Board Evaluation, not DE-valuation
Raising the bar without wrecking the team
Every director has heard that boards ought to be doing evaluations. The TSX Governance Guidelines push for them. Board best practices promote them. Shareholder advocates demand them.
But most directors roll their eyes at the mention of board evaluations and many boards still only pay lip service to them. There’s a host of reasons why this attitude prevails: Evaluations take time and we’re already too busy. We don’t really know what to do, so let’s look into it for next year. . . Or later. We’ve done them before and they’re a waste of time. Things can get pretty uncomfortable so let’s stick to the core business. Oh please, we’re still trying to recover from the damage that was done from our last round of evaluations!
Acknowledging these reasons for resistance, it is still a fact that when board evaluations are done well, they help the board significantly. Done poorly, they risk causing more problems than they can prevent. However, unless your board team does a check-up to find out how well it’s performing, there could be several members who are silently moaning about the status quo. Worse, at a time when committed, competent board members are in such high demand, you risk losing the talented ones you most want to retain. Let’s underscore some key benefits of evaluations by boards:
- Board members who participate in evaluations are more likely to feel a greater sense of personal accountability to the business than those who do not. This is particularly important given the pervasiveness of “group think” within organizations. Even the renowned investor and veteran of 19 corporate boards, Warren Buffet, admits that “Too often I was silent when management made proposals that I judged to be counter to the interests of shareholders.” Here is proof, once again, that it takes courage to speak up. Periodic board evaluations force us to pause and reflect on our performance.
- Board evaluations create a culture of continuous improvement. This works best when similar questions are repeated over several years too allow evaluations to be compared and areas of growth to be tracked. This benchmarking encourages board members to strive for better results as they become aware of the factors that contribute to a high-performing board.
- As board effectiveness improves, so does access to quality board members. To quote Ken Blanchard, celebrated business author, “feedback is the breakfast of champions.” High performers are more likely to be interested in serving on a board that is operating well and that takes its own performance seriously.
According to psychologists, we can’t learn without feedback. Whether it’s a skinned knee or a “cold shoulder,” feedback helps us decide what adjustments should be made in our behaviour to get along better in this world. Since we weren’t all born as accomplished and sophisticated board members, it makes sense that we would welcome any tools that would help us climb the learning curve faster. That’s what effective board evaluations do.
As important and powerful as board evaluations can be, it’s critical to use them in ways that avoid a board DE-valuation. There are risks—remember that for every mile of clear highway, there are two miles of ditches. Here are a few key concepts to keep in mind to avoid the ditches:
- Design and deliver the evaluation process in a spirit of “enhancing excellence” as opposed to “exposing problems.” Realize that people tend to fear that the feedback will be painful, so it is essential to demonstrate leadership which conveys the intent of the exercise is to help each other succeed. We encourage people to drive on the road, not focus on the ditches.
- Ease into the process. Don’t do the first evaluation with 108 factors. Make it short so everyone feels like it would be just fine to do another one before long.
- Commit the necessary time. The real payoff comes when the board discusses the ratings and comments. It may require a couple of hours to do justice to this. To minimize it only sends the message that the time directors took to complete the survey was not necessary.
- Don’t fall into the trap of simply “getting it done” as if the purpose is to cross something off a list somewhere. Pursue the discussion to the point of clarifying what things board members are going to DO—both to keep up the good work and to tune up the weak areas.
- Make the process anonymous so that board members are free to express views that they perceive other board members may not share. As the President-Elect of the International Society for the Psychoanalytic Study of Organizations observed, “a lot of subtle forces can come together that exert an invisible censorship” such that even the most intelligent people can become unwilling to speak up when they wish to preserve a sense of group belonging or to be loyal to the person who invited them to join the board. An anonymous evaluation gathered and analyzed by an independent third party provides a “safe” way for board members to express their opinions. Using a competent, outside facilitator also helps the group navigate the process while minimizing relational risk amongst directors.
In practice, the potential benefits of board evaluations far out-weigh the risks of de-valuation when the process is properly managed. Evaluations can raise the bar for governance excellence with any board.
Further StepsTake action today! STRIVE's new online board evaluation tool, the G.E.M. Assessment Tool, can help your board understand exactly how to raise the bar for governance excellence...Search
Login
In Stores Now
