About this guide
Some parts of this guide list actions your board must take. Other parts of the guide give your board a range of options to tailor for your circumstances.
If your board, a director or chair need support, reach out to your portfolio department.
As per the Public Administration Act 2004, your portfolio department has a responsibility to help your entity with administration and governance issues.
Why assess board and director performance
You need to assess the performance of boards and directors to maintain the board’s integrity.
This includes:
- how well the board has performed over the year
- how each director contributes to the board
- the chair’s leadership
- any assessment requirements from your department and minister
- areas for improvement.
You assess board performance to help:
- identify areas for improvement
- identify any need for additional capabilities on your board
- examine processes, culture and operations
- provide an opportunity for professional development of directors
- meet standards of good practice
- meet legislative requirements.
Your legal obligations
Section 81 in the Public Administration Act 2004(opens in a new window) and the Code of Conduct say your board must assess performance.
Your board must have policies and procedures in place to set out how you:
- assess board performance
- assess director performance
- deal with poor performance by directors.
Who assesses board performance
You can choose a person or a group to assess your board’s performance. You don’t have to use the same person or group each time.
You can assess performance with:
- internal people, such as your chair, deputy chair, whole board or a sub-committee
- external people or third parties such as a director from another entity or governance support staff from your portfolio department
- a combination of both for instance your chair might be suitable for assessing a director’s performance, but it might be more appropriate that you go externally to assess the chair’s performance.
When to assess
Assess performance with internal people every year.
Assess performance with external people or third parties every 3 to 4 years. You could consider conducting an external assessment more regularly if you are on the board of a larger entity. The timeframe for an external assessment could align with a board’s maximum term.
Compare the results from internal and external assessments to get a broad view on your board’s performance.
Assessing performance externally
You can use a third party to assess all or part of your board’s performance.
They must:
- be independent and impartial
- manage any conflicts of interest
- be trusted to access confidential information about your organisation and board.
You may want to use an external person if your:
- board has been created recently
- board’s directors are new
- board’s or directors’ responsibilities have changed
- board has capability issues
- board wants to assess performance in a more transparent or independent way
- board is responsible for a large or complex organisation.
You may use the services of a professional consultant to do a performance assessment.
If you’ve exhausted the options above for a third party performance assessment, please review the Administrative Guidelines on Engaging Professional Services in the Victorian Public Service(opens in a new window) before engaging a consultant.
Scope for assessing board performance
Work out the scope of how you want to assess your board’s performance.
Here are some examples:
Scope for assessing individual performance
How you assess the chair and each director’s performance is different to how you assess your board’s overall performance.
You must assess the chair and each director’s performance. We recommend an annual review where you:
- discuss what each director contributes to the board
- assess the performance of each director including strengths and weaknesses.
This may help directors on your board:
- maximise their participation
- use diverse skill sets.
What you need to assess only for chair performance
You need a separate process to assess your chair’s performance.
This is to address issues not covered when you assess the performance of directors.
Seek advice from your portfolio department about who can assess the performance of your chair.
The chair’s performance is often assessed by your portfolio department, in consultation with the Minister.
Here are some examples of what to include:
What you need to assess for both chair and individual director performance
You need to assess these areas for both the chair and individual directors:
How to assess board and director performance
Planning to assess board performance
To get the most out of how you assess performance, think of some of these factors.
Timing
Take timing into account when you assess performance.
Remember to:
- assess performance every year
- review previous assessments
- embed parts of the assessment process in everyday business practice
- consider the end dates of your directors’ appointments.
Responsibility
When you assess performance, define who is responsible for:
- planning
- assessing
- reporting
- implementing recommendations, including from past years.
Scope of focus
Agree on the scope of what you’ll assess before you do it, such as:
- previous years’ assessments
- guidance from your department or Minister
- priorities or issues
- other areas of risk.
Your scope must include any requirements in:
- the laws that established your organisation
- any laws related to your organisation
- any instructions or directions issued by your minister or portfolio department
- the Public Administration Act 2004(opens in a new window)
- other applicable legislation or regulation.
Privacy
Explain your approach to privacy in how you assess performance, such as:
- if directors can give feedback anonymously
- if the person assessing performance will give the board a summary of the feedback or share a raw, unedited report
- who can access the feedback
- processes for higher levels of confidentiality if required.
Reporting results
Agree on how you’ll report on your results, such as:
- if your board will release the results
- how your board will communicate the results
- who your board will send the results to.
Methods to assess board performance
Agree on how you’ll assess performance including methods that will:
- get you the most out of the agreed scope
- give you data that helps you analyse trends.
You can use all or some of the methods below to design an assessment process suitable for your board and entity.
How to report the results of performance assessments
As a board, agree to when and how you’ll report on your results.
This may look like:
- a presentation to your board on your results
- a group discussion and analysis of your board’s results
- meetings between your chair and an external consultant
- meetings between your chair and each director.
If you discuss your results as a board, you need to balance:
- being honest and open about the board’s performance
- protecting individuals from reprisal.
Always de-identify any performance results and share them as a summary of all results.
Report on board results as a group. But only report on individual results between the chair and the individual.
Table and record assessment reports in the minutes of your board’s meeting.
For all boards
You may be required by the law or a ministerial direction to report on your board’s performance to your portfolio department or minister.
Seek advice from your portfolio department on what you need to report.
For boards covered by the Public Administration Act
Under section 81 of the Public Administration Act(opens in a new window), you must report any major risks identified during the assessment to your relevant Minister and Secretary.
How to manage recommendations from performance results
Once you table your board’s results, your board may have some recommendations to discuss and adopt.
If a third party made the recommendations, review them as a board and decide which ones you want to implement. If needed, seek advice from your portfolio department.
When your board adopts recommendations, you must:
- minute the recommendations at a board meeting
- assign who is responsible for each recommendation
- agree to timeframes for reporting back to your board, including milestones and progress updates
- decide if your board needs a sub-committee to oversee implementation
- consider what resources you need
- consider if you need to make the recommendations public or share them with stakeholders to be transparent and accountable.
Board responsibilities
Your board is responsible to ensure recommendations are implemented.
For simple recommendations, assign them for action as soon as possible.
For complex recommendations, you may need an implementation plan.
For recommendations about directors:
- identify their development needs and come up with a plan to act on them
- only discuss these plans between the relevant director and the chair.
For all recommendation types, schedule reviews to check if a recommendation achieved its intended outcome.
Chair accountabilities
In most cases, your chair is accountable to the minister for their performance.
For guidance on how your chair manages their accountabilities, seek guidance from your portfolio department.
How to address poor performance
If your board is covered by the Public Administration Act 2004(opens in a new window), you must have a process in place to deal with poor performance of a director.
Poor performance can take a range of forms, such as:
- participation
- quality of contributions
- behaviour.
Always take action to support a director to perform highly.
Here are some examples on how you can identify and manage poor performance:
- have one-on-one meetings between the chair and the director to identify the issues and how to fix them
- set up ongoing discussions between the chair and the director to monitor performance, which could include the use of a performance plan
- identify learning and development opportunities with a plan and timeline to implement
- change the projects or sub-committees that the director takes part in
- speak with your portfolio department for advice.
If you’re concerned about your chair’s performance, get advice from your portfolio department.
Issues not considered poor performance
Misconduct or failure to declare conflicts of interest are considered more than poor performance.
These issues will need to be addressed through the appropriate processes.
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