Evaluation is always beneficial. We were evaluated in schools, colleges, and are being evaluated at work places. Evaluation has a role to play in everyone’s life and even if you are at the epitome of success, your efforts should be evaluated so that you do better in the future. Same applies to board and
CEO evaluation.
The benefits of board evaluation come in many forms. Taking stock of the effectiveness of the board is beyond that simply filling the evaluation forms for the regulators and governing bodies. Board evaluation can bring several additional benefits. If you cannot measure how the board is performing, how do you know if the business is performing well?
While employees need smart goals to measure their annual performance, the directors and CEO are no different. They should also be evaluated annually through a series of evaluations. While CEO evaluation is performed by the board of directors, the board must self-evaluate itself when the time comes. Evaluation of the board of directors help in assessing individual directors and the board and the committee. Taking the first glance of such an evaluation, the benefits shall include:
1.Helping the organization attract high-quality investors.
2.Helping senior management and board to identify potential opportunities and areas for organizational improvement.
3.Ensuring that the board members are reminded of their responsibilities.
4.Directors are also given an opportunity to add their feedbacks and raise concerns.
5.It becomes an annual tool for the chair to address any performance shortfalls.
Besides these, there are other deep-rooted benefits that helps the organization beyond the surface. We know that all the boards are different and they are a mix of skills, competencies, knowledge and experience. Thus, the evaluation that we must go about will also vary depending upon the factors. The effectiveness of the board and its committees will always depend upon how well the directors work together to make their strategic decisions and consider opportunities and risks along with.
Good board dynamics along with the right directors is necessary for efficient and effective decision making. Directors also have a legal and fiduciary duty to act in the best interests of the company as well as the stakeholders. Many countries have regulators to check on the working of such board of directors and evaluating such team of board is also necessary to comply with local rules and regulations. For specific banking and financial companies, it is important to conduct independent annual board assessments or evaluations of the board and the committees.
That said, we want to tell you that CEO evaluation and the board self-evaluation is quite critical for the growth of the organization. If you need help with this, you can reach out to us.
Brody Lukas is the author of this website and writes articles for a long time. To know more about CEO Evaluation and
Board Self Evaluation please visit the website.