Considerations for Upgrading Board Evaluation Processes

In brief: Produced with the Report of the NACD Blue Ribbon Commission on Building a Strategic-Asset Board, this document offers a series of questions for boards to consider as they examine their evaluation processes.

This resource can help your board

• Review your approach to the evaluation process to enhance effectiveness and avoid “evaluation fatigue.”

• Identify areas of improvement opportunities and align these to the strategic needs of your organization.

• Establish a process to monitor progress on the implementation of follow-up steps.

Most relevant audiences: nominating and governance committee members

In consultation with our Board Advisory Services faculty members, NACD has identified a number of approaches that leading organizations use to transform board evaluations from check-the-box exercises to processes that drive continuous and collective improvement. Boards seeking to enhance their evaluation processes should consider the following questions:

1. Are we taking advantage of multiple opportunities to evaluate the board’s performance throughout the year?

The Report of the NACD Blue Ribbon Commission on Building the Strategic-Asset Board recommends conducting annual full-board evaluations and committee and individual-director evaluations at least once every other year. However, to incorporate a continuous-improvement mind-set, boards should seek additional opportunities to assess their performance throughout the year, such as evaluations coinciding with critical inflection points for the organization and/or the board, or periodic informal evaluations at the end of board meetings.

Perform “after-action reviews” after important business- or governance-related events. Taking stock of the board’s operations and effectiveness in fulfilling core duties is a key component of an effective evaluation process. Significant events or transition points (i.e., CEO succession, turnover of multiple directors, M&A deal, or material risk event) provide an excellent opportunity to gather feedback while recollections are still fresh. These evaluations enable directors to review board performance at moments when it matters most and will help to identify opportunities for improvement. The after-action review should assess

• whether the desired results were achieved;

• what went well and didn’t go well;

• which directors excelled and which ones underperformed; and

• what should be changed the next time the event occurs.

Conduct informal evaluations after board meetings. Because most boards meet in person five or six times per year under normal circumstances, it’s important that each board meeting be as effective as possible. Conducting brief, informal evaluations at the conclusion of each meeting gives all directors an opportunity to recalibrate and assess whether all of the elements that make for a productive meeting were present, and to what degree, including: