At long last, progress. Of a sort. I think. Research by the accountancy firm PricewaterhouseCoopers (PwC) suggests that years of agonising by corporate governance gurus, academics and the odd management columnist have not been entirely in vain.

The PwC survey, published last week, revealed that FTSE 100 companies are taking far more notice than in the past of non-financial measures of performance when it comes to calculating bonuses for senior executives.

Half as many bonuses were awarded solely on the basis of financial results in 2006-07 as in the previous year. Meanwhile, there has been almost a tripling of the number of bonus packages that were based on a combination of indicators.

It is not just financial performance that has to be strong: measures such as customer satisfaction, employee job satisfaction and environmental impact have to be moving in the right direction, too. It looks as though the famously unbalanced scorecard that has been used to decide top-level pay might finally be getting rebalanced a bit.

There is nothing new about deploying non-financial measures to help decide pay levels. As Jon Dymond, managing consultant in the executive reward team at the UK-based Hay Group, points out, data on customer satisfaction or retention have long been used to assess the performance of managers lower down the corporate hierarchy.

What is new is the growing sense that the contributions of senior executives ought to be looked at under these headings, too.

Executive pay remains a fraught area, where even the best intentions can lead to unwanted consequences. It is understandable, Dymond says, if remuneration committees have got bogged down in technical discussions with institutional investors.

"They talk finance to you, so you talk finance back to them," he says. There is a tendency for directors' performance to be considered purely in financial terms, which may not be the best way of assessing how the business is really doing and what its long-term prospects are."

And then when pay consultants become involved, "experts can end up talking to experts", he adds.

It is a closed world with its own private language. Remuneration committees will be damned for taking too simple an approach - "crude, easily achieved targets" - and damned if they allow discussions to get too complicated.

And yet, of course, pay is only part of the story. It is the icing on the cake.

Much more important is the overall and, you would hope, wide-ranging assessment of directors' performances, both execs and non-execs, that precedes narrow decisions about pay and reward. Looking at it this way and considering the evidence, it would be a mistake to get too excited about any modest improvement on the question of how bonuses are being calculated.

Proper, independent and thoroughgoing assessments of board performance are still a rarity. But, argues Tom Bonham Carter of the UK advisory firm Armstrong Bonham Carter, the problem is that there is no clear definition of what an effective board is. Bonham Carter says only one-third of FTSE 100 companies have undergone such an evaluation by an outside party.

Among FTSE 250 companies, the figure is much lower.

Why do boards continue to resist the idea of external assessment? It is certainly something new - in other words, "not invented here". Some companies seem to reject in principle the idea that any newfangled governance structures have anything to offer them.

Royal Sun Alliance's 2006 annual report contained this terse statement: "The non-executive directors have a unanimous view that the appointment of a senior independent director is not appropriate at this time." Nuff said, apparently. Never comply, never explain, never apologise.

Bonham Carter, who served in the military before entering the City, says: "The British army's first principle of war is the selection and maintenance of the aim. In practice, the given aim for any particular mission is designed to be clear and concise to avoid causing any confusion, especially when the 'fog of war' nurtures confusion anyway."

Boards that cannot communicate a clear aim to their organisations are setting themselves (and their shareholders) up for disappointment.

Never mind fiddling around with bonuses: the bigger question of understanding what the board is actually doing has to be settled first. -