Board Self Evaluations – the Tool to Increasing Value

Readers who have participated in one of my board training sessions or have read our previous board-focused materials know that I believe board development to be one of the best investments an organization can make.  The rationale is simple.  Boards that don’t add value are a drain on the organization.

Research continually shows that boards are spending better than 2/3 of their time examining and approving what has already happened (finance reports, executive updates, progress on plans) vs. taking control of the future armed with the lessons from the past.  Board’s underperform because they are not proactive.  Approving what has already happened is not adding value.

The Fix

Added value means that a board is identifying problems not previously seen, urging innovation and change when needed, providing valuable intelligence on the organization’s strategic position, succession planning, risk management. These are value-added activities that boards struggle to find time to complete, and thus they underperform.

To add more value, the board needs more knowledge and competency.  To get either of these they need to invest time in learning. To a large degree, your organization will only go as fast as your board goes. Greater certainty in decision making is the road to going faster. How fast can your board go, and more importantly how can you increase the speed? A board self-evaluation will answer both those questions.

Why do a Self-Evaluation?

A self-evaluation examines the board’s performance against the 10 basic responsibilities of a board.  On average, about 25% of the tasks are rated good, 50% as mediocre and 25% as poor or not at all.  In short, boards self-declare that there is ample room for improvement.  Usually, this is news to them.  They have never looked at it, have never set a course to correct or improve and, without doing an evaluation, they would not set a course to add more value.

In summary, you can’t commit to fill a gap in board performance if you have not defined the gap.  You can’t define the gap without awareness of where you are underperforming.

How to do a Board Self-Evaluation

Boards tend to be managed or directed rather than manage and direct.  That is, management sets the agenda, decides what information to share and the like.  A committed and effective chairman can take control of much of this and should.  But, the point here is that board meetings tend to be highly structured with little time for meaningful discussion, general input and the like.  The best boards commit to planning retreats to be more proactive, but I have found that many of these planning processes and the use of the products from these planning sessions underperform in setting direction and holding management accountable.

Thus, there is little time or appetite for boards to reflect on their performance and how they can improve.  You could set aside time on the agenda to talk about this, but would members be forthcoming about where they see underperformance?  My experience is that they would not.  It is considered an affront to one another.  Further, if you are not clear on what you are supposed to produce as a board, you will have blind spots as to what you aren’t doing that you should, hence the results of self-evaluations I have shared above.

Therefore, I recommend that you use some sort of evaluation instrument as the evaluations are anonymous.  Then either have the chair facilitate the results of the evaluation and define a plan for needed improvements or bring in a facilitator to do this.

Okay, now let me up the gradient just a bit.  There really are three levels of evaluation that would add value to your board, they are as follows:

1. Evaluation of performance on board responsibilities and tasks (to receive a sound list of board responsibilities, email us).
2. Evaluation of the effectiveness of meetings: This examines whether you are making good use of time, have high quality data for decision making provided by management, have good meeting management by the chair, etc
3. Evaluation of director performance: this examines whether directors are completing review of packet materials before the meeting, respecting the opinions of others, not dominating discussion, etc.

My experience is that few boards do #1 above and almost none do #’s 2 and 3. Evaluating meeting performance is something that could be done in a few minutes at the end of each meeting or by use of a simple form turned in at the end of each meeting.  Evaluating director performance is usually a difficult discussion to have and is rarely done.

What You Will Learn?

Again, national research finds that most board members are dissatisfied with their experience as directors.  They don’t feel they are adding value.  My hunch and experience is that those who are dissatisfied are most likely to add value to your organization, but you are risking losing them unless you up your governance game. A self-evaluation will point you to the source for turnover of board members.

In addition, the evaluation process should tell you the following:

1. How can management better support effective decision-making by the board?
2. How can the chairman improve meeting management so that the group feels more productive?
3. How can the chair and CEO work together to improve agenda setting to insure that basic board responsibilities are met?
4. What is the knowledge and competency needed to improve board performance?

The self-evaluation process takes little time to complete and has the potential to add great value to your organization.

Questions? I would be happy to answer them or to send information on tools your board can use to complete a self-evaluation.