What does the Corporate Governance Code mean for your organisation?

Newsletter articles

1 Jul 2011

HR Insight Issue 13

Mary Mercer, IES Principal Consultant

Mary MercerFollowing some well-publicised organisational financial failures, the revised Corporate Governance Code for quoted companies was introduced by the Financial Reporting Council in 2010. The Code sets out principles relating to the role and effectiveness of boards and advises that “the board should undertake a formal and rigorous annual evaluation of its own performance and that of its committee and of individual directors”. The Code also includes a new provision that “evaluation of the board of FTSE 350 companies should be externally facilitated at least every three years”. It stresses that achieving a highperforming board is “a challenge that should not be underrated” as “to run a corporate board successfully is extremely demanding”, depending on factors such as good leadership by the chair and “the frankness and openness of mind with which issues are discussed”. Whilst the Code is a requirement for the FTSE 350, it is both good practice and an investment in organisational performance for all boards to evaluate their performance on a regular basis whether they are in the private, public or voluntary sectors.

Building on our reputation for evaluation as an independent, objective, apolitical organisation, IES has developed a rigorous approach to assessing a board’s level of compliance with the Code. In addition, we believe that beyond compliance there are higher levels of board performance which are based more on the people and relationship issues, such as how effective board meetings are and what they focus on rather than just whether they happen or not. Our new suite of evaluation tools will allow organisations to choose what level of assessment and support they want to engage with to deliver the best business outcomes.

If you would like to know more about the Code, or feel your organisation would benefit from using these tools or from a Board Effectiveness Assessment, please contact Mary Mercer for more information.

Board effectiveness: The study In January 2009 IES was commissioned by the West Midlands Strategic Health Authority (SHA) to develop a methodology to study and evaluate a programme designed to address concerns about NHS boards’ lack of attention to quality and clinical issues as opposed to financial and operational issues. Read the full report.