Evaluating The CEO – 10 Tips For Process And Content: The organization’s Board of Directors is responsible for evaluating the performance of the chief executive officer. Boards who are not taking this function seriously are making a big mistake. Skipping performance reviews tells the CEO that he/she is not valued enough to warrant such an investment of time, energy, and effort by his/her supervisors. This is a poor message to send the person who bears all of the burdens of a company or agency.
Sometimes Boards ignore evaluations because they simply don’t know how to conduct them. The purpose of this article is to provide critical tips around both process and content related to assessing the work of the individual in charge. If YOU currently serve on a Board-regardless of whether the organization is large or small, make sure the following are happening:
1. Evaluate the CEO on an annual basis without exception.
Ideally, CEO evaluations should be handled by the Executive Committee and scheduled for the same time each fiscal year. Year-end is a good time to do them, for example. There are times when evaluations need to occur more frequently, however. At the conclusion of a new hire’s probationary period (whatever length of time that is) the first evaluation should occur. Within three months of an unsatisfactory annual review another evaluation should take place to follow up on progress made pertaining to serious deficiencies. Giving a poor or questionable evaluation to a CEO and then failing to put forth standards for expected changes and corresponding time frames for demonstrating those changes is unacceptable behavior on the part of the Board.
2. Incorporate a self-evaluation into the overall process.
The Board’s Executive Committee needs to decide upon meaningful foci for the CEO’s self-evaluation. This needs to be done well in advance of evaluation process implementation. Suggestions for content include: discuss in writing how well the strategic plan objectives have been met during the year, reasons for not meeting particular objectives, specific struggles encountered in the position and how those may be overcome, and personal barriers to success on the job. A secure Board may even ask the CEO to evaluate his/her relationship with the Board of Directors, discussing what is working effectively and what could be improved from that person’s viewpoint. Most Boards, unfortunately, are not open to this sort of candid feedback.
3. Seek input from employees representing various layers of the organization.
Members of the Executive Committee can conduct twenty minute face to face or telephone interviews with a sampling of the staff to gain insight into how folks experience the CEO firsthand on a regular basis. This piece of the process is critical. Because the Board is somewhat removed or totally removed from day to day operations, they should spend time with the people who know what is actually happening. Frequently, Boards skip this piece, and it’s a mistake to do so. It’s difficult to evaluate somebody from fifty miles away. Meeting with staff allows the Board to get an up close and personal view of reality.
4. Measure CEO performance primarily against the job description, job standards, and the strategic plan.
While these three documents provide the meat for evaluating any CEO, the rub lies in how comprehensive and clear they are in the first place. Incomplete, poorly constructed documents can lead to an ineffective, useless, and potentially disastrous evaluation. The Board needs to make sure that they are reasonable, well written, and relevant to the current work environment BEFORE trying to measure CEO performance against them. Otherwise it is unfair to the executive. If a Board has a certain expectation of the CEO, it better appear in one of these documents. Inventing expectations at the last minute – apart from what’s on paper – isn’t credible.
5. Assess how well the CEO grows other people.
Leadership is more than meeting or exceeding revenue/profit goals. How much and how well does the executive invest in the company’s employees? Exactly what does that investment look like? Or isn’t it happening at all? Do people feel motivated to excel in their jobs? Are they recognized for outstanding contributions? Are they given appropriate freedoms? Are they given the opportunity to voice their creative ideas? Are they granted permission to attend professional development workshops and seminars and then share what they’ve learned? A Board can find out the answers to these questions simply by asking the staff.
6. Examine the CEO’s interpersonal skills and their effect upon the organization.
A Board needs to know how well their chief executive officer interacts with others, if he/she praises others and makes them feel valued, how he/she criticizes people, if he/she engages in personal interest conversations with them, if he/she can inspire employees to reach for the stars. A CEO tool box lacking effective interpersonal skills strongly implies that this particular CEO may not work out at this particular company or any company for that matter. In fact, interpersonal skills count for a great deal when one looks at the whole package. Whether an extrovert or an introvert, the CEO has to be able to get along with others in all sorts of situations.
7. Check the CEO’s ability to manage conflict, risk, and organizational change.
This area cannot be overlooked or minimized. Most Boards know what’s going on here just by the nature of Board work. How does the CEO deal with conflict between him/herself and another Board member? Between Board members themselves? What observations can be made? How does the CEO present various risks and upcoming changes to the Board? Does he/she face them head-on or shy away from such 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 has to pay attention to those clues. Sadly, many folks “sleep” in Board meetings, ignore definite signs of trouble, or tend to go along with the crowd when opinions are voiced. Why? It’s easier to function like this than to pay close attention, take a stand, express a different view, and/or truly get involved.
8. Identify the CEO’s efforts to develop him/herself personally and professionally.
It’s tough to grow others if the CEO is doing nothing to grow him/herself. Does the CEO value growth in general? Is he/she reading trade magazines, attending seminars, conferences, and workshops, joining professional groups, networking with other executives? Is he/she seeking a mentor and/or mentoring someone else? Has he/she considered the benefits to hiring a coach? A therapist if necessary? Boards may think these things aren’t their business, but they are wrong. All of these things are Board business. Who wants a chief executive who pooh-poohs personal and professional development? When this type of a person heads up an organization, watch out! Whatever happens-or doesn’t happen-at the top trickles down throughout the multiple layers of the company and has a huge impact.
9. Develop a corrective action plan that addresses cited deficiencies.
Just talking about what isn’t working can never be enough. The Board Chair needs to include deficiencies in the written evaluation, discuss them clearly with the executive, AND create an action plan for correcting problems and/or developing important skills that are currently lacking. An action plan serves as a road map. It is something the Board can use to measure progress over the next few months. Ideally, the CEO buys into the plan and is motivated to make the changes the Board desires. Some negotiation may occur, depending upon the issues. Both the CEO and the Board Chair should then 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 communique from the Board Chair. It is not a diatribe or a thesis to be delivered without comment. The Board Chair is not a dictator. The Board Chair is a facilitator of information that, in the best scenario, leads to positive growth for the executive and improvement for the organization at large. The evaluation process must not become a power struggle between the two people. When that happens, much is lost. A great strategy plays out like this: the Board Chair relays an observation about something and asks the CEO how he/she views that same thing. Where do the differences lie, if any exist? Discussion focuses upon the differences in perception. In cases where the gap is wide, both individuals need to hammer out what each can live with in order to reach some kind of consensus around how to move forward. But evaluations are not contests where one person wins and the other loses. A savvy Board Chair understands this and conducts him/herself accordingly.
Sylvia Hepler, Owner and President of Launching Lives, is an executive and career coach/advisor based in South Central Pennsylvania. She connects with clients primarily by phone with in-between emails if desired. Her ideal clients are senior level corporate executives and nonprofit executive directors who are willing to commit to working steadily and diligently to move from their current status of stuckness to greater clarity, improved self-confidence, increased skill, and deeper sense of purpose. Her mission is to support executives as they get unstuck, reduce unnecessary suffering, and increase balance in their lives. Ms. Hepler’s background includes: teaching, public speaking, retail sales, freelance writing, and executive leadership of a 14 county nonprofit organization. She has a working knowledge of staff supervision, Board development, Quality Management, SWOTT Analysis, the hiring and firing of employees, mission/vision development, networking, and organizational collaboration. Ms. Hepler demonstrates keen insights into human behaviors, exceptional ability to prioritize projects and tasks, and bulls eye skill around matching appropriate communication strategies with particular situations. Her deep empathy coupled with a no-nonsense approach yields swift, noteworthy results with most coaching clients. PRODUCTS: Ms. Hepler has written a “Special Report” entitled, “FIVE FATAL FLAWS in EXECUTIVE THINKING”, produced an audio CD on “making change”, and launched a monthly tele seminar series called “Solutions By Sylvia”. CONTACT: Sylvia@launchinglives.biz 717-761-5457