Boards of both commercial and not-for-profit organizations should be commended for conducting a comprehensive review process of its Chief Executive Officer. It is however, quite uncommon. Boards often fail to address this duty in a consistent, rigourous and professional manner. The reason: they don’t have adequate information.
The Board, usually through the personage of the Chair, has a fiduciary responsibility for the performance to the company or agency over which it presides, and of its prime agent, the CEO or Executive Director, but does not have access to the day to day processes.
This is obviously flawed in at least two ways:
First, the performance of the ED needs to be differentiated from the performance of the agency as a whole.
Second, the adequacy of the information upon which a judgment must be based.
One of the principles of performance management in organizations is that there should be no surprises. However, if the Chair is not present in an ongoing way, especially when the agency is operating under a policy governance model (full or partial ‘Carver’ model), he and the Board are left with only limited information: reports on the overall performance of the agency, its financial position, and its impression of the ED based on the limited experience of watching the ED perform at Board Meetings. There is no or only limited opportunity (or even expectation) of active frequent involvement and feedback by the Chair of the ED’s day-to-day operating style and performance.
We are of the view that the annual Review of Performance is a necessary and powerful tool for monitoring and sustaining the performance of key individuals, especially in leadership positions. This is especially true for the CEO. Moreover a properly conducted performance review helps the Board