How to Run a Board Evaluation

By Adrian Lawrence FCA, founder of NED Capital · Part of the Board Governance Hub

A board evaluation is how a board holds up a mirror to itself — a structured assessment of how well it is performing, where it is strong, and where it needs to improve. Done well, it is one of the most valuable things a board does: it surfaces the skills gaps, unhealthy dynamics and process failings that boards drift into without noticing, and it turns a vague sense of how the board is doing into a clear, actionable picture. Done as a box-ticking exercise, it is a waste of everyone’s time and worse than useless, because it creates the illusion of scrutiny without the substance. This guide sets out how to run a board evaluation that genuinely improves the board: the different types, the process, the questions worth asking, and — the part boards most often neglect — how to act on what it finds.

It is written for chairs, company secretaries and boards planning an evaluation, and draws on NED Capital’s work assessing and strengthening boards. Every engagement is led personally by Adrian Lawrence FCA.

Why Board Evaluations Matter

Boards, like any group of people working together, develop habits, blind spots and dynamics that shape how well they function — and that they rarely examine unless prompted. A board can gradually become too comfortable, too deferential to management, too narrow in its skills, or too settled in its ways, without any single moment at which the decline is obvious. A board evaluation is the mechanism that catches this. It provides an honest, structured assessment of the board’s effectiveness — its composition, its dynamics, its processes, its relationship with management, and the contribution of its individual members — and gives the board the information it needs to improve. For premium-listed companies, the UK Corporate Governance Code expects an annual evaluation and an externally facilitated one at least every three years, but the value of evaluation is not limited to companies that must do it. Any board that wants to stay effective benefits from examining itself honestly and regularly.

Internal Versus External Evaluations

Board evaluations come in two broad forms, and the choice between them matters. An internal evaluation is run by the board itself, usually led by the chair or company secretary, often through a questionnaire and discussion. It is lower-cost, quicker, and can work well for a board that is broadly healthy and wants a regular check. Its limitation is objectivity: a board evaluating itself may not see, or may not want to confront, its own deeper problems, and directors may be reluctant to be candid about colleagues or the chair. An external evaluation is facilitated by an independent third party, who conducts interviews, observes the board, and brings an objective perspective and comparative experience. It costs more and takes longer, but it brings a candour and objectivity an internal review cannot, and it is particularly valuable where the board suspects real problems, where the dynamics are difficult, or where the chair’s own performance needs honest assessment. Our independent board evaluations service provides the external option. Many boards alternate — internal reviews most years, an external one periodically — which is both good practice and, for listed companies, expected.

The Evaluation Process

A well-run evaluation follows a clear process. It begins with agreeing the scope and purpose — what the evaluation is meant to examine and achieve — and the method, internal or external. Information is then gathered: through questionnaires, one-to-one interviews with each director and often with senior executives, review of board papers and minutes, and, in an external evaluation, sometimes observation of a board meeting. The evaluation examines the board’s composition and skills, its dynamics and culture, the effectiveness of its meetings and information, its committees, its relationship with management, and the contribution of individual directors including the chair. The findings are analysed and presented — honestly, which is the whole point — to the board, usually with clear recommendations. And then, crucially, the board agrees actions and follows through. An evaluation that stops at the report, without action, achieves nothing. The board skills matrix is a useful input, mapping the board’s skills against what the business needs.

The Questions Worth Asking

A good evaluation asks searching questions across several areas. On composition: does the board have the skills, experience and diversity the business needs, and where is it thin? On dynamics: does the board challenge management and itself genuinely, or has it become too comfortable; do all directors contribute; is there real debate? On the chair: does the chair lead the board effectively, create the right culture, and manage the relationship with the chief executive well? On process: are meetings well-run, is the information timely and good enough to govern by, does the board spend its time on the right things? On the relationship with management: is it constructive but appropriately independent, or too close or too distant? And on individual contribution: is each director adding value, and are any disengaged or past their useful tenure? The willingness to ask these questions honestly — particularly the uncomfortable ones about the chair, the dynamics and individual directors — is what separates a real evaluation from a formality.

A Worked Example: An Evaluation That Changed a Board

Consider a mid-sized company whose board had performed well for years and assumed it still did. Prompted by the three-year requirement for an external review, it engaged an independent facilitator, more as a compliance step than out of concern. The interviews told a different story. Directors, speaking candidly to an outsider in a way they had not to each other, described meetings that had become comfortable and predictable, a chair who ran an efficient but unchallenging board, and a growing gap between the board’s skills — strong on the company’s traditional business — and the digital and regulatory challenges the company now faced. None of this had surfaced in the board’s own annual self-assessment, because no one had wanted to say it to colleagues’ faces.

The evaluation gave the board an honest picture and a set of recommendations: refresh the board’s skills with a director bringing digital and regulatory experience, restructure meetings to create more genuine debate, and for the chair to actively invite challenge rather than manage towards consensus. The board acted on all three. Within a year the meetings were sharper, the skills gap was closing, and directors reported a board that felt genuinely more effective. The evaluation worked not because the questionnaire was clever but because an external facilitator created the candour to surface what the board could not say to itself, and because the board then acted on what it heard. That is the difference between an evaluation that changes a board and one that files a report.

Acting on the Findings

The most common failing in board evaluation is not in the evaluation itself but in what follows — or fails to follow. An evaluation produces findings and recommendations; a board improves only if it acts on them. That means agreeing specific actions with owners and timescales, whether refreshing the board’s composition, changing how meetings run, addressing a difficult dynamic, developing directors, or, where necessary, managing the departure of a director who is no longer contributing. It means the chair taking personal responsibility for driving the changes, and the board reviewing progress. And it means being willing to act on the uncomfortable findings, not just the easy ones. A board that evaluates itself honestly and then acts becomes measurably more effective over time; a board that evaluates and files the report gains nothing, and may be worse off for the cynicism a hollow exercise breeds. Where the findings point to a need to refresh the board, our guides to refreshing an underperforming board and appointing a non-executive director cover the next step.

Frequently Asked Questions

How often should a board be evaluated?

Good practice, and the expectation for listed companies under the Corporate Governance Code, is an evaluation every year, with an externally facilitated review at least every three years. Any board that wants to stay effective benefits from regular honest self-examination, whatever its formal obligations.

What is the difference between an internal and external board evaluation?

An internal evaluation is run by the board itself — lower-cost, quicker, but limited by the board’s ability to see its own problems. An external evaluation is run by an independent facilitator, bringing objectivity, candour and comparative experience, and is particularly valuable where real problems are suspected or the chair’s performance needs honest assessment.

Who should run a board evaluation?

An internal evaluation is usually led by the chair or company secretary. An external one is run by an independent facilitator with governance expertise. For the evaluation of the chair specifically, the senior independent director typically leads, since the chair cannot assess their own performance.

What happens after a board evaluation?

The board should agree specific actions with owners and timescales, and follow through — whether refreshing composition, changing processes, addressing dynamics or developing directors. An evaluation only improves a board if it acts on the findings; the report itself changes nothing.

Is a board evaluation confidential?

The individual interviews in a well-run evaluation are treated confidentially, which is what allows directors to be candid. The findings are shared with the board, usually in a form that conveys the substance without attributing specific comments to individuals, so that honesty is protected.

Can a board evaluation assess individual directors?

Yes, and a thorough one does — assessing whether each director is contributing effectively, including the chair. Individual assessment is sensitive but valuable, particularly where a director has disengaged or served past their useful tenure, and it feeds directly into board refresh and succession.

NED Capital | Sister practice of FD Capital | ICAEW practising certificate held by Adrian Lawrence FCA.