equipped for a merger, a leadership transition, a regulatory change, or a shift in stakeholder expectations. The review should identify those gaps before they become problems, not document them after the fact.

This is also where the interview component of a review delivers its greatest value. A survey captures what directors think about the board's processes and structures. An interview captures what directors actually experience: the dynamics in the room, the quality of the Chair's leadership, the relationship between the board and management, the conversations that aren't happening, and the issues that have been circling for months without being addressed. That qualitative depth is where the real insights live, and it's the thing that a standardised, benchmarked survey cannot provide.

A More Useful Conversation About Board Performance

For me, the purpose of a board performance review is not a scorecard against some theoretical gold standard. It is not an exercise in finding fault. And it is certainly not an attempt to make every board look the same.

It is an independent look at how the board is performing now, what is already working well, and what would make governance work better for the organisation it actually serves.

That is a much more useful conversation than asking whether a board is simply "effective."

Governance in Focus works with boards to sharpen performance and strengthen accountability. If your board is considering a board performance review, or questioning whether your current evaluation approach is telling you what you actually need to know, we welcome the conversation.