During my many years in governance, I’ve noted a number of traits that are perennials of every good board – and one that is deeply woven into their very fabric is a willingness to embrace board performance evaluation.
Good boards are good leaders and good leaders lead by example, so they figure that if they’re evaluating the CEO, the CEO is evaluating the managers and so the evaluation waterfall cascades down through the organisation, why should they be exempt?
They understand, too, that by looking at their own performance and being prepared to tell people about it, they’re sending a strong and powerful message: we’re not the repositories of all wisdom; rather we’re fallible human beings.
Believe me, it can be daunting, which is why some boards scratch the surface while others go the whole hog. And ultimately, what separates great boards from good ones is the depth of the exercise.
The least confronting is a ‘whole of board’ evaluation, where the board as a collective is evaluated. The board gets together to talk about what they’ve done well and where they might improve, and the areas for improvement are captured in a board action list for the next 12 months. Doing just this is a significant step in the right direction, particularly for boards new to performance evaluation.
A slightly more sophisticated approach involves open discussion. Start by scouring the internet for examples of board performance evaluation surveys, have each director confidentially complete the chosen survey, collate and present the results for discussion and agree on areas to work on over the next 12 months.
More intrepid boards might wish to go a step further and use an external expert, who will follow a combination of the first two approaches and may supplement the findings by holding confidential discussions with board members and executives. The expert will then share the results and all will agree on a year-long performance improvement plan.
Let’s move now to the really gutsy boards, those that go beyond board evaluation and delve into a world where each committee of the board, each individual director and the chair are evaluated.
It’s best to use an external person, who will employ a combination of surveys and discussions to prepare the suite of reports. What follows is a series of confidential discussions with each director and the chair, at which each agrees to attend to certain areas (also kept confidential) over the next 12 months.
The really great boards go on to use the annual report to tell shareholders and members that they’ve undertaken an evaluation. They share the findings and are candid about what they’ll be working on in the year ahead.
All pretty unnerving, yes, but if we remember the golden rule that evaluations should never be seen as mechanisms for uncovering faults and rather as positive processes to identify strengths and areas where we can improve, we’re all winners.
Now, putting my money where my mouth is, I’d love you to evaluate these blogs, tell me what’s good, bad and neither here nor there, which topics resonate and what areas of governance and strategy you’d like me to explore in future blogs…
Until next time,