Wednesday, September 11, 2013

The Last Time We Evaluated Our CEO? How About Never!

It's time to demystify the board's role in evaluating the CEO.

When I ask board members or CEOs about the annual performance review of the CEO, the reluctant responses run the continuum:

  • “We did a review three years ago, but it didn't go well.”
  • “The Board Policies Manual says the Governance Committee should conduct the annual evaluation—but no one knows how to do it.”
  • “Our board chair takes the CEO out for lunch—and uses the annual review forms from her company's HR department.”
  • “We pray for our CEO and speak the truth in love, but we don't have a formal process.”

Every governance resource lists some variation of “supporting and evaluating the CEO” as one of the primary responsibilities of a well-functioning board.  Ten Basic Responsibilities of Nonprofit Boards: The Companion Workbook, published by BoardSource, suggests, 
“The annual review should be a formal, written process that centers primarily on the annual goals mutually and previously 
agreed upon by your board and the chief executive.”

Aha! That's the reason so many boards fail to conduct annual evaluations of their CEOs—no annual goals!  

Try this pop quiz at your next board meeting: “OK, everyone stand.  I have a Starbucks card for the last board member standing.  Now...if you can name two of our CEO's annual S.M.A.R.T. goals that are written, approved by the board, and recorded in our minutes...remain standing.”
Trust me—the last person standing will be you, 
and you will keep the Starbucks card.

So what to do?  If you're not already annually evaluating CEO performance, agree on the process. Consult the literature on why and how, including Rebekah Burch Basinger's excellent six-page resource for theological schools, “The Board's Responsibility for Evaluating the President.”  Then ensure that the agreed-upon goals meet the S.M.A.R.T. test: Specific, Measurable, Achievable, Realistic and Time-related.

Basinger suggests a four-step process: 1) Establish a committee to manage the presidential evaluation, 2) Set criteria for the evaluation, 3) Gather input, and 4) Discuss the findings with the president (in a face-to-face meeting, followed by a written review and summary).

She adds, 
“The best evaluations encourage presidents 
to think deeply about their own vocational satisfaction.”

Imagine a board that thoughtfully and prayerfully, in a God-honoring way, encourages, supports and blesses the CEO with helpful and frank feedback—so he or she will leverage their God-given strengths, spirituals gifts and leadership style to the glory of God and Kingdom advancement!

QUESTION: What is your board's process for annually evaluating your CEO? 

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