A key role of the board is to monitor and evaluate its own performance. This review should be a formal process conducted once a year, with a method and targets set and agreed to, by the board in advance.
By encouraging directors to review their own performance and contribution, board evaluations can improve decision-making processes, teamwork and meeting effectiveness. The process also helps clarify the roles of directors and the executive officer and how they relate to one another.
Board reviews should look at the activities, structure and processes of the board. By working through this review directors and the board will be able to see how effectively they are doing their job, individually and as a board, and how well directors work together.
Evaluating the performance of the board is not the same as evaluating the performance of the organisation. Good organisational performance does not mean that the board cannot, or should not, improve. Some organisations are successful despite not having a high functioning board. On the other hand, it is usually focussed, strategic and effective boards that drive success, improved performance outcomes and a sustainable strategy.
Here’s a step by step guide on how to evaluate your board.
Decide who to evaluate, and how
An evaluation might review the board as a whole, committees of the board, individual directors—or all of these. At first, some volunteer directors might be uncomfortable with individual performance assessments until they realise that the review is a supportive process; not about criticism or finding fault. A board culture of continuous evaluation and improvement will benefit the organisation under the board’s care.
These look at how well the board is functioning, the nature of its relationship with the executive officer, and whether the board fulfils the duties set out in the organisation’s constitution and board charter. Guiding documents and policies should be updated if needed.
The evaluation process provides the perfect environment for the board to reflect on its makeup. It is also a chance to consider whether it has directors with the skills, experiences and qualifications needed to support the organisation’s strategic direction. The board can identify opportunities to develop the capacity of existing directors or it may plan to recruit new directors whowill bring the right experience or skills into the organisation.
Evaluations of board committees should review the roles, structure and composition of the committees and whether they effectively support the board in its role.
Individual directors, including the chair, can be evaluated with a combination of internal self-review and peer-evaluation processes. Their contributions to the work of the board, and their capacity to work effectively with fellow directors, can be assessed.
A key part of the process is to identify where directors can improve their performance and contribution and how those improvements can be achieved. Directors may be offered professional development opportunities, mentorship or peer guidance to support them as they grow.
Consider external evaluation
If your organisation has adequate resources, your board might consider hiring an external consultant to conduct the evaluation.
A consultant can compare your organisation’s governance practices to those of other ‘like’ entities in a dispassionate and independent manner. They are less likely to be swayed by the personal factors that can influence self and peer-evaluations.
External evaluations do not need to be conducted annually; they may be held once every several years to supplement internal annual reviews.
Use a variery of sources of information. One-to-one interviews between the chair and each director are important. Surveys can help monitor board performance over time, but should not be over-interpreted as they can be influenced by personal biases, feelings and opinions.
Work with your executive officer
Executive officers and management should be included in the board evaluation through interviews or surveys to add alternative perspectives to the self-assessment by the board. Engagement of the executive staff can highlight the strengths, weaknesses and effectiveness of the relationship between the board and its executive officer or staff team. Because the relationship between the chair and executive officer is critical to organisational success, it is important to review the effectiveness of that relationship and identify issues and opportunities to maximise outcomes.
Act on the messages emerging from the review
The findings of the board evaluation should shape a performance improvement plan for the board, and possibly individual directors. Measurable performance indicators should be set, which form the basis of the next year’s evaluation. The chair or a committee of the board should have responsibility for implementing the plan and monitoring performance.
Annual reviews do not replace continuous assessment and improvement. The board should assess its performance at its regular meetings, this will support improvement throughout the year. An end of meeting assessment is one approach.
Australian Institute of Company Directors: Board evaluation and director appraisal.
Institute of Community Directors Australia: