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Reviewing Board Effectiveness

Grant ThorntonWhilst public companies, in line with the Combined Code recommendations, are expected to evaluate the effectiveness of their Board, other firms are increasingly alive to the benefits offered by an independent, external analysis of the leadership team. The more progressive professional service firms (eg. financial services, PE houses, hedge funds, law firms) in particular are embracing such initiatives.

Why? These firms typically operate a Partnership structure, where the leadership team governs a population of bright, opinionated characters who are also co-owners of the enterprise.  This brings high levels of internal scrutiny, and demands greater emphasis from the top team upon partner inclusion and engagement. Professional service firms are therefore populated by interested, opinionated stakeholders with clear views about how the business should be managed, and an objective board evaluation provides transparency, and re-assurance that there is good governance in place.

There is also a more prosaic, bottom-line concern. The marketplace for professional services is increasingly competitive and challenging, and wise firms are looking to secure any advantage they can. As HBS professor Thomas J De Long puts it: "In the past, the work of PSFs was a gentleman's game - and now it's blood sport." Board evaluation, done properly, can identify levers for improving business performance and securing competitive advantage.

One such progressive firm is accountancy and advisory business Grant Thornton. CEO Scott Barnes initiated an effectiveness review of his leadership board. Using questions selected from Wickland Westcott’s own proprietary board evaluation toolkit, key stakeholders were interviewed and a clear picture constructed of the strengths and development areas of the team. This was shared with the board themselves, and other relevant stakeholders, and an action plan put in place to avoid the Achilles heel of most board evaluations – weak follow-through.

Scott Barnes comments: “Wickland Westcott sought a clear briefing at the outset, and understood exactly what I was trying to achieve. They deployed the right tone throughout, nailed the board presentation, and delivered good value for money”.