board and director performance evaluations
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EXCELLENCE IN BOARD EXCELLENCE IN BOARD & DIRECTOR & DIRECTOR ASSESSMENTASSESSMENT
Session ObjectiveSession Objective
• provide perspectives and
review process steps for Board
and Individual Director
Evaluations
Motivation for Motivation for EvaluationsEvaluations
• Improved Performance: we can do better
• Best practice: we can’t not do it
• Compliance: we have to
• Comparison: we’re better than…
• Compromise: we have to, so let’s get some benefit
Drilling down…Drilling down…• …make explicit what everyone knows
• …impetus for needed change
• …put spotlight on performance issues
• …identify priorities for good governance
• …what get’s measured, gets done
What Should Be What Should Be AssessedAssessed
• all key components of the board:
oBoard chair
oFull Board of Directors
o Individual directors
oCommittees
oCommittee chairs
Good GovernanceGood Governance
Structure+
Process+
Relationship=
Board Effectiveness
Competence+
Contribution+
Character=
Director Effectiveness
Required conditionsRequired conditions• agreement on how results will be used
o clear outcomes defined
• appetite to engage in the processo value and relevance recognized
o Board ownership of process and results
• trust and confidence in process & peopleo perceived risks
• good use of time and resourceso stewardship
BOARD BOARD EVALUATIONEVALUATION
Overriding Overriding ObjectivesObjectives
• Board Assessment
oto foster proactive board development
oraise the performance bar relative to governance best practices
Key Success Key Success FactorsFactors
• director engagement and participationo platform for constructive discussion on
performance
• in-depth, customized review
• timely, relevant feedback
• director commitmento time and thought o support objectives / contribute to success o act on results
Key BenefitsKey Benefits
• accurately check board pulse
• identify and act on issues
proactively
• encourages shared commitment to
governance success
• promotes effective use of time &
resources
Practical Practical PerspectivesPerspectives
• board effectiveness not easily
measurable
• focus traditionally on structure
• effectiveness linked to what can’t
readily be seen or measured:
o relational dynamics
o value and contribution the Board makes
Measuring the Wrong Measuring the Wrong ThingThing
• no link between effectiveness and…
odirector independence (structural)
odirector terms and tenure
odirector age
oboard size
oother “structural” metrics
Using the Wrong Using the Wrong ProcessProcess
• assessments tend to be insular
o rely on internal views
o focus on best practice theory
• Boards do little benchmarking
o should ask: how are we doing relative to best hospital or other healthcare boards
o difficult to access valid, relevant benchmarking information
Ensuring RelevanceEnsuring Relevance• impacting board performance is…
o Director personality (behaviour) and competency
o Board chemistry (trust, candor, quality of
discussion)
o Board and Committee leadership
o Board / Management relationships
o meeting effectiveness
o information and reporting
o decision-making (scope and timeliness)
How to assessHow to assess• Board assessments should be:
o Comparative: benchmarking against objective criteria
o Convenient: directors are busy
o Constructive: affirming strengths; identifying opportunities for improvement
o Comprehensive: assess all relevant criteria
o Confidential: ensure candour and commitment
Effective Effective assessmentsassessments
• establish benchmarks:o avoid personal opinion/biases
o need objective criteria
o use behavioural descriptors
o focus on key board accountabilities, deliverables and success factors
Process StepsProcess Steps• training / education
• collect data through a multi-phased approach ensures rigour and objectivity:
osurveys
o interviews
oobservation
Who Should Manage Who Should Manage Process?Process?
• several optionsoBoard Chair
oCorporate Secretary
o External Consultant
• all valid for different reasons
• circumstances / culture the determining factors
Other Process Other Process ConsiderationsConsiderations
• who owns the process?
• confidentiality expectations / assurances
• how will reporting of results be handled?
• accountability for acting on results?
• management participation (if any)
• identification of benchmarks / comparables
Board Evaluation Board Evaluation ProcessProcess
• Diagnosis
1. written survey/questionnaire
2. interviews
3. observation
• Reporting• Action Planning• Measure results
ConsultantConsultant’’s Roles Role
• ensure a successful outcome
o technical skills and experienceo project managemento understand and accommodate broader
issueso identify relevant outcomeso ensure confidentiality, trust and confidenceo effective analysis of raw data o propose recommended next steps
Board Structure Board Structure
• How the Board is organized o director and chair independenceo sizeo committee structureso roles, responsibilities, mandates, key
tasksomembership (skills / experience mix)omeeting frequency
Board processesBoard processes
• How the Board does its work:o meeting effectiveness o Information delivery and managemento director recruitment / appointment processo director orientation and ongoing educationo director successiono board and director evaluation
Board behavioursBoard behaviours
• group dynamics & interpersonal
relations
oBetween Directors
oBetween Board and Management
oBetween Chair / Board
Key QuestionsKey QuestionsFocus on the Board’s impact…
•What was the most significant achievement during the last year?
•What would the organization lose if the Board ceased to meet?
•What is the Board’s primary contribution?
•What tangible value does this contribution deliver?
INDIVIDUAL INDIVIDUAL DIRECTOR DIRECTOR
EVALUATIONEVALUATION
Director Director characteristicscharacteristics
“There are 3 characteristics a
director needs: curiosity,
competence and the courage to
speak your mind and stand for
what you believe in.”
• Stephen A. JarislowskyO.C., ICD Fellow
FOCUS
BEHAVIOUR
BEHAVIOUR
Performance Performance IngredientsIngredients
• “The single most important corporate governance requirement is the quality of directors.”
o integrityo competencies & capabilities o motivation
• Canadian Coalition for Good Governance
BEHAVIOUR
BEHAVIOUR
Recommended Recommended ObjectivesObjectives
Board member performance and
success
•clarify performance expectations
•affirmation of strengths and contribution
•identify improvement opportunities
•communicate key messages
•personal accountability
Key BenefitsKey Benefits
• help directors maximize their contribution to the board team
o Increase the board’s bench strength
o assess education needs
o facilitates succession planning
• e.g., Board and Committee chairs
Director evaluation Director evaluation modelsmodels
• self-evaluation
• peer-to-peer
• combinations of the above
oalign with appetite/culture
oadd rigor over time
BEST PRACTICE
Process Process ConsiderationsConsiderations
• who owns the process?
• who will manage the process?
• what are confidentiality expectations and how will they be met
• how will reporting of results be handled?
• what accountability for acting on results?
Issues and Issues and challengeschallenges
• how results will be used
• discoverable for use in litigation
• used to settle scores between board adversaries
• directors opting out
• how to address non-performing directors
Issues and Issues and challengeschallenges
• different levels of director competence and
experience
• individual director accountability for acting
on results
• reducing perceived risk
• comfort assessing peer directors
Evaluation criteriaEvaluation criteria• based on three key dimensions:
o competency• possesses relevant skills &
experience
o contribution• use of skills and experience
o characteristics• behavioural: models organizational
values, team member, etc.
Evaluation ProcessEvaluation Process• Diagnostic phase:
• peer survey input
o ranking against criteria
o commentary
Evaluation ProcessEvaluation Process• Feedback and follow-up:
osummary of survey results
o key themes
o identify key issues and priorities
o individual feedback sessionsocoaching on potential action steps
QUESTIONS AND
COMMENTS?
279 Queen Street South, Suite 201Kitchener, ON N2G 1W4
Tel: 519-744-5909
www.boardgovernance.ca
E-mail: john@boardgovernance.ca
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