Board performance evaluations are not new. In fact they’ve been around for decades, but the practice really caught on in the corporate world after the Enron meltdown in 2002 and the passage of the Sarbanes-Oxley Act of 2002.
Groups such as the National Association of Corporate Directors (NACD), BoardSource, the Business Roundtable and other organizations concerned about good governance came out with strong recommendations for boards which included assessing their own performance on a regular basis.
NRECA’s most recent National Director Study fielded by our
National Consulting Group in 2015 showed that 40 percent of co-ops had conducted a board performance evaluation in the past two years and 53 percent reported doing so on an annual basis.
NRECA began talking more about board performance evaluations in 2003, and by 2009 the National Director Study showed that 29 percent of boards had conducted a board performance evaluation in the previous year.
In a recent conversation with NRECA’s Directory Advisory Group, the question was asked about what values the group members felt their co-ops had gained from evaluating their board’s performance. Here’s what we heard:
— The process increased discussion among our board about performance as well as (unexpectedly) a more open dialogue on other issues.
— The process helped us through a merger – it helped directors from each board to work together on a common process parallel to the merger issues.
— It helped us to address a disengaged director in a non-confrontational way.
— It brought us closer as a board.
An additional benefit discovered by some boards comes from communicating to the membership that their board regularly engages in such a process as a way to discover how the board can improve its communication/discussion skills, its decision making process, and its ability to stay focused on strategic issues facing the cooperative.
If your board has not conducted a performance evaluation but is interested in giving it a try, here are some suggestions to help you get started:
- When you get together at the statewide or at NRECA’s Regional Meetings, talk to your fellow directors from other co-ops about what they’ve done – what worked and what didn’t.
- Start with a full board discussion about what you want to achieve.
- Recognize that board performance evaluations come in many shapes and sizes, many are done by the board themselves, and some are facilitated by a consultant.
Here are some general observations about the board evaluation process.
Most board performance evaluations are led by the board president (chair). The most widely used approach is for the full board to agree on the questions that will be included and the date of the board meeting at which the board evaluation results will be discussed. It’s a good idea to schedule this agenda item well in advance so that the process is not a surprise to anyone.
Directors tend to more open to the evaluation when it has been fully explained as a process to improve board performance, not a process to find out what the board is doing wrong. It’s critical that all directors understand the evaluation process and what is expected of them before the process begins.
Directors must understand that the survey is asking for their opinion in response to each question and that only candid responses will make the process useful.
The board should be assured that their responses will be kept anonymous and that no attempt will be made to identify who said what on the evaluation form.
Outlined below is one approach to conducting the performance evaluation on your own (without a facilitator).
- It’s a good idea for the board chair to consult the cooperative’s attorney as plans are made for a board performance evaluation.
- Set a date on the board’s agenda to discuss (and seek full board input on) plans to conduct a board performance evaluation. Explain its purpose and allow time to answer director questions and clarify the purpose of the evaluation — to find out if/how the board can perform better (not, “What’s wrong with our board??).
- Typically, a survey is designed to gather anonymous feedback from the board as part of the evaluation. Allow time for suggestions on the types of questions to be included on the survey
- Set a date on the board’s agenda when the results of the board’s performance evaluation will be discussed.
- Set a date on the board’s agenda to discuss the results of the board performance evaluation.
- At the board meeting one month prior to date set above, distribute a copy of the survey to each director on the board. Allow directors sufficient time (e.g. two weeks or so) to complete the evaluation form. Upon their completion of the form ask directors to mail the form back to a designated person (e.g., the CEO’s executive assistant, the co-op’s attorney, etc.) who will compile the results into a single report for the board.
- Upon tallying the responses, the designated person should deliver the summary report to the board chair. The chair can then include the results in the monthly board packet.
- Particular attention should be paid to those questions scoring noticeably high, low or where there appears to be disagreement among the board on a particular response.
- The discussion about results should lead to a prioritized list of areas of improvement (goals) that the board agrees to focus on over the next several months or coming year. It’s advisable to develop an action plan for each area of improvement specifying who will do what, by when, and what constitutes success in the measureable achievement of improvement. Progress should be reported on at each board meeting until each goal is achieved.
Other board appraisal resources compiled from NRECA educational and conference materials:
A checklist that will help directors and the chair in assessing critical issues of effectiveness. Click here.
A “quick” checklist that will allow you to take the “effectiveness” temperature of the board. Click here.
A self-evaluation form that can be useful for directors in assessing their own individual effectiveness. Click here.
A sample survey for board performance and review. Click here.
Performance evaluation form based on nine core responsibilities of boards. Click here.
- Those wanting a deep dive on the subject may want to consider NRECA’s Board Leadership course, How to Evaluate and Improve Board Performance (BLC 957.1).
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