Boards are becoming accustomed to annual evaluations, but they do not always evaluate the board chair
It can be tough to evaluate the board chair, but according to most national corporate governance recommendations, all board members should be formally evaluated. Here are some considerations on how to do it well.
The chairperson’s leadership of the board is critical, as it is his or her ability to set the tone of board discussions, enabling members to speak openly, which creates the foundation for the board to perform well.
The chairperson’s role also includes to
- ensure the board agenda is focused on value creation and strategy
- maintain a good working relationship with the CEO
- ensure significant risks are being identified and mitigation plans created
- ensure directors continuously update their skills and understanding of the company, to best contribute to creating value on the board
Normally the vice chairperson or the senior independent director (SID) handles the feedback to the chairperson on behalf of the board.
The evaluation can be as simple as having the chairperson leave the room and having the vice chair / SID facilitate an open discussion with the directors, covering the areas deemed important for judging the chair’s performance. The chairperson then returns to the room to receive the feedback.
However, it can be advisable to utilize a skilled external party, both to collect individual feedback, summarize, then convey results to the board and chair. That way information can be collected on a “neutral” basis and feedback be provided in a structured, constructive and well considered way.
A successful evaluation should identify the competencies which the chairperson ought to possess to do the job well, as well as the role s/he is meant to play specifically in that company and assess to what degree the chair delivers on these expectations.
The evaluation can easily be integrated into the general board and committee evaluation, both through online questionnaires as well as one-on-one interviews, which are recommended for collecting richer feedback from each board member.
We wrote not long ago about Why and How to Evaluate the Board, but the topic of how to evaluate the chairperson is often missed, and it is important not to forget or avoid this part of the evaluation.
Contact us for more details on how this can be done effectively.