The really board-savvy transit CEOs I’ve worked with over the years make sure that their board regularly evaluates their performance, employing a well-designed process that is both thoughtful and substantive. Why? Because these CEOs well know that board evaluation of their performance is one of the most powerful tools for building and maintaining a solid board-CEO working relationship that can withstand the inevitable stresses and strains at the top of every transit authority. So I’ll be spending several minutes discussing CEO evaluation during the “Hit the Ground Running With Your New Board” webinar I’ll be presenting later this month for the New York Public Transit Association.
Not just any evaluation process will strengthen the board-CEO working relationship, however. Conducting a really substantive evaluation that gets to the heart of CEO leadership is a highly complex, time-consuming process. I’m sorry to report that many – hopefully not most – transit boards, looking for an easier way out, are seduced by the siren song of simplicity and the illusion of precision. A classic poorly designed process I’ve come across several times over the years has individual board members fill out questionnaires that – typically employing a numerical scale (1 to 5 most often) – assesses the CEO’s functional excellence, rather than the outcomes of her leadership: for example, how good is she at long-range strategic planning? At external/ stakeholder relations? At recruiting and managing executive team members? Etc.
The appeal of the questionnaire approach is understandable. It’s simple. It’s not terribly time consuming; and it seems scientific (numerical rankings are tabulated). However, its obvious flaws make it a dangerous process that can actually damage the board-CEO partnership. Most importantly it misses the point completely – focusing on functional excellence while neglecting what really matters: the concrete outcomes of the CEO’s leadership. It is also highly subjective (imagine a board member sitting in his office deciding whether to rank the CEO as a “2” or “3” in external relations), and thus open to abuse. And adding insult to injury, I’ve seen boards that exclude the CEO from the guts of the evaluation process, merely reporting results to her at the end.
Thank heaven the simplistic, pseudo-scientific approach appears to be on the wane around the country, as boards and their CEOs collaborate in making evaluation a meaningful tool for relationship maintenance. Features of evaluation processes I’ve seen work really well include:
- A board standing committee – typically executive or governance – responsible for designing and conducting the evaluation
- A two-tiered evaluation of CEO performance focusing on the assessment of: (1) overall authority performance against targets established in the annual operating plan; and (2) CEO performance in achieving negotiated “CEO-specific” targets (outcomes that the CEO is directly accountable for producing, such as implementing a new board structure or significantly improving a key stakeholder relationship).
- Intensive committee-CEO in-person interaction with lots of give and take throughout the evaluation process: from the negotiation of the CEO-specific targets to the actual assessment itself.
- And the identification of CEO leadership issues that deserve serious attention during the upcoming fiscal year.
Is the process I’ve described simple? Of course not; nothing truly important is ever simple. Is it precise in the sense that numerical rankings are being tabulated? Of course not; pseudo-science is never a virtue. But it does embody what we most want: attention to substantive leadership results.