Developments in board reviews and on boards
Philip Sidney, Senior Associate, Lintstock Ltd, discusses the firm’s most recent research report on board reviews and board effectiveness, published in collaboration with the Institute, which sheds light on the challenges currently faced by boards and offers practical advice for boards and governance professionals.
Highlights
- the latest Lintstock report, based on interviews with 195 top executives from around the world over six months, looks at the practice of board reviews, as well as a wide spectrum of challenges related to board performance
- board reviews need to be tailored to the specific needs and nature of each board, while the growing culture of feedback means that directors – particularly younger directors – are more appreciative of regular performance appraisals
- adding a skills matrix to a board review exercise helps with the important task of getting the right mix of experience and expertise on a board, and ensuring the appropriate areas of coverage for the future
In the UK, corporate boards have been required to review their own performance since 2003, while board evaluations are increasingly being required internationally. This includes Hong Kong, where a new Corporate Governance Code Provision requires boards to conduct a performance review every two years from 1 July 2025, on a ‘comply or explain’ basis.
Lintstock’s new report, titled International Best Practice in Board Effectiveness and published in March 2025 in collaboration with The Hong Kong Chartered Governance Institute, aims to share useful insights on board evaluations and on board effectiveness in general. This report is based on commentary from over 400 directors and board representatives of leading international companies – including interviews with 195 chairs, company secretaries and executives – and is tailored to Hong Kong companies and their specific concerns.
The project began its life in March 2024 on a client trip to Hong Kong and Australia. Our client boards were intrigued by our research for the UK All Party Parliamentary Corporate Governance Group on how the practice of board reviews has developed in the UK and they enthusiastically wrestled with our questions on how the practice on their boards was different – or similar – to other markets.
We were keen to hear more, and engaged with chairs and company secretaries in Europe, Asia, North America and Australia over a period of six months. We found that our conversations would often follow the interests of our interviewees and develop beyond the area of board reviews to cover a much broader spectrum of themes related to board performance, including composition, expertise, risk, regulation and technology. It became clear that boards have endured a very challenging few years – the participants had a great deal of insights to share and a lot to get off their chest.
This article will give a brief rundown of the findings, which are divided into lessons for board reviews and lessons for boards.
Lessons for board reviews
Tailoring the review
At one level all boards are the same – groups who meet together, receive information and make decisions. But the distinct skill sets and personalities on a given board, combined with variations in size, sector and geography of companies, means that each board review exercise is unique.
One of the key messages from our respondents is that board reviews are no longer seen as a tick-box compliance exercise. In fact, box-ticking is now what people explicitly want to avoid. Boards take performance more seriously now and most do not set out to conduct a review with the aim of triumphantly disclosing in their annual report that their board is ‘effective’. They are as aware as we are that there is no objective standard on which to base that kind of judgement.
board reviews are no longer seen as a tickbox compliance exercise
The motivation now is less to affirm that a board is performing well and more to take the opportunity to collectively improve. This means that board review exercises need to be scoped to the needs and nature of the board. It was clear from our feedback that a ‘template’ approach with off-the-peg surveys or uninformed interview questions does not lead to strong engagement.
In a similar vein, there is no purely ‘technological’ solution to delivering an effective board review, as a survey alone adds limited value. Good facilitators deliver thoughtful analysis, land difficult messages, and share meaningful benchmarking and insights into best practice.
good facilitators deliver thoughtful analysis, land difficult messages, and share meaningful benchmarking and insights into best practice
Cultivating a culture of feedback
Lintstock facilitates board reviews across five continents and we have hugely enjoyed building an understanding of how boardroom cultures vary geographically. While the local context undoubtedly influences directors’ willingness to constructively critique the board’s performance, we found in our research that boards all over the world are cultivating a culture of feedback. Directors expect more from their board review exercises and are therefore willing to provide more input with greater enthusiasm – in turn, this has encouraged board evaluators to up their game.
We heard from chairs that this focus on performance is partly due to a generational shift on boards – younger directors are more likely to be used to, and appreciative of, regular performance appraisals.
The growth of a feedback culture has led to an evolution of the chair role in particular, as they are increasingly called upon to address their colleagues’ performance. Tackling individual board members’ contributions can be difficult and chairs have needed to develop the ability to handle sensitive conversations. One chair compared the role to raising children.
That comment rings especially true for family business boards, where chairs are often called upon to manage the performance of their own children. Hong Kong boasts a number of extremely successful family businesses and it is encouraging that board reviews are seen to add value in this context. From our observations, family business boards can be more suspicious of the process at first, but once they have seen how much value can be unlocked through an honest appraisal of board effectiveness, they often become its staunchest advocates.
The individual versus the collective
The board is collectively responsible for the oversight of an organisation and ultimately stands or falls on its effectiveness as a body – but the skills, knowledge and contribution of the individual directors are key determinants of the board’s effectiveness. A rigorous evaluation of board performance therefore requires scrutiny at a collective and an individual level.
The toolkit of techniques available to reviewers is expanding. The practice of conducting ‘360 reviews’, where each director assesses the contribution of each of their colleagues, has been gaining popularity in the UK, having been a common practice for some time in geographies such as Australia, Canada and Scandinavia.
The main techniques for reviewing boards – surveys, interviews and meeting observation – are now well established, and we also detected an appetite for innovation in the feedback we received. One company secretary suggested that ‘someone should tear up the rulebook’ on board evaluations, while some felt that greater use of technology might benefit the process – for example using AI to collate and synthesise feedback.
Perhaps in the future we will see boards drawing on other fields such as sports or the military in order to gain an edge – one might imagine an AI model analysing the sentiment of discussions in the boardroom. For now, the arrival of digital board packs has made it possible for management to identify when directors read their papers and how much of the pack they view – with embarrassing consequences at times.
Lessons for boards
The past few years have been a bruising experience for boards, and the chairs and company secretaries we spoke to were candid about the challenges they face. The results make concerning reading.
The risk-reward of being a director
Perhaps the most alarming finding in our research was the perception that the risk-reward ratio of board service is heading in the wrong direction. The burden on boards is growing, with continual pressure on agendas as more and more areas are placed under the board’s remit – some boards are given packs that are 1,000 or more pages long before every meeting.
the burden on boards is growing, with continual pressure on agendas as more and more areas are placed under the board’s remit
The regulatory and economic environment is a key driver of the strain. One chair we spoke to said that their message to legislators would be ‘stop’ – that no more regulation or responsibilities should be placed on boards. The burden of regulation is such that directors are increasingly opting to stay off public company boards. There was a call for consistency and predictability, especially given the turmoil of the past few years.
Remuneration is certainly a factor here. The additional responsibilities have changed attitudes and it is increasingly felt that the time commitment that directors take on, as well as the financial and reputational liability, is not balanced by commensurate remuneration.
Boards are finding talent more and more difficult to secure, and worryingly we were told that the standard of competency among board members is decreasing – a senior independent director stated to us that ‘the NED environment is not fit for purpose’.
Generalists versus specialists
The challenges of recent years have also led boards to rethink their composition. Since the 2010s there has been a significant increase in the demand for specialists on boards to provide subject-matter expertise on emerging topics. The most common request is for technological and digital expertise, although latterly there have also been calls for specialists in ESG and sustainability.
Subject-matter experts who join corporate boards often find it challenging to gain traction, however, as they can struggle to contribute more broadly to the board’s oversight beyond their own area of expertise. There are limited seats on a board and it is an opportunity cost to include a director who can only contribute for 15 minutes in a four-hour meeting.
Generalists have come to the fore recently – as former executives who have served at the top of companies in a variety of industries, their broader business experience allows them to create a bridge between the board and management. Generalists also tend to be better placed to respond to crises, as veteran executives who have hard-won experience of what to do in the event of an emergency.
Getting the right mix of experience and expertise on a board has always been a challenge, and we are seeing more and more boards adding skills matrices to their board review exercises to ensure that they have coverage in the right areas, including soft skills, for the coming years.
Positioning for the future
Given the fast-moving external environment and shifting agendas, boards need to constantly challenge themselves as to whether they, as a group, are the right team to be leading their organisations. No company has an inherent right to exist and boards should not be a retirement home for executives who are beyond reproach or challenge. At a time when entire industries are transforming overnight, we have seen a number of boards – particularly in the natural resources companies negotiating the energy transition – questioning whether they can oversee their organisation effectively.
There was a feeling that there may be a need to refresh boards more quickly in response to the needs of the business – although there was also recognition of the benefits of continuity in a volatile environment, particularly in Hong Kong. A number of Hong Kong board members told us that their long-serving non-executives (often far exceeding the nine-year limit we have in the UK) provide extremely valuable institutional memory and set a tone of long-term stewardship. It will be interesting to see how board oversight develops following the latest change to the Hong Kong Corporate Governance Code, which introduces a nine-year cap on independence (introduced over a six-year transition period).
The principle of rotation is the same in the case of board reviewers. There is a balance to be struck between continuity and the perceived impact of longevity on the freshness of advice. The needs of boards and companies change over time, and so the purpose and scope of their board review will inevitably shift – ultimately it is a question of tailoring, and it is good to see that boards and providers are increasingly attentive to ensuring that there is a good fit.
Conclusion
It was encouraging to see the collective resolve and commitment to continuous improvement in the feedback we received, and the willingness among the participants to share insights on best practice – as well as candid reflections on the challenges they have encountered – was highly valuable. Despite the challenging situation in which the international business world finds itself, boards are committed to pushing forward and challenging themselves to raise the bar. We hope that our latest research will be of use to boards and governance professionals as they seek to continuously improve their own performance.
Philip Sidney, Senior Associate
Lintstock Ltd
