Tie CEO performance to strategic objectives for more powerful, productive and equitable evaluations.
Every board develops and monitors strategic goals for its credit union, and every board evaluates the CEO. But how many tie those responsibilities together?
If more did, CEO evaluations would be more objective, productive and predictable, suggests Deedee Myers, CEO of CUESolutions provider DDJ Myers Ltd., Phoenix. “We have a vision, we have a strategic plan, and we have initiatives. That gives us all the metrics we need to be aligned for an objective CEO evaluation.”
Basing performance assessments on organizational outcomes offers concrete evidence in evaluating the CEO’s leadership capabilities and may help to avoid some of the pitfalls of subjective evaluations that are inequitable to female executives. Unless directors agree on metrics to determine the chief executive’s compensation based on progress in realizing vision, strategy and initiatives, “it becomes difficult for the CEO to understand what she’s going to be paid,” Myers says.
“What we tell board chairs is: When you’re done with your strategic planning process, go back and look at how you’re evaluating your CEO. If you’re evaluating her in a way that doesn’t align with the strategic plan, then there’s going to be some breakdown,” she notes.
At many credit unions, directors rely on subjective observations for at least part of the CEO performance assessment, as in evaluating the board-executive relationship, for example. How does the CEO support the board’s work? Do the CEO and board have a productive relationship? How does the CEO keep directors informed about credit union operations?
Board members’ direct observations of the CEO in action are, for the most part, in the boardroom. For a wider view of leadership character and capabilities, request 360-degree feedback from the executive’s direct reports and other staff, Myers suggests. If the credit union conducts an employee engagement survey, that data can also help the board assess organizational alignment under the CEO’s leadership.
“But we’re human, and we also need—in the boardroom and as executives working with our direct reports—to be in self-reflection,” she recommends. “This is a huge sense-of-self opportunity.”
Those reflections on how to assess performance fairly by checking one’s biases at the door should take place in an “unencumbered space” where people can focus on the task at hand without interruption. And they should check their mood, she adds. A task as important as a performance evaluation should not be influenced by someone having a bad day.
Frequency of evaluation is another consideration. At the staff level, annual performance assessments are largely an outdated practice, with many credit unions opting for monthly check-ins between managers and their direct reports. The board could adopt the same schedule, providing evaluations to the CEO at the same time directors assess the progress toward strategic initiatives.
In that way, performance evaluations are aligned with strategy from the top down and across the organization: The CEO reports to the board on strategic initiatives based on regular updates from the executives leading departments involved in executing those strategies. Other executives, in turn, set priorities for their mid-level managers based on the same goals.
“If we always know what we’re evaluated on, it removes stress, ambiguity and angst,” Myers says.
“When vision, strategy, initiatives and performance evaluations are aligned and the questions that guide the evaluation are worded in a way to minimize unconscious bias, the outcome is more positively aligned with the true performance of the CEO,” she adds. “And I would also say to CEOs, don’t sell yourself short. If the evaluation process is not aligned, step up and advocate for a third-party review, if necessary, to improve it.”cues icon
Karen Bankston is a freelance writer based in Portland, Ore.