I. It’s all about people
An effective supervisory board depends fundamentally on its composition; it is a decisive factor in evaluating board performance. This concerns, first, the competencies and experience each member contributes to board work. Second, it requires attention to how the board functions as a collective—and whether each member can contribute their distinctive strengths effectively in the boardroom. In this sense, supervisory board effectiveness is ultimately a question of people, leadership, and team dynamics.
II. A Company-Specific Competency Profile
The competency profile, long recommended by the German Corporate Governance Code (GCGC), serves as a strategic steering instrument for ensuring an appropriate supervisory board composition. It articulates the board’s target composition and should be applied consistently to support board development and succession planning.
Crucially, the competency profile should not be treated as a static document. It requires regular review and continuous updating. As a company-specific and dynamic instrument, it must reliably reflect the company’s situation, business model, and strategic challenges. New requirements—such as those arising from technological innovation, regulatory developments, or changing market conditions—should be incorporated systematically. In addition to technical expertise, the profile should also consider soft skills and, within reasonable limits, relevant personal attributes.
Whereas the competency profile describes the target state, the qualification matrix provides an overview of the board’s current composition and competencies. Given expectations from the Government Commission, investors, and other stakeholders, close integration between the competency profile and the qualification matrix is essential.
III. Meaningful Qualification (Skills) Matrix
The qualification matrix was introduced to improve transparency and traceability of supervisory board composition, particularly for shareholders. It documents the current implementation of the competency profile by showing what specific knowledge, experience, and competencies each board member possesses, and how these align with the overall competency expectations for the board.
Accordingly, the matrix functions not only as an internal reference point, but also as a tool for external accountability. For shareholders, it is an important information source for assessing whether the board’s competence base is sufficiently robust. In addition to professional competencies, best practice has evolved to include information on independence, first appointment and end of term, nationality and international background, potential overboarding, and committee memberships. By contrast, requirements such as integrity, personal suitability, and fulfillment of regulatory “fit and proper” expectations (e.g., reliability and professional qualification under supervisory standards) may be treated as baseline prerequisites for taking on a board mandate.
Three years after their introduction, qualification matrices remain highly heterogeneous across companies. Differences persist in the number of competencies listed, how they are selected and categorized, how they are defined, and what methodologies and proficiency levels are used. While improvements over time are visible, they are often incremental and selective. A next development step is therefore needed: a systematic, methodologically sound, and strategically applied matrix that is not perceived merely as a reporting obligation, but—together with the competency profile—as an effective instrument to strengthen succession planning and board development. Investors and the DVFA expert committee on Governance and Stewardship have explicitly called for higher-quality implementation of the GCGC recommendation.
IV. Verifiable Disclosures and Supervisory Board Performance
A key improvement area concerns the assessment of competencies. Competence disclosures should not rely exclusively on the self-assessments of the individuals concerned without plausibility checks or verification. The central expectation is that matrix entries must be individually traceable for each supervisory board member. For external stakeholders—particularly investors—traceability is a prerequisite for confidence in the disclosures. As the DVFA emphasizes, only under these conditions can such assessments command credibility. At the same time, current analyses suggest that self-assessed competence levels in German listed companies are generally reported at a high level.
Traceability can be supported, first, through published résumés that provide evidence for the claimed competencies. Supervisory board members should ensure that publicly available CVs remain current. Where individuals hold multiple mandates, disclosures should be consistent across websites and annual reports. A best practice is to connect the matrix to members’ CVs through hyperlinks or brief annotations specifying which roles and experiences substantiate each stated competency. This creates a robust connection between stated competence claims and observable qualifications. Public Social Media profiles (e.g., LinkedIn) should also be kept consistent and current.
In addition, individual performance assessments—for example as part of regular board evaluations—may contribute to objectifying the qualification matrix. Such practices are well established in many Anglo-American boards and have begun to appear in regulatory approaches in parts of the continental European financial sector. If evaluations are not treated as a purely formal exercise and if conclusions are drawn, they can materially improve collective board work. This includes more substantive discussions with board members about competence development and training needs. For the supervisory board chair, performance dialogues can also serve as a structured assessment of the board’s overall capability.
Beyond plausibility and verification, two further issues are becoming increasingly important: differentiated disclosure of proficiency levels and transparent communication of the methodology used. Although multi-level proficiency models are becoming more common, companies differ significantly in both the number of levels and their definitions. A more standardized scale would improve the informativeness and comparability of qualification matrices and enable a more realistic assessment of competence depth across boards.
V. Shorter Terms of Office
Dynamic competency profiles and traceable qualification matrices reach their full potential only when complemented by additional instruments within the broader board-appointment toolkit. Central among these is the acceptance of shorter appointment periods, combined with staggered and/or differentiated term lengths.
In periods of heightened volatility and rapidly shifting operating conditions, companies must exercise rigorous judgment not only in selecting their senior leaders. Particularly with respect to the management board, the supervisory board must continuously monitor emerging developments and reflect them in executive appointments, leadership development decisions, and the allocation of responsibilities. Long and static appointment periods have increasingly become less common, especially in light of the average tenure of management board members.
These developments also support recurrent calls—especially, though not exclusively, from international stakeholders—for shorter appointment periods for supervisory board members. In practice, many companies have reduced statutory appointment periods from five years to four or three. This enables faster responses to changing conditions and shifting competency requirements. Topics such as digitalization and AI, sustainability, geopolitical risks, and defense-related considerations can be integrated more rapidly through targeted appointments.
VI. Staggered Boards
Shorter appointment periods and a greater ability to recalibrate board composition raise a legitimate concern: whether the supervisory board can still preserve the stability required for effective oversight and sustained support of the management board. One governance response is the staggered board, meaning a structure in which terms of office (on the shareholder representative side) do not all expire at the same time. The ability to introduce periodic changes on the shareholder side may also positively influence internal board structures, including committee composition. For the chair, staggered terms can provide opportunities to bring new perspectives into the board and deepen expertise in committee work. This approach also strengthens the role of performance considerations in supervisory board work.
VII. An Annual Supervisory Board Agenda Item
Calls for transparent, consistent processes—and for regular attention to appropriate board composition—are well established. They are increasingly reinforced by regulatory expectations, including the recommendation to publish a qualification matrix annually. If the governance instruments described above are applied, annual reflection on board composition becomes unavoidable. Shorter terms and staggered structures require more frequent attention. The board’s composition, the competency profile, and the qualification matrix should therefore be treated as recurring annual agenda items.
To deliver its full value, the qualification matrix must not be treated as a yearly compliance exercise. Instead, it should be established as a central internal steering tool. This includes systematic alignment between the competency profile and the matrix, and the derivation of concrete requirement profiles to support a professional and transparent appointment process.
VIII. Professional and Transparent Appointment Processes
Once the competency profile defines the target, the qualification matrix documents the current state, and shorter terms plus staggered structures create agility, implementation depends on identifying appropriate candidates and applying an orderly appointment process. The supervisory board, typically through the chair, should maintain a current list of potential candidates “in the drawer.” This list can be developed using suggestions from within the board and with support from professional executive search advisers.
Especially in listed companies, filling a supervisory board vacancy should generally be supported by a professional search firm. Historical developments indicate that the use of external advisers in supervisory board appointments is increasing. This is a sensitive domain, as appointment processes must avoid harming individuals’ reputations. At the same time, a professionally managed search provides shareholders with assurance that the company has conducted a “best candidate” process—both in technical qualification and in team fit. Additionally, in contingency scenarios (e.g., an unexpected vacancy), advance preparation helps the supervisory board maintain operational readiness and ensure prompt responsiveness.
IX. Last but Not Least: The Nominating Committee
Internal effectiveness also requires a fully functioning nominating committee, which is often chaired by the supervisory board chair. The committee should regularly consider which competencies the board requires in light of the company’s business model and whether the board currently covers them adequately.
It is frequently observed that, in many companies, the nominating committee remains largely dormant. If the supervisory board has effectively institutionalized these governance instruments, the committee’s work cannot be reduced to procedural formality—let alone lapse into inactivity. The nominating committee must meet regularly to ensure continuous attention to appropriate board composition; otherwise, the aforementioned governance measures have limited effect.
Finally, the importance of the supervisory board chair warrants explicit mention. The chair sets the “tone from the top” within the board, toward the management board, and in engagement with investors.
X. Conclusion
An effective supervisory board depends decisively on its composition. A competency profile that defines the target benchmark, complemented by a qualification (skills) matrix that maps the current composition, has become an established pair of governance instruments. In volatile conditions, however, they achieve full effect only when complemented by shorter appointment periods, staggered board structures, and regular supervisory board consideration—supported by structured preparation within the nominating committee. Supervisory board appointments are not a one-time, fixed-date event; they constitute a continuous governance process.