One of the top responsibilities of  Boards is evaluating the performance of the CEO.  How often are CEO formal evaluations done well?  Batting average – less than .500.  Why? Boards often lack the process, tools and importantly, an objective third party, to converge and facilitate far-ranging views of Board members.

My experience is that CEOs are often left underwhelmed and even peeved with the process or feedback, which can seem spotty and subjective, inconsistent with prior messages, full of corporate-speak and flat or accolade-laden and lacking in helpful insight for the future.

Boards want to get this right but interestingly, often turn to their CEOs to recommend the very process by which they will be evaluated! That’s when we get their phone call.

How should this process work? It is in the best interest of both parties to create a balanced, intentional and thoughtful process that is rich with Consistency, Clarity, Objectivity and Communication.

1) Consistency of Message. No CEO should be left in the dark.  The job of CEO is tenuous and demanding enough, without worry of being misunderstood or off course.  The performance feedback process should eradicate mixed messages and serve as a bellwether for the CEO, avoiding surprises.

2) Objectivity.  Board members need to take necessary time upfront to agree on evaluation criteria to gauge the performance of the CEO.   We often find that Board members view their CEO through different lenses or expectations.  Hammering that out at the Board early is critical.

3) Clarity. Gathering Board feedback about last year’s performance using this criteria is no simple matter.  There are points of agreement and disagreement that need to be flushed out, aggregated and documented, culminating in key communication points for the CEO. And the Board wonders – how should we discuss leadership idiosyncrasies in the same conversation as EBITDA?

4) Communication. This work is for naught unless the Board Chair executes a professional, frank and high-value exchange with the CEO.  Too often, these exchanges end up coming across as broad and diluted or picky and demotivating.  Clearly, preparation, expertise and finesse is needed in these high-stakes conversations with experienced business leaders.

To create a win-win situation, with the Board fulfilling their duty and the CEO receiving valuable feedback requires a leader and facilitator of the process. Asking this of an internal HR leader puts them in a tough spot. A better bet is a trusted, unbiased third party.

The Bailey Group provides Boards with CEO performance tools and processes and facilitates the steps and discussions to help Boards and CEOs achieve intended value and end in a win-win!