When using Policy Governance® principles, boards evaluate CEOs and Executive Directors by reviewing monitoring reports that demonstrate reasonable interpretation of, and compliance with, the board’s Ends and Executive Limitations policies.

In contrast, when using more traditional approaches, many boards struggle with CEO performance evaluation because the process can feel subjective or unclear.

For example, we often see boards turn to familiar approaches from the HR world, such as:

• 360-degree feedback
• Evaluation forms and scoring systems
• Annual performance reviews

On the surface, these tools seem reasonable. They create structure and give the board a way to have the conversation. But they don’t resolve the core issue, and are not designed to address the board’s specific role in governance.

Why traditional CEO evaluations often create problems

What these approaches miss is the need for the board to establish clear expectations at the outset. After all, how can a CEO or Executive Director perform according to expectations that have never been clearly defined?

Without setting out the performance criteria, even a well-designed evaluation process becomes subject to:

• Assumptions and impressions
• Recent events, random observations
• Fragmented data from multiple sources
• Individual perspectives, feelings, or moods

And the board ends up having conversations like:

• “I think things are going well overall”
• “Communication could be better”
• “That initiative didn’t land well”
• “Staff seem happy… I think?”

Even with well-intentioned board members, this process is often vague and shaped by individual preferences. Most importantly, it does not connect board policy to evidence of results on the ground.

What boards should do instead:

• Have policies that clearly establish what is to be achieved, for whom, and at what worth (i.e., Ends), as well as the operational boundaries within which those Ends are to be achieved (i.e., Executive Limitations).
• Monitor achievement and compliance with a reasonable interpretation of these policies on a regular basis.
• Treat the CEO’s performance as reflected in the results of this monitoring process, perhaps reviewing a summary of those results on an annual basis.
• Add no further criteria beyond what the board has already expressed in its Ends and Executive Limitations policies. The CEO cannot reasonably be held accountable to performance criteria that he or she has not seen in advance.

What boards should actually evaluate

When evaluation is tied directly to what the board has already said—through its Ends and Executive Limitations policies—it becomes much simpler:

• The board is no longer evaluating the person.
• It is evaluating performance against its own standards.

When reviewing monitoring reports, the board:

• checks to see if the policy interpretations are reasonable, and
• assesses evidence of achievement or compliance with those policy interpretations.

Learn more

If your board would like to explore a more structured approach to evaluating its CEO or Executive Director, ask us about our online board education program, the Board EXCELerator.

For CEOs and Executive Directors looking for guidance on writing monitoring reports, we also offer the Board EXCELerator: Management Edition.

See also:

• Policy Governance® Walk-Through: How to Write a Monitoring Report
• How to Assess the CEO’s Ends and Executive Limitations Monitoring Reports
• Monitoring Reports When Using Policy Governance Principles