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CEO Evaluation: a Potentially Powerful Relationship Adhesive

March 9, 2020 0 Comments

At a daylong “High-Impact Governing Work Session” last fall, the board, executive director/CEO and executive team of Access Services in Los Angeles County spent around 1 ½ hours  discussing practical ways to cement the executive director’s working relationship with his board.  One of the relationship building tools the group closely examined was board evaluation of the executive director’s performance.  But they didn’t mean one of those highly subjective and essentially meaningless questionnaires that board members often individually fill out in the privacy of their own offices.

These questionnaires miss the point by having board members assess their CEO’s functional excellence rather than measurable bottom-line outcomes.  For example, using one of those notorious 0 to 5 scales, board members typically judge how well the CEO has performed in carrying out such functions as hiring and motivating top administrators, strategic planning, financial planning and management, external relations, etc.  Although tabulating board members’ numerical rankings to come up with average CEO scores in each functional area lends an air of scientific precision to the evaluation process, it is basically a highly subjective opinion survey.  If it weren’t bad enough that the questionnaire process involves making subjective judgments about irrelevant performance metrics, it is open to abuse, putting the CEO professionally at risk.  Believe me, on several occasions over the years I’ve witnessed board members who were “out to get” their CEO assign rankings of 0 or 1 in several functional categories, ensuring that the CEO’s averaged overall score was in the mediocre – or worse – range.  The complete absence of objectivity and quality control make the traditional questionnaire a potentially lethal tool indeed!

What the Access Services board and executive team members discussed in last fall’s work session was employing an evaluation process that focuses on pertinent,  measurable outcomes, rather than functional excellence, at two levels.  The obvious level is organization-wide outcomes that are typically identified in the annual operational planning process (e.g., number of riders served; on-time performance).  The second, less obvious level involves what I call the CEO’s “CEO-centric” outcomes, which are typically negotiated toward the end of the fiscal year with the board’s governance or board operations committee. These CEO-centric outcomes are essentially targets that the CEO intends to make a top leadership priority of his/her own – that he/she will devote significant time and attention of his/her own to achieving. For example, in one of the six breakout groups that met during the Access Services session, the executive director/CEO presented such CEO-centric outcomes as implementation of updated board communication guidelines, attendance at 6 important public events, development of a revised budget preparation process, and creation and implementation of a new staff development program.

Long experience has taught me that employing such CEO-centric outcomes can make the CEO evaluation process a powerful board-superintendent relationship sealant.  The CEO’s discussing his/her own CEO-centric leadership targets sends a clear signal:  “I welcome your input on my leadership goals as your chief executive officer.  To make a real difference in our region, we have to work closely together, and I’m not the least bit worried about your treading on what might be seen as my turf.”  My readers well know that in the “olden days,” traditional CEOs commonly felt the need to maintain distance from their board and protect their CEO turf from board incursions.  But I’m seeing a new breed of CEOs these days, who see themselves as hybrid leaders:  part board member, part top executive.  This new breed will without question be far more effective at building lasting partnerships with their boards and, as a consequence, significantly boost organizational performance.

By the way, Dave Stackrow and I discuss board evaluation of CEO performance in some detail in Chapter Three of our new book, “Building a Solid Board-CEO Partnership” (Governance Edge, 2019).

 

 

Doug Eadie
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