Great CEO performance assessment always a genuine two-way process
If there’s one common thread running through all successful CEO performance assessments, it’s a genuine commitment to a transparent and two-way process, where the board and CEO agree on the key goals and measurements and the board then works with and supports the CEO in achieving the objectives.
Thankfully, such practice is now commonplace in our commercial sector: sadly, it’s still pretty much the exception in our Not-For-Profit and Government organisations.
Of course, in the commercial world CEO performance assessment is intrinsically linked to the CEO’s remuneration package. Indeed, it defines the package, determining not only the base salary and short-term incentives such as annual bonuses when targets are met, but dictating how a CEO will be rewarded – usually with share options – when achieving longer term objectives that drive company and shareholder value.
And given that there’s so much riding on getting these three components right, it’s not surprising that boards of commercial companies have long understood the need to treat CEO assessment seriously.