The evaluation form arrives in December.
One board member loves the CEO’s energy. Another dislikes her communication style. A third remembers a delayed project from March. Someone searches for salary data during the meeting.
The board wants to be fair. Its process makes fairness difficult.
Miriam Carver and Bill Charney frame rehearsal 3.7 around that anxiety. The board must evaluate the CEO and set compensation, but it is unsure whether the system can be objective.[1]
I would move the evaluation out of December.
A fair review is built during the year. The board states the Ends the organization must achieve and the Executive Limitations the CEO must not violate. It adopts a monitoring schedule. The CEO gives a reasonable interpretation of each policy, identifies measures, and provides evidence. The board decides whether the evidence demonstrates compliance.
That record is the performance evaluation.
It does not capture every quality that matters. Judgment, courage, team development, and communication may require thoughtful assessment. But a board should not allow a stack of late personal impressions to outweigh the performance system it adopted.
I see four disciplines that make the process cleaner.
First, evaluate the job the board assigned. If expectations changed during the year, name that fact. Do not grade the CEO against a private standard that appeared after the work was done.
Second, distinguish organizational performance from personality. A CEO can be warm and noncompliant. A CEO can be reserved and effective. Style may matter when it affects a written expectation, but popularity is not a monitoring method.
Third, keep a written record. BoardSource recommends an annual chief executive review based on the job description, stated priorities, and measurable goals.[2] Documentation protects the CEO as well as the board. It shows what was expected, what evidence was considered, and what the board decided.
Fourth, separate the performance conversation from the compensation decision. Performance should inform pay, but the two meetings ask different questions. The first asks whether the CEO fulfilled the assignment and what should change. The second considers market data, the organization’s compensation philosophy, affordability, legal rules, internal equity, and retention.
BoardSource’s compensation checklist adds the practical pieces: complete pay information, a current job description, comparable market data, legal review when needed, and a documented decision.[3]
I would assign a small committee to gather data and administer the process. The full board remains accountable for the final evaluation and compensation decision unless governing documents provide otherwise. The committee should not create its own expectations. It should apply the ones the board adopted.
There is an honest difficulty here.
Results are not always fully controllable. A school leader may face a sudden enrollment drop. A ministry may lose a major donor. A public agency may receive an unfunded mandate. The board should judge the CEO against policy and reasonable interpretation, including whether the CEO anticipated risk, reported noncompliance, and responded prudently. Fairness does not require pretending context is irrelevant.
It also does not require lowering every difficult End.
The board can ask whether the End remains worth its cost. If resources are inadequate, it may change the result, change the priority, or accept the risk. That is a governance decision. Blaming the CEO for an impossible assignment is not accountability.
Invite the CEO to comment on the process before it begins. Agreement does not give the CEO a veto over standards, but it can expose unclear measures, missing context, and timing problems. Fairness is easier to trust when the person being evaluated understands both the evidence and the way the board will use it.
You can improve next year’s review this month.
List the policies and goals that will count. Put each monitoring report on the calendar. Agree on the evidence. Decide who gathers compensation comparables and when. Tell the CEO how the board will reach its judgment.
The fairest evaluation contains few surprises.
So does the strongest relationship.
Footnotes
[1] Miriam Carver and Bill Charney, The Board Member’s Playbook (Jossey-Bass, 2004), rehearsal 3.7, pages 48–51.
[2] BoardSource, “What to Evaluate,” section on chief executive assessment.
[3] BoardSource, “CEO Compensation Checklist”.
Additional reading
BoardSource’s The Nonprofit Board Answer Book addresses CEO assessment, board-staff relations, and financial oversight in a practical question-and-answer format.
Peter Greer, David Weekley, and Tiger Dawson’s The Board and the CEO is useful before evaluation season turns a relationship into a transaction.