Stop Doing Annual Board Evaluations!

Start conducting board performance reviews that elicit helpful advice on how the board might work better.

The Governance Solutions Group is a board advisory practice with a focus on engaging directors in the annual board assessment process and guiding strategic governance decisions. Services are backed by years of experience and well-honed expertise. Clients include public, private and nonprofit company boards.

Sounds like the wrong thing to say when part of your business is serving as the independent facilitator for board evaluations. Or, maybe not.

Since 2003, the NYSE has required directors to perform an annual board performance evaluation and today it is a widely accepted practice for all boards. A lot has changed since 2003 - business is more complicated, and directors spend more time in meetings and other engagement activities. While board work has evolved over recent years, the method most boards use for the annual board evaluation has not. It’s time for a change.

The “annual” board evaluation has become a rote “check-the-box” process. We are all a bit “survey fatigued,” since we receive survey requests about ten times a day from our airlines, doctors and favorite retailers. To make matters worse for directors, the board often uses the same survey year after year (or worse, more questions are added each year). The survey answers usually show the board “agrees” directors are engaged, they are doing a good job and they ask challenging questions. Let’s face it, in most cases these answers are not helpful.

So, how do directors ensure they receive valuable input that will actually help the board do its job better? Two answers: First, stop looking at the board evaluation as an annual process and begin mapping out a longer-term board assessment plan that uses various methods to ensure useful director feedback is collected. One year the board might engage an independent governance expert to facilitate one-on-one interviews; the next year the board chair might conduct interviews; the next year a survey could be used. There is not one right way to create a multi-year board assessment process and the example shown in Exhibit 1 will help generate ideas.

The essential elements of a board performance review (mapping the structure, preparing the tools, collecting and analyzing data, facilitating a board discussion) doesn’t change when using a multi-year approach, only the methodology changes.

The second answer to “how does the board receive valuable feedback” is by using “pocket” or “pop-up” reviews. This might mean, at the end of each board meeting, asking simple questions such as “did we have the information we needed” and “what could we have done better?” For additional “pocket” review examples, refer to Exhibit 2.

Start conducting board assessments that elicit helpful information by mapping out a multi-year plan and using “pocket” reviews on a periodic basis.

Denise Kuprionis

513.272.8500
denIse@gsgboards.com
gsgboards.com