Guidance

Non-executive director appraisals: principles and resources for arm's-length bodies and sponsoring departments

Published 11 April 2022

ALB NED appraisal principles

The overarching principles that should underpin the appraisal process for ALB NEDs is that appraisals:

• Should focus on the strategic contribution of the NED to the ALB’s board and be evidence-based. The level of involvement and rigour should be proportionate to the role, their experience and tenure in post;
• Should focus both on outcomes and behaviours; and
• Should recommend areas for development to support a culture of continuous improvement.

These principles, wherever relevant and practical, should also look to be adopted in the appraisal of Executive Directors. Whilst Executive Directors will have appraisals in their capacity as executives, their performance as a board member should also be included. For example the role of a Chief Financial Officer in their role on the Finance subcommittee.

Detailed principles on the process are as follows.

Preparation, including ‘who’ is responsible

The chair

The chair:

• Is responsible for reviewing the performance of the NEDs on their board and deciding how to conduct these appraisals. If relevant, the chair may wish to involve the senior independent director (“SID”).
• Should consider the NED’s role and achievements against the 12 principles of governance for public body NEDs and any relevant findings from the board effectiveness review (see separate guidance).

The NED

The NED should undertake self-assessment of their performance over the last reporting year before the appraisal.

The sponsoring department

The sponsoring department should ensure that the chair is aware of their responsibility and require them to conduct formal and rigorous annual appraisals of all NEDs on their board.

Frequency

The chair must undertake NED appraisals at least annually. More frequent appraisal should be considered for those new and/or inexperienced in the role.

Content of the appraisal discussion

The chair should:

• Focus upon the contribution of the NED to the strategic purpose of the ALB. Appraisals should be proportionate and constructive and should consider how the NED has performed against the 12 principles of Governance for Public Body NEDs and how the NED has had regard to the Code of Conduct for Board Members of Public Bodies.
• Consider the NED’s role in any subcommittees and how they have contributed to value for money - see Managing Public Money.
• Set out opportunities for development (including training and skills), and the results should be used to inform training and development and succession plans.

The NED should feed back any observations regarding either their own performance, or that of the board (including the chair), to the chair.

Post-appraisal activities

The NED must act on learning and development needs identified during the appraisal, or during the board effectiveness review. However, the chair may need to discuss training costs with the Accounting Officer.

The chair must provide a record of the appraisal to the secretariat and/or sponsor team. Issues identified that relate to statutory functions, Managing Public Money or Codes of Conduct are escalated to the Permanent Secretary in the first instance.

Ensure, as set out in the Governance Code for Public Appointments; “No reappointment or extension being made without a satisfactory performance appraisal, evidence of which must be made available to the Commissioner on request”. This will form a key part of wider consideration by Ministers on potential reappointment.