Most boards already run some form of annual evaluation. Far fewer run one that directors privately rate as useful. The gap usually has little to do with the questionnaire and everything to do with how findings are gathered, framed and followed through. This guide sets out the board performance review process end to end: what the UK Corporate Governance Code expects, how to collect candid input, what the annual report has to say afterwards, and how to turn findings into an action plan the chair can credibly own.
What is a board effectiveness review?
A board effectiveness review is the formal annual assessment of how well the board, its committees, the chair and individual directors are working. The UK Corporate Governance Code 2024 calls the same exercise a board performance review, and the two terms are used interchangeably in practice. The Code expects it to be formal and rigorous, run every year, and facilitated by an external reviewer at least every three years in FTSE 350 companies. For the platform side of running one, see BoardServe's board effectiveness reviews.
That expectation sits in Provision 21 of the FRC's UK Corporate Governance Code 2024, which asks for a formal and rigorous annual review of the performance of the board, its committees, the chair and individual directors, and for the chair to commission a regular externally facilitated review. The 2024 Code applies to financial years beginning on or after 1 January 2025, so for most companies with a December year end the first reports under the new wording arrive in 2026.
The change of vocabulary is worth pausing on, because it reframes the whole exercise. The 2024 Code says "board performance review" where earlier editions said "board evaluation". EY's published summary of the changes records the intent: the wording was changed to signal a continual process of self-improvement rather than a backward-looking assurance exercise. That distinction matters for how you design and communicate the round. Directors engage far more candidly when the purpose is "how do we get better" than when it is "did we pass".
For companies applying the Code, this operates on a comply-or-explain basis, so a review is not strictly mandatory. Explaining the absence of a credible annual review to investors and proxy advisers is an uncomfortable conversation, and one most chairs would rather not have. For a fuller orientation to the Code's expectations on composition, succession and reporting, our company secretary's guide to the 2024 Code sets out the wider context.
What does the review cover?
The review covers four lenses, named in Provision 21 of the UK Corporate Governance Code 2024: the board as a whole, its committees, the chair, and individual directors. A round that asks only "how is the board doing?" collapses those four into one and produces answers too general to act on.
Each lens needs its own questions, its own evidence and, in the case of individual directors, its own confidentiality.
| Lens | What the review tests | Where the evidence comes from |
|---|---|---|
| The board as a whole | Balance of skills, quality of information and papers, use of board time, calibre of debate, relationship with the executive, oversight of strategy, risk and culture | Questionnaire ratings, board papers and minutes, observation of a live meeting |
| Committees | Whether the audit, remuneration and nomination committees have the remit, information and time to do their work. Audit committees also face the 2024 Code's internal-control reporting provision, which applies for financial years beginning on or after 1 January 2026 | Terms of reference, committee papers, interviews with committee chairs and members |
| The chair | Stewardship of meetings, fostering of constructive challenge, relationship with the chief executive, succession planning | Confidential director interviews, usually led by the senior independent director or an external facilitator |
| Individual directors | Whether each director continues to contribute effectively and demonstrate commitment, including time commitment | One-to-one appraisal conversations, attendance and contribution records |
Committees repay a deeper treatment than a single question set allows, particularly where an audit committee is carrying new internal-control reporting. Our guide to committee effectiveness reviews for audit, remuneration and nomination committees covers the committee-specific questions in full. Individual director assessment connects directly to re-election recommendations and is sensitive enough to merit a separate, confidential process. Our guide to non-executive director appraisal covers how to handle it constructively.
Two further areas deserve explicit questions. First, diversity and inclusion: against the backdrop of the FTSE Women Leaders Review and the Parker Review's ethnic-diversity targets, boards should assess not just headline composition but inclusion in practice. A board skills matrix and audit is the natural companion exercise. Second, technology and AI oversight: as boards take on responsibility for AI governance under frameworks such as ISO/IEC 42001 and the EU AI Act, the review should test whether the board genuinely understands the risks it is signing off. We cover that in our piece on board oversight of AI governance.
What the board needs to decide before the round starts
Five decisions shape everything that follows. Settle them at the board or nomination committee before a single question is drafted, because reopening them mid-round costs credibility with the directors you are asking to be candid.
- Scope. Which of the four lenses this round covers in depth, and which get a lighter touch. A comprehensive review of all four every year is rare outside large listed companies; a defensible pattern rotates depth while covering all four at least at a summary level.
- Internal or externally facilitated. Provision 21 expects the chair to commission a regular externally facilitated review, at least every three years in FTSE 350 companies, so a common cycle is two internal rounds and one external. Outside the FTSE 350 the three-year expectation does not formally apply, though periodic external challenge still guards against the slow drift that internal-only rounds can mask. Our guide to choosing between an internal and an external board effectiveness review sets out the full comparison, including candour, cost and what each means for your disclosure.
- Timing. Run the round well ahead of the year-end reporting cycle. Findings that land two weeks before the annual report goes to print become a disclosure problem rather than an improvement opportunity.
- Who sees the raw data. Directors need to know before they answer whether responses go to the chair, the company secretary, an external facilitator, or no one in identifiable form. Decide it once, state it plainly, and do not change it afterwards.
- How the instruments are administered. Paper and email are workable for a small board. Questionnaires, 360-degree input and interview scheduling across a board, three committees and a dozen directors are not. If you are weighing tools rather than spreadsheets, look for structured questionnaires, confidential response handling and a clear evidence trail.
The board effectiveness review process, step by step
Seven steps, in order. Most boards that are unhappy with their review have skipped or compressed steps four and six.
- Scope the round. Confirm the five decisions above in writing, and agree who is accountable for delivery, normally the chair with the company secretary running the process. Where the round is externally facilitated, agree the terms of reference and the reviewer's access to papers and meetings at this point.
- Design the instruments. Keep them short and purposeful. A focused questionnaire of well-chosen questions beats an exhaustive one respondents rush through. Mix quantitative ratings, which are useful for tracking change year on year, with open free-text prompts, where the real insight usually lives. Draft a separate interview guide for the chair and individual director lenses.
- Collect candid input. Senior directors are time-poor and have completed enough questionnaires to recognise a box-ticking exercise on sight. Complement the survey with confidential one-to-one conversations, because the most valuable observations are rarely written down. Aggregate small-population results carefully so a single dissenting voice cannot be identified. Because responses can constitute personal data, handle them in line with UK GDPR and ICO guidance on data minimisation and retention, and avoid keeping identifiable transcripts longer than the process requires.
- Analyse and test the findings. Separate what one director said from what the board collectively shows. Look for the gap between the ratings and the interviews, which is usually where the real finding sits. Test emerging conclusions with the chair and the senior independent director before they reach the board, not to soften them, but to make sure they are right.
- Report to the board. Be honest about what the round found, including the uncomfortable parts. A review that surfaces only strengths is not credible, and directors know it. The chair's willingness to name and address a genuine weakness is what earns the process trust.
- Agree an action plan the chair owns. Provision 22 expects the chair to act on the results. Effective plans prioritise ruthlessly: three or four meaningful actions beat fifteen aspirations. Each action carries a named owner (usually the chair, senior independent director or a committee chair, supported by the company secretary), a target date, and a clear definition of what "done" looks like. Distinguish quick wins, such as restructuring board papers, from structural matters such as succession or committee refreshment, which may run over a year or more.
- Track between rounds. A review is a snapshot; effectiveness is a trajectory. The action plan should return to the board at intervals through the year as a standing item, so progress is visible and owners are accountable. Consistent rating questions year on year let you see whether a concern is improving, plateauing or worsening, which is precisely the continual improvement posture the 2024 Code's language was designed to encourage.
Keeping the action plan, the prior findings and the evidence of follow-through in one place also makes the next round far easier. You begin by reviewing what the board committed to last time and whether it stuck.
How should the annual report describe the review?
Provision 23 of the UK Corporate Governance Code 2024 expects the annual report to describe how the review was conducted. The Chartered Governance Institute's guidance for listed companies goes further, setting out the objective and scope, the methods used, whose views were sought, the reviewer's tenure and connections, and whether previously announced actions were delivered.
That guidance, Reporting on board performance reviews (Chartered Governance Institute UK and Ireland, September 2023), is the most specific published account of what a substantive disclosure contains. Its expectations include:
- The objective and scope of the round: whether it covered all aspects of the board's effectiveness or focused on particular factors, whether committees were assessed, and whether individual directors were assessed.
- The processes used, for example interviews, observation of board or committee meetings, review of papers, and questionnaires, and whose views were sought beyond the board itself.
- How long the reviewer has been carrying out reviews for the company. Where that exceeds six years or two full reviews, whichever is shorter, or where other connections exist, the report should explain how independence and objectivity are safeguarded.
- Where the reviewer also provides other services, the payment for the review as a percentage of the total paid to that provider.
- Whether the reviewer is independently accredited or otherwise complies with the Chartered Governance Institute's Code of Practice for board reviewers.
- The key aspects of performance the board concluded need to improve, with specific actions and a timetable wherever possible, and a report on whether actions announced in previous years were implemented.
The guidance is blunt about boilerplate: a statement that the board has the correct mix of skills and abilities is not helpful on its own, and the reasoning behind any such judgement should be explained. Investors increasingly read this disclosure as a signal of board quality, so write it as a substantive account of what changed.
Common mistakes, and what to do instead
- Treating the round as assurance rather than improvement. The Code's own change of language points the other way. Frame the invitation to directors around what the board should do differently next year.
- One question set for four lenses. Committee, chair and individual director questions cannot be derived from a whole-board questionnaire without losing the specificity that makes findings actionable.
- Promising confidentiality the process cannot keep. On a board of eight, a free-text comment about the chief executive is often attributable on sight. Say what will be aggregated and what will be quoted before anyone answers.
- A plan with fifteen actions and no owners. Findings that produce no visible change erode trust faster than no review at all, because directors conclude the exercise is theatre.
- Writing the disclosure last. If nobody has looked at the annual report wording until drafting week, the round will not have collected the evidence the disclosure needs, particularly on reviewer tenure, connections and delivery of last year's actions.
- Leaving the external round to the last possible year. Commissioning a facilitator, agreeing terms and running interviews takes months. A FTSE 350 chair who starts in the third year is already late.
Run well, the annual round is one of the highest-leverage exercises a board undertakes: it sharpens focus, surfaces what no one wants to say in the room, and gives the chair a defensible mandate to act. BoardServe supports the full cycle in one place, from board, committee, chair and individual director assessments and 360-degree input through to board-ready reports and an action plan tracked to the next round. If you are scoping your next review, see BoardServe's board effectiveness review service.