This refers to Asish K Bhattacharyya's column "Board evaluation - Is the law misleading" (Accountancy, January 19). The evaluation of the board's performance assumes importance in the context of the emerging corporate business models. The board of directors is responsible for the delivery of good governance, while leading the company. Good governance connotes transparency, accountability, pecuniary and personal integrity and willingness to do the right thing, not merely doing things right. In this perspective, governance style and standard can be measured in two broad dimensions - rule-based indicators (de jure) and outcome-based indicators (de facto), which are complementary to one another. It would, therefore, be possible to evolve an objective framework for the evaluation of performance of the board and its various committees, on the above lines.
The board may use the services of outside governance experts to examine their performance, policies, procedures and practices in the given framework.
The assessment of the performance of individual directors may only be impressionistic based on surrogate data in the general absence of detailed record of deliberations of board meetings. However, the system of evaluation of the board and its members should be oriented towards improvement in governance standard and quality, not as a stick to beat.
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The board may use the services of outside governance experts to examine their performance, policies, procedures and practices in the given framework.
The assessment of the performance of individual directors may only be impressionistic based on surrogate data in the general absence of detailed record of deliberations of board meetings. However, the system of evaluation of the board and its members should be oriented towards improvement in governance standard and quality, not as a stick to beat.
Biplab Chakraborty Kolkata
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201
E-mail: letters@bsmail.in
All letters must have a postal address and telephone number