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Board evaluation in India—Redefined
Board evaluation is one way of checking board’s progress against its plans and visions. In India, regulatory landscape for board evaluation has evolved at a faster pace over the last three years. Guidance Note by SEBI on January 05, 2017 provides detailed guidance on the process and parameters to be considered for board evaluation.
The change is coming, leadership at the top is being redefined as boards take a more active role that once belonged to the CEO. Directors are in need of new road map for—when to lead, when to partner, and when to stay out of the way. Regulators, investors, and employees are all pressing boards to deliver on their responsibilities. That requires a handful of decisions that only boards can make—the decision to select and retain the chief executive, to establish a climate of ethics and integrity, to set goals and incentives for the executive team, to determine the company’s central idea, risk appetite and capital structure, etc. A board’s leadership can create value, while its absence can destroy value.
Today, forward-looking imperative comes from the way long-term economic, technological, and demographic trends are radically reshaping the global economy, making it more complex to oversee a successful multinational business. As executive teams grapple with the immediate challenge of volatile and unpredictable markets, it has become more vital than ever for directors to remain abreast of what’s on (or coming over) the horizon.