Setting the stage for the chief executive’s annual review

Whenever I am in a workshop setting that includes nonprofit chief executives, I ask, “How many of you are evaluated on an annual basis by your board?” Usually about half the people in the room will raise their hands. Then I’ll ask those that raised their hands, “How many of you have actually been formally evaluated in the last twelve months?” This time the number is even smaller.

This is certainly not a scientific method for gathering data, but I think it is fair to say that chief executives deserve an annual evaluation by their boards, and too few are evaluated annually or at all.

While there is sure to be some amount of anxiety for anyone who is being evaluated, the reality is that most chief executives want to know how they are doing, what they are doing well, and where there is room for improvement. As board chair, it is your responsibility to ensure that an annual evaluation happens, that it is conducted fairly and appropriately, and that the rest of the board is aware of and has some level of input into the process.

In addition to being the right thing to do for any employee, you are putting the organization at risk if you don’t evaluate. Far too many organizations don’t take evaluations seriously until it is too late—when they find that they have a problem with their chief executive. What should have been the norm suddenly becomes the exception that will set-off a variety of alarm bells.

There are some fairly standard reasons why organizations and their boards fail to have an annual review process in place:

• Other things get in the way – Unless there is a carefully described evaluation process and timeline, odds are that other things will take priority and the evaluation will get pushed off to the next month, and then the next, and then the next…

• The chief executive doesn’t respect the board’s process – If the chief executive doesn’t believe that the process will provide useful feedback or that those who are leading the process will approach it fairly, it is easy for him or her to make sure it doesn’t happen.

• Complacency – With a long-time or successful chief executive, it is easy for the board to become complacent and feel like the evaluation process is a low priority or unnecessary. Why should it be any less important to a long-time chief executive to know where he or she stands with the board of directors?

• Lack of knowledge about how to conduct an evaluation – Not all board leaders have experience in conducting an evaluation appropriately and professionally, and too often the corporate models they try to draw upon are not a good fit.

If any of the obstacles that I’ve described above sound familiar, it is not too late to turn things around or to make sure that your “annual” process is truly annual. Here are some basic tips for board chairs to consider:

1. Regard the evaluation meeting that you’ll have with your chief executive as the most important conversation you will have all year. That is certainly how your chief executive will consider it, so you should too. Make sure that you communicate at every step that you take your responsibility seriously and consider the evaluation process a priority.

2. Meet with the chief executive early in the fiscal year to determine what the best timing might be for each stage of the process. Develop a timeline that you can share with the board and that can be used to guide the process in future years. A good process usually involves several steps, so don’t underestimate the time involved.

3. Find a mutually agreeable process. Start by asking the chief executive, “On what things do YOU want the board to judge your performance?” The board may want to add other items, but an evaluation that is built upon “here’s what I think is important” is going to have greater buy-in than a process that is imposed upon the chief executive.

4. Ideally the chief executive’s job description, your strategic plan, and the goals established by the chief executive and the board should all link together. If you don’t have these items, or they are not up-to-date, use the evaluation process as a catalyst for developing them.

5. Engage the board in the process. The board chair should not be flying solo. Provide the full board with a vehicle for offering their input—an on-line survey process may be ideal. Report to them (in executive session) on the input received and the conclusions you’ve drawn, and report to them again when the process is completed.

6. The chief executive should complete a self-evaluation using the same criteria. You will want to swap evaluations in advance of a meeting to go over them, and it is always best if you can exchange evaluations simultaneously, to avoid the temptation either party might have to write an evaluation that responds to what the other has written.

7. Make the meeting where you’ll have the evaluation conversation a priority on your calendar. Make sure that you’ve scheduled more time than you think you’ll need and that you don’t change or cancel it. This meeting is so very important, and that is what you want to be sure to convey.

8. Include your vice chair or another officer in the evaluation conversation. While there are sound legal reasons for doing this, the best reason is that it helps to set the standard for the next board chair. You are modeling behavior that you hope will become engrained in the organization.

9. Incorporate goal setting into your process. This can often be the ideal time for the chief executive and the board to set goals for the coming year. You might ask the chief executive to do this as part of his or her self-evaluation process, with the understanding that you and the board are likely to want input into the final version (which can be used to guide the next year’s evaluation process).

10. Identify how the board can be of help and support to the chief executive. If your process identifies ways in which the chief executive can improve his or her performance, make sure you are offering support. This may be a course, a conference, an executive coach, a mentor, or some other strategy, but be prepared to make the offer and to secure the funding needed. And don’t forget to ask, “How can the board be of help to you?”

While my hope is that you will regard the annual evaluation of the chief executive as both necessary and manageable, it would be a mistake on my part to over-simplify all the aspects of a successful evaluation process. The tips I’ve offered here should provide the foundation for your evaluation process, but they certainly don’t cover all the possibilities, particularly if you are facing a difficult evaluation conversation that might result in some corrective action. That is why I recommend to my nonprofit clients that they consider purchasing from BoardSource either the on-line or print version of the Assessment of the Chief Executive by Joshua Mintz and Jane Pierson. It is not inexpensive, but, as an alternative to developing your own evaluation process, it can certainly save you a tremendous amount of time.

For additional information, please contact Jeff Wahlstrom at (207) 992-4407 or send him an e-mail message at [email protected].