October 28, 2021

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The Governance Coach™

Is Your Board Evaluating Performance?

When it comes to evaluation, is your board living by its own standards?

You likely recognize the value of evaluating your CEO against predefined expectations and standards. You even expect the CEO to do the same with subordinates. If you are using Policy Governance® you created well defined policies and a monitoring schedule to guide the process and follow it. Likewise, you have a set of policies which direct the expected behavior of the board.

However, if you are like many boards I have observed, you struggle to evaluate yourself with the same rigor you do the CEO. Perhaps you don’t know how, or  things seem to be going well so you find no need to evaluate. Whatever the cause, for the sake of your organization’s health here is why self-evaluation is important:

  1. Self-evaluation models the behavior the board wants to see in the CEO and reinforces the board’s credibility. Consider the parent who regularly tells a child, “Do as I say, not as I do.” Although the child may obey when the parent is watching, what will they do when left alone? What impact will this have on their relationship? How well will the child receive correction when they know the parent is unwilling to hold him or herself to the same standard? A similar dynamic exists between board and CEO.
  2. Self-evaluation helps the board stay its course and govern with excellence. Although the principles of Policy Governance are simple, they require significant self-discipline to live out. If a board is not careful, bad habits creep in and before the board knows it, it has drifted from the principles it set out to follow.

Back in my Kung Fu days we would practice our forms over and over again to get them right. However, practice was not enough. We had to evaluate our practice to preserve the integrity of the form. Hence, we followed the motto of the five P’s: Perfect Practice Prevents Poor Performance. This served as a constant reminder to check what we were doing. To not just do the moves, but to evaluate and ensure we did the right move in the right way. If we didn’t, the wrong moves would be incorporated into muscle memory, only to be revealed come evaluation or performance day. As you can imagine, trying to fix errors now committed to muscle memory is much harder than those caught along the way. The same is true for a board as it forms its habits over time.

The purpose of board self-evaluation is not to evaluate individual board members, but rather the performance of the board as a whole. Although the evaluation of individuals may arise from this, it is not the focus. To this end, a good board self-evaluation should be:

  • Positive – you should come away with a sense of what the board’s strengths are.
  • Constructive – you should identify specific changes that need to be made.
  • Educational – you should identify what you still need to learn about and make plans to learn it.

When should board self-evaluation be done? Consider a ship traveling across the ocean. It sets out from port heading to its destination. If the captain locks the rudder in place, the ship fails to reach its destination as competing forces push it off course. Knowing this, the crew continually adjusts its heading to stay on course. The longer they go between course corrections, the greater the correction needed. The same is true for the board.

A board can look at its policies and set out an evaluation frequency, just like it does for policies that apply to the CEO. For some policies the board may be able to do a self-evaluation every 12 to 24 months. For others, more frequent evaluation will be beneficial. An example might be how the board conducts itself during meetings. Is the board staying focused on governance issues or has it drifted into operational matters? Is the board evaluating the CEO monitoring reports based on any reasonable interpretation? Has the board shifted into advising the CEO rather than letting its policies fulfill their role? These questions are best asked at the end of every meeting, providing the optimal opportunity to identify where the board may be slipping before the behavior becomes habit. Additionally, incorporating self-evaluation into every meeting stresses its importance. It also builds trust within the board, with the CEO, and with the owners on whose behalf the board governs.

So, who does the board’s self-evaluation? Although ensuring the evaluation happens, and tracking the board’s conduct during meetings can be delegated to the board chair or another board member, the best self-evaluation occurs when all board members engage in peer-to-peer accountability. When every board member is committed to ensuring the rigor and integrity of the board’s conduct, the board has the best chance of catching problems before they start. At any time during a meeting, any board member who notices the board has drifted into operational matters should identify it. The CEO also has a role to play. Although he/she may not be an official board member, the CEO can observe what is happening and provide valuable insights. In fact, inviting the CEO to assist in self-evaluation may even be written into board policy.

The board could also consider an independent third party such as a consultant who is qualified in Policy Governance, ideally with the designation “GSP” (Governance Systems Professional).  The consultant is external to the board’s process, so can observe without self-interest. The consultant’s focus is on how the board governs rather than the decisions the board has to make. Some boards choose to have the consultant present at all meetings (especially for boards that only meet a few times a year or experience frequent turnover). Other boards may bring in a consultant every few years, or periodically invite the consultant to join the meeting virtually. Much will depend on your unique situation.

If your board has been rethinking how to evaluate its performance, there is no time like the present to learn how to do it well and implement an effective strategy. When boards make self-evaluation a part of every meeting, the board’s ability to govern grows. The relationship with the CEO and owners improves, and the organization as a whole benefits. Our consultants at The Governance Coach™ will be happy to assist you.

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