When the Dutch Governance Code established in 2009 that (external) evaluation of the Supervisory Board is good governance, that designation was received with closely concealed contempt and skepticism within many Supervisory Boards. After all, the Supervisory Board was perfectly capable of controlling its own functioning and — if necessary — intervening! The fact that this line of thought ultimately boils down to “the butcher who judges his own meat” was not a common opinion at the time.
Much has changed since that time; evaluating the Supervisory Board with the help of an external party is now increasingly seen as a useful tool for examining the state of the Supervisory Board and generating feedback on its performance and thus improving it.
My own experience as a commissioner with the board review is mixed; the first evaluation that I experienced, about 15 years ago, was carried out by a major accounting firm. That focused mainly on the content and procedures as they were usual within the Supervisory Board and within the interaction between administration and supervision. And although it is good and useful to include content and procedure in the evaluation, those issues do not get to the heart of the matter; namely explicitly naming the collective values of a Supervisory Board, identifying the personalities of the individual supervisory directors and exploring their willingness to have a real conversation, especially about difficult and sometimes controversial issues. And — last but not least — investigate whether there is the courage - that it takes from a Supervisory Board (both individually and collectively) to take decisions when it comes down to it.
In a later evaluation, I found that - because the emphasis was placed on the individual and collective qualities and values of the Supervisory Board - it became clear that the chairman was not functioning optimally, even to the extent that several individual commissioners were considering leaving.
When — through the evaluation — it became clear what was going on, what was implicit was made explicit and thus negotiable. So this was not about procedures and content but about collective (and until then implicit) values. As a result, the chairman's attitude and actions changed radically and that in turn led to a better functioning Supervisory Board; no one left.
What this example says most is how important it is to make implicit assumptions and the perspective on other people's actions explicit. It seems like a death eater but nothing could be further from the truth. So asking questions, continuing to ask questions and also raising tricky topics is the motto. The relationship between the board and supervisors also benefits when evaluated: mutual expectations are explicitly put on the table, so that both the board and the Supervisory Board can give their roles more depth.
All in all, the Supervisory Board evaluation - if focused on values and interaction - has a major impact on the added value of the Supervisory Board for the company.
It is crucial that the Supervisory Board is open and curious about the evaluation and that the results are converted into effective behavior, both among themselves and towards the board.
De Bestuurskamer provides customized solutions when it comes to evaluating the Supervisory Board. Both on the content and in the evaluation process. The boardroom itself has a lot of experience with governance and supervision and is therefore well placed in both management and Supervisory Board with an eye for all interests.
Evaluation of the Supervisory Board has now become an indispensable tool for permanently boosting the quality of a Supervisory Board.
Pamela Boumeester
