The organization’s Board of Directors is responsible for evaluating the performance of the CEO. Boards of directors that don’t take this role seriously are making a big mistake. Skipping performance reviews tells the CEO that he / she is not valued enough to justify such investment of time, energy, and effort on the part of their supervisors. This is a bad message to send to the person who bears all the burdens of a company or agency.
Boards sometimes ignore evaluations because they just don’t know how to do them. The purpose of this article is to provide critical advice on the process and content related to evaluating the job of the person in charge. If YOU are currently serving on a Board, regardless of whether the organization is large or small, make sure the following happens:
1. Evaluate the CEO annually without exception.
Ideally, CEO evaluations should be handled by the Executive Committee and scheduled for the same date each fiscal year. End of the year is a good time to do them, for example. However, there are times when evaluations need to be done more frequently. At the end of a new hire’s probationary period (whatever the time period), the first evaluation must occur. Within three months of an unsatisfactory annual review, another assessment should be conducted to track progress on serious deficiencies. Giving a poor or questionable evaluation to a CEO and then failing to present the standards for expected changes and the corresponding timelines to demonstrate those changes is unacceptable behavior on the part of the Board.
2. Incorporate a self-assessment into the overall process.
The Executive Committee of the Board must decide on significant foci for the CEO’s self-assessment. This should be done well before the implementation of the evaluation process. Content suggestions include: discussing in writing how well the objectives of the strategic plan have been met during the year, the reasons for not meeting particular goals, the specific struggles encountered in the position and how they can be overcome, and personal barriers to success at work. A safe board may even ask the CEO to evaluate their relationship with the Board of Directors, discussing what is working effectively and what could be improved from that person’s point of view. Most boards of directors, unfortunately, are not open to this kind of candid comment.
3. Seek input from employees representing various levels of the organization.
Executive Committee members can conduct twenty-minute face-to-face or telephone interviews with a sample of staff to gain insight into how people experience the CEO first-hand on a regular basis. This part of the process is essential. Because the Board is somewhat removed or completely removed from day-to-day operations, they should spend time with people who know what is really going on. Boards often omit this piece and it is a mistake to do so. It’s difficult to assess someone fifty miles away. Meeting with the staff allows the Board to have a closer and personal view of reality.
4. Measure the CEO’s performance primarily against the job description, job standards, and strategic plan.
While these three documents provide the meat to evaluate any CEO, the problem lies in how comprehensive and clear they are in the first place. Incomplete and poorly prepared documents can lead to an ineffective, useless, and potentially disastrous evaluation. The Board must ensure that they are reasonable, well written, and relevant to the current work environment BEFORE attempting to compare the CEO’s performance with them. Otherwise, it is unfair to the executive. If a Board has a certain expectation of the CEO, it is best that it appears in one of these documents. Making up expectations at the last minute, other than what is on paper, is not credible.
5. Evaluate how well the CEO grows other people.
Leadership is about more than meeting or exceeding income / earnings goals. How much and how well does the executive invest in the company’s employees? What exactly is that investment like? Or is it not happening at all? Are people motivated to excel at their jobs? Are they recognized for outstanding contributions? Are adequate liberties granted them? Are they given the opportunity to express their creative ideas? Are they given permission to attend professional development workshops and seminars and then share what they have learned? A Board can find the answers to these questions simply by asking the staff.
6. Examine the CEO’s interpersonal skills and their effect on the organization.
A board must know how well its CEO interacts with others, if he praises others and makes them feel valued, how he criticizes people, if he engages in self-interested conversations with them, if he can inspire employees to achieve goals. stars. A CEO toolbox lacking effective interpersonal skills strongly implies that this particular CEO may not work at this particular company or any other company. In fact, interpersonal skills count for a lot when you look at the whole package. Whether extroverted or introverted, the CEO must be able to get along with others in all kinds of situations.
7. Check the CEO’s ability to handle conflict, risk, and organizational change.
This area cannot be overlooked or minimized. Most boards of directors know what happens here simply by the nature of the board’s work. How does the CEO handle the conflict between him / her and another member of the Board? Among the members of the Board themselves? What observations can be made? How does the CEO present the various risks and upcoming changes to the Board? Do you face them head-on or shy away from these discussions? Again, what does the Board observe here? CEOs give many clues about their performance during Board meetings, as well as during less formal interactions with individual Board members. The key is that the Board needs to heed those clues. Unfortunately, many people “sleep” at Board meetings, ignore definite signs of trouble, or tend to agree with the crowd when opinions are expressed. Why? It’s easier to function well than to pay close attention, take a position, express a different opinion, and / or really get involved.
8. Identify the CEO’s efforts to develop personally and professionally.
It is difficult to grow others if the CEO does nothing to grow. Does the CEO value growth in general? Do you read trade magazines, attend seminars, conferences and workshops, join professional groups, network with other executives? Are you looking for a mentor and / or advising someone else? Have you considered the benefits of hiring a coach? A therapist if necessary? Boards of directors may think these things are none of their business, but they are wrong. All of these things are Board business. Who wants a CEO who makes fun of personal and professional development? When this type of person runs an organization, watch out! Whatever happens, or doesn’t happen, at the top it seeps through the multiple layers of the business and has a huge impact.
9. Develop a corrective action plan that addresses the deficiencies cited.
Talking about what doesn’t work can never be enough. The chairman of the board should include deficiencies in the written evaluation, discuss them clearly with the executive AND create an action plan to correct problems and / or develop important skills that are currently lacking. An action plan serves as a roadmap. It is something the Board can use to measure progress over the next several months. Ideally, the CEO accepts the plan and is motivated to make the changes the Board wants. Some negotiations may occur depending on the issues. Both the CEO and the chairman of the board should sign the action plan to seal the deal, so to speak.
10. Establish an evaluation environment that invites dialogue.
The formal evaluation of the CEO should never be a one-way communication from the chairman of the board. It is not a tirade or a thesis to deliver without comment. The chairman of the board is not a dictator. The Chairman of the Board is an information facilitator that, in the best of scenarios, leads to positive growth for the executive and improvement for the organization as a whole. The evaluation process should not become a power struggle between the two people. When that happens, a lot is lost. A great strategy plays out like this: The chairman of the board broadcasts an observation about something and asks the CEO how he views that very matter. Where are the differences, if any? The discussion focuses on differences in perception. In cases where the gap is wide, both people must determine what each can live with in order to reach some kind of consensus on how to move forward. But evaluations are not contests where one person wins and the other loses. A smart board chair understands this and behaves accordingly.