CEO’s stay at the top-most hierarchy and thus, it is difficult for anyone to add objective feedback for such a high authority in the organization. For this reason, it becomes imperative for the board to evaluate CEO and assist the person in accomplishing the daily tasks. A seamless feedback mechanism can help but the evaluation should be objective, free from any personal biases.
Many boards of directors spend half time of their lives in the board room but they lack the ability to objectively evaluate the CEO. A simple remedy to this problem is creating a report card for the CEO. Every board member can fill it and submit it. Moreover, there should be a feedback mechanism developed in the organization where employees can add their positive or negative feedbacks about the CEO. Combining all the information together, CEO evaluation can be done hassle free.
One strong reason why board of directors are not able to judge CEOs is that they aren’t aware of the responsibilities of the CEO. While everyone would agree that a CEO is responsible to deliver returns to shareholders, the minute details are still missing. If you are also a part of the board member and struggling with CEO evaluation, the information in the next section can definitely help you.
As we stated earlier, you can create a report card. The card must have the following areas where you can judge your CEO against all the factors.
1. The vision: Every company owns a mission and vision statement. CEO is responsible to reiterate the same to the employees, shareholders, and the internal as well as external incumbents of the company. While evaluating the CEO, it is important that board members check whether CEO has successfully shared the mission and vision of the company with everyone.
2. Smooth flow of human resources: How many times your CEO has referred to the human resources of the company? You need to see if CEO is paying attention to the employees and considering them important in the company. A CEO has to build a company, which is beyond competition. It is only he who can create a cooperative culture within the company. When the employees are happy to work, they show more productivity at work.
3. Building the right culture: A company culture is something that defines the working style of an organization. A CEO is responsible to create a culture that is transparent and everyone gets a share of his good work. A culture takes time to build. A CEO needs to create a fair system and gradually the same system will become the culture of the company. If your CEO has done it for your organization, he should be given full marks here.
4. Providing capital and other resources: While capital and other resources will mostly come from outside, a CEO is responsible to channel these resources in the right direction. CEO has full control on the capital that is pooled in the organization. He must channel the capital for research and development, product development, awarding employees, and all other things. Your must evaluate your CEO on this point as it is one of the most important ones.
CEO evaluation is important but board self-evaluation is equally important. Talk to us to know more.
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.