Botswana’s State-Owned Enterprise landscape has undergone significant changes in recent months, with several SOE boards being overhauled and new directors appointed to entities that had previously operated without fully constituted boards. The changes have been viewed as necessary to strengthen oversight and address governance concerns within institutions that carry significant public mandates. This comes against a backdrop of corporate governance concerns that have previously been raised in relation to some public interest entities by the Botswana Accountancy Oversight Authority (BAOA), placing renewed attention on the effectiveness of boards and the quality of oversight being exercised within Botswana’s public enterprises.
The reconstitution of these boards presents an opportunity to strengthen governance, but the appointment of directors is only one part of that process. The effectiveness of a board cannot be determined simply by the qualifications and experience of the individuals appointed to it. For this reason, there is a strong case for Board Performance Evaluations (BPEs) to form part of the governance cycle of Botswana’s SOEs, particularly as newly constituted boards settle into their roles and begin navigating the challenges of the institutions they have been appointed to oversee.
A board evaluation is intended to provide an honest assessment of how effectively the board is performing its responsibilities and whether the board’s collective conduct is contributing to the institution’s objectives. It can expose weaknesses in the quality of information reaching the board and the extent to which directors are exercising appropriate challenge. It can also reveal problems that are difficult to see from within the boardroom because they have become normalised through familiarity.
A board being evaluated can retain control of the entire process, deciding the questions to be asked, the areas to be examined and what action should follow. There is nothing wrong with a board evaluating its own performance, and directors may approach the exercise in good faith. But there is an obvious conflict in asking those whose performance is under scrutiny to define the standards against which they will be assessed. The risk is not necessarily that directors will deliberately protect themselves; it is that the process gives them control over what the evaluation can reveal.
Directors can approach an evaluation in good faith and still produce a limited assessment of their own effectiveness. A director who has dominated board discussions for years may not recognise that behaviour as a governance weakness, while other directors may be reluctant to identify it in a process controlled by the board itself. A board can therefore receive a technically complete evaluation while remaining largely unaware of the issues that matter most.
The problem becomes more pronounced where evaluation questionnaires are built around conventional questions that invite directors to rate the board on a scale, confirm whether procedures are followed and express general satisfaction with the functioning of the board. Such an exercise can produce impressive percentages without necessarily revealing much about how the board actually functions. A board can score highly on attendance, compliance with meeting procedures and receipt of board papers while still failing to challenge management adequately.
The recent reconstitution of SOE boards makes the question of evaluation particularly important because a newly appointed board can inherit institutional problems that existed long before the arrival of its directors. It can also inherit established relationships, management practices and boardroom cultures that influence how decisions are made. New directors may bring considerable professional experience to the table and still find themselves operating within a system whose weaknesses are difficult to identify without deliberately testing the way the board functions.
An evaluation should therefore go beyond asking directors whether they believe the board is effective and examine how the board actually functions. The early stages of a board’s tenure may provide the most valuable opportunity to establish a culture in which performance is examined before ineffective practices become entrenched.
This does not mean that every board evaluation must be outsourced to an external consultant. An external evaluator can ask the wrong questions, misunderstand the institution, produce a generic report and leave the board with a document that is filed rather than acted upon.
A board can legitimately conduct periodic self-assessments as part of its own governance practice. What becomes problematic is treating that self-assessment as the only mechanism through which board effectiveness is tested. A stronger model would introduce greater objectivity at appropriate points in the governance cycle. External facilitation could be used periodically, particularly for newly constituted boards, boards experiencing significant changes in leadership or composition, or institutions where governance concerns have already emerged.
An evaluation should not be designed merely to confirm that the board is functioning but also to find out where it is not functioning. That requires questions that examine behaviour, judgement and outcomes rather than simply asking whether directors are satisfied with processes. It requires attention to the conduct of the chairperson, the effectiveness of individual directors, the quality of collective decision-making and the relationship between governance and organisational performance.
A board that receives a report identifying weaknesses and then files it with the previous year’s governance documents has completed an administrative exercise rather than a performance intervention. Findings should translate into specific areas of development and changes in board processes. Where the evaluation identifies persistent individual performance concerns, those concerns should not disappear simply because the board is reluctant to confront them.
Botswana’s SOEs have an opportunity to approach board evaluations differently as new boards take shape. The objective should not be to create another annual compliance requirement that produces a report stating that the board is functioning satisfactorily. The objective should be to create a governance discipline in which boards are periodically required to confront the gap between how they believe they are performing and how they are actually performing.
Public institutions cannot reasonably be expected to demonstrate continuous improvement while their boards assess themselves against standards of their own making without meaningful challenge to those assessments. Where public resources and public mandates are involved, the credibility of governance processes matters almost as much as the processes themselves.
If board evaluations have historically been treated as an annual exercise in self-confirmation, repeating the exercise with a new board composition does not necessarily change what the evaluation is capable of revealing. Changing the directors without changing the mechanism through which their effectiveness is examined risks reproducing the same governance blind spots under a different set of names.
A board that marks its own homework may well give itself an honest assessment and even identify weaknesses that require attention. But where the institution’s performance, public mandate and accountability are at stake, governance should not depend entirely on the assumption that the person holding the marking pen will always identify every mistake on the page.