A board and directors need to have their effectiveness assessed at least annually.
The aim of performance assessments is to consider how well the board and directors are meeting their responsibilities, and identify opportunities for reform.
Assessments are typically undertaken for:
- The Board: to examine how well the Board as a collective has performed over the year;
- Individual Directors: to examine each Director’s contribution to the Board; and
- The Chair: (in addition to assessment of their role as a Director) to examine the Chair in their leadership role.
There are several reasons why performance is assessed, including to:
- identify areas for improvement;
- examine processes, culture and operations;
- provide an opportunity for professional development of Directors;
- identify any need for additional capabilities on the Board;
- meet standards of good practice; and
- meet legislative requirements.
The requirement for performance assessments is contained within s.81(1)(d) of the Public Administration Act 2004 (the PAA) and is reinforced in s.3.3 of the Code of Conduct (the Code).
The PAA and the Code state that boards are required to comply with the policies and procedures of their public entity in relation to:
- assessing the performance of the Board;
- assessing the performance of individual Directors; and
- dealing with poor performance by Directors.
The Board should also comply with any requirements set out in the public entity’s enabling legislation, as well as any instructions or directions issued by the Minister or relevant Department. As a matter of good practice, the Board should review these on an annual basis to ensure any changes are acted on.
It should be noted that performance assessments as discussed here are distinct from any assessment of the public entity’s performance ( for example, internal or external audits).
VPSC has developed a guidance document to assist public entity boards meet these obligations.