Board Evaluations : Insights from India and Beyond
Board evaluation has emerged as a corporate governance priority and brought to the forefront many associated challenges. This is not a revolutionary change. Board assessment procedures are evolving as nations and companies formulate and test divers...
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| Language: | English en_US |
| Published: |
International Finance Corporation, Washington, DC
2015
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| Online Access: | http://documents.worldbank.org/curated/en/2015/06/24606693/board-evaluations-insights-india-beyond http://hdl.handle.net/10986/22146 |
| Summary: | Board evaluation has emerged as a
corporate governance priority and brought to the forefront
many associated challenges. This is not a revolutionary
change. Board assessment procedures are evolving as nations
and companies formulate and test diverse requirements. Until
recently effective Board evaluation was not regarded a Board
priority. In 2002, Yale University Professor Jeffrey
Sonnenfeld commented: ‘I can’t think of a single work group
whose performance gets assessed less rigorously than
corporate Boards.’ India has moved to the forefront of this
governance challenge with its new Companies Act of 2013,
which states that the Board of every listed company and
other public companies with paid-up capital of Rs 25 crore
or more (approximately US$ 4 million) shall report the
annual performance evaluation of individual directors, the
Board and its committees. However, in the last 12 years the
situation has substantially changed. Corporate governance
practitioners have been applying Peter Drucker’s idea that
‘what gets measured gets managed,’ and among senior leaders,
what gets acknowledged and valued gets done even better.
Recognizing the merits of various approaches, we highlight
the Board’s leadership culture, the tone at the top, as an
essential feature of an effective assessment process. Board
evaluation is driven by the values and performance
expectations of senior leaders in Tata Group, Infosys and
other well-known Indian companies. Topics addressed in this
article include: incentives for Board evaluation; extent of
Board evaluation globally; significant requirements in
India; predictable barriers and challenges; case example of
Board leadership from India; recommended practices
worldwide; and future trends and challenges. |
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