CEO Evaluations!

Who’s coaching the head coach?
Most organizations take great care in defining the characteristics they value in their new hires and emerging leaders. Performance evaluations and leadership development programs focus on soft skills that create an organization’s desired culture and brand experience. As new leaders are groomed, they are challenged to define and hone their style, placing emphasis on not just their business results, but how they achieved them. Through this process, emerging leaders are given open and honest feedback from their mentors and bosses, and when done well, this process creates strong leaders – our next CEOs.

But what then? A five-year old once asked me what a CEO is. I responded, “it stands for Chief Executive Officer, but you can think of it as the boss of all the bosses.” This was fascinating to a kindergartener, who beamed, “Awesome…that means she can do whatever she wants?”

After a brief chuckle, let’s pause. Assuredly a leader entrusted with this coveted role isn’t simply doing whatever they want, but, yes, they’ve earned the autonomy to run their organization. They passed the tests, reflected, adjusted and grew… all the way to the top. But does that mean they no longer need feedback?

CEO Evaluation
Chief executive officers sit in the one seat on the organizational chart that isn’t below another box. Rather than having a direct leader, in most organizations, they are governed by a board of directors. Consistent coaching and dialogue are replaced by monthly status meetings where financials take center stage. Annual performance evaluations are generally replaced by annual compensation reviews that too often are entirely metric based.

While achieving the desired financial results of the business can be an outcome of strong leadership, CEOs committed to continuously improving themselves and the business want more. Stephen P. Kaufman, 14-year CEO of Arrow Electronics wrote for the Harvard Business Review:

Limiting performance management to only financial measures makes little sense. All the incentives in the world won’t transform CEOs into better decision makers. And when CEOs stumble or fall, they pull their companies down with them. Boards have an obligation to shareholders to ensure that companies are led well.

HR Directors and boards can collaborate to create a stronger CEO evaluation process, including these three essentials:

 1.Leadership Style

Before any organization created financial goals, they had a vision. The organization’s purpose and core values should be upheld and enhanced by its Chief Executive Officer. Boards should reinforce and strengthen as necessary the alignment between the CEO’s priorities and performance, and the mission, vision, and goals of the organization.

 2.Leadership Relationships

Guiding an entire organization doesn’t rest solely on the shoulders of the CEO, they are surrounded by a management team and advised by a board of directors. Well-lead organizations have a unified team of leaders. This means not that healthy debate isn’t fostered or that differing views aren’t valued, it means that the CEO isn’t a lone ranger. Boards should see and hear from other key leaders and have a sense for how a CEO is regarded by his or her team.

3.Objective Measures

Financial performance is just one set of measures a board should use to evaluate a CEO. Think back to the mission and vision of the organization and define other tangible goals that are markers of success. For example, if you are running a cooperative or membership organization, you may consider not just the number of members you have, but how they score the service they receive. If you are a family-founded company that prides itself on being a great place to work, you may consider measuring employee retention and satisfaction. Think not just of the financial outcomes you want your business to achieve but identify measures that are earlier indicators of success or barometers of sustainability.

 Get in-FUSED

We created in-FUSION Group 10 years ago with the vision to be more than a consultancy. We dig in and work with our partners, becoming a part of your team and your organization. The senior team at in-FUSION Group has more than 70 years of leadership experience and has worked with numerous organizations to improve their CEO and Board evaluation processes.

We quoted Harvard Business Review to bring you this paper. Read their great article on CEO evaluations here:

https://hbr.org/2008/10/evaluating-the-ceo

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