By Les Wallace, PhD
The Board’s responsibility is to help the CEO be as successful as possible.
Clear expectations form the basis for all good performance relationships. The CEO feedback process belongs to the entire Board and all should be involved; it is not a Board president’s or executive committee’s responsibility.
Therefore, the Board must ensure the CEO understands expectations for performance and interaction with the Board. Certainly, timely communication as the year proceeds is critical, but so too are touch points for formal milestones. Formal, annual goal setting and feedback sessions, for example, should be supported by additional formal, semi-annual feedback.
Typical categories for goal setting and CEO feedback include:
- Enterprise operational management (e.g., fiduciary/financial, human capital, organizational climate, customer satisfaction, legal compliance, consultants)
- Relationship with Board of Directors (communication, responsiveness, integrity)
- Relationships with external constituents (e.g., government, accreditation and oversight bodies, customers/clients, funding sources, philanthropic sponsors, enterprise partners)
- Funding development
- Strategic Thinking
CEO Leadership Succession
Boards should expect the CEO to develop two succession plans: (1) Identifying who will take over in an acting capacity should the CEO not be available for duty; (2) a longer term development plan for higher level managers who may someday become CEO candidates.
CEO leadership succession, a critical commitment of any CEO and Board of Directors, suggests that a couple of high level managers of the organization ought to be identified as potential CEO successors. This doesn’t mean they are “ready now” but most likely means they have the potential, with development, to compete for the CEO job (or another CEO job) sometime in the three-to-five-year horizon.
Boards expect that the CEO will identify these high potential leaders and provide coaching, mentoring and formal leadership development to guide their leadership maturation. Customarily, Boards expect an annual report on this CEO leadership development initiative.
Development of potential in-house talent does not mean a board is precluded from conducting a full external search should the CEO position become vacant. This should be public knowledge to all participants in a leadership succession program.
Major contributors to a CEO’s leadership success include:
- Competencies that match the leadership challenge:
- Does the Board have clearly identified leadership competencies?
- Does the CEO get the benefit of 360 Degree Leadership Feedback?
- Does the CEO have a non Board member coach / mentor for support?
- Clear expectations for performance
- Timely feedback
- Annual goal setting
A basic foundation for a successful Board CEO evaluation process includes:
- An up-to-date CEO position description.
- Board policy for CEO annual evaluation & feedback.
- Board utilizing “executive sessions” regularly.
- CEO performance objectives (goals) and measures set annually.
- Board clearly understands “governance vs management.”
- Board conducts its own self-assessment annually
A typical 6-step evaluation process
- CEO completes self-assessment for board (a personal, confidential 360 feedback survey is also recommended for CEO).
- Board surveys members for evaluative feedback and suggested goals (based on agreed upon leadership competencies, past goals, developmental objectives, and data from customer and organizational climate surveys as available).
- Executive or Governance Committee reviews input and creates draft evaluation and recommends salary/bonus. [Note: Governance committees may also conduct / contract a salary survey to guide this decision]
- Full Board of Directors reviews and approves evaluation and salary.
- Executive or Governance committee holds feedback session with CEO.
- Board finalizes evaluation, CEO goals, bonus, and salary increase.
Format for the evaluation feedback may vary but typical sections include:
- Performance Relative to Leadership Competencies.
- Accomplishment on Goals and Objectives.
- Special Accomplishments.
- Opportunities for improvement.
- Performance Goals for the Upcoming Fiscal year.
- Needs improvement
- Consistently meets expectations
- Consistently exceeds expectations
This format might be graphically organized as follows:
- Leadership Competencies (50%)
- Enterprise Management
- Customer Focus
- Board Relations
Typical CEO Leadership Competencies applied to the CEO evaluation and self assessment include (but are not limited to): Strategy Development, Transformational Leadership, Enterprise Management, Customer Focus, Board Relations, Integrity / Credibility. These competencies are further delineated below.
- External Awareness: trends, challenges, opportunities, threats, competition, governmental policy.
- Visioning: creating / energizing a common vision.
- Strategic Thinking: challenging traditional practices and seeing new models and partnerships.
- Strategic Planning: seeing a roadmap for organizational transformation.
Evidence: clear future vision and game plan; staff clear on and supportive of vision & plan; strategic movement.
- Leading transitions / transformation.
- Systems re-design / re-engineering.
- Sponsoring continuous learning.
- Facilitating creativity / innovation.
- Developing and maintaining partnerships / coalitions / alliances / government relations.
Evidence: Significant smooth change, strategic movement, new ideas, helpful partners.
Enterprise Management Competencies:
- Accountability / performance excellence / HR / legal.
- Financial management / Budgetary performance.
- Engaged / involved organizational climate (annual employee engagement / climate survey recommended).
- Leadership succession development.
Evidence: organizational efficiencies & effectiveness, transparency, engaged workforce, few organizational surprises.
Customer Focus Competencies:
- Creating and tracking value and satisfaction.
- Services / products designed with customer input.
- Quality improvement efforts.
Evidence: Customer surveys, voice of customer evident in changes / new offerings, quality review confirms quality and surfaces improvement opportunities.
Board Relations Competencies:
- Communication: timely, complete, transparent.
- Offers Board options / alternatives.
- Supports / assists Board succession planning.
- Facilitates Board development choices.
- Meeting / agenda support.
Evidence: Full board assessment.
Integrity / Credibility Competencies and Personal Characteristics:
- Values / ethics beyond reproach.
- Continuous learning commitment.
- Polical Savvy.
- Personal / professional balance.
Evidence: constituents validate ethical leadership, continual learning results in improved leadership and new ideas brought to the Board, obvious personal responsibility for mental and physical health.
Sample CEO Goals
Every CEO evaluation should include specific goals for the coming year.
The following are sample goals.
Sample CEO Goal: Information Technology
- CEO is charged with the assessment, research, and development of an organization-wide technology strategic plan for presentation at the June Board meeting. Such a plan will likely address but not be limited to:
- Anticipated technology needs five years out.
- Current service assessment and risks.
- Proposed enhancements: hardware / software.
- Financial investment required: short and long term.
- Staffing implications.
- Return on investment.
- Potential support contractors.
Sample CEO Goal: Human Resources
- CEO is charged with engaging a full scope organization-wide external review of human resources policies and practices (excluding compensation and retirement programs) for presentation at the March Board meeting. Such an assessment will likely include but not be limited to:
- Policy / procedure review for completeness, adherence and legal compliance.
- Hiring, on-boarding, performance management and termination, record keeping.
- Retention, turnover, career development.
- Leadership/management development & succession planning.
- Recommendations and additions.
Despite the board’s confidence in your CEO evaluation and feedback process, where might opportunities exist to add even greater value to the process?
Have you re-engineered the CEO evaluation and feedback process within the last three years? If not, take a look. Even small adjustments can have powerful outcomes