Board assessment? Why bother?

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Call to order!

The chair has called order for the regular monthly meeting of your nonprofit board. You’re asked to speak to an item that you placed on the agenda - board assessment - a matter that’s been on your mind for some time. “I think we should assess how well we’re doing as a board.”

“What do you mean?” says one of your colleagues. “Well,” you reply, “how do we know if we’re contributing anything of value to the effectiveness of this organization, unless we have a good grasp on what our responsibilities are and how well we’re performing them?”

“That’s a good question!” says the chair. “Since you’ve raised the matter, and other members of the board seem interested, would you be willing to do a bit of research on this and bring it back to the board’s next meeting with a clear rationale and a proposal for how we might proceed.”

Here’s what you report back to the next meeting of the board...

Why bother?

Performance assessment is increasingly established as a best practice in governance of nonprofit, public and private sector organizations. Public trust depends upon transparent governance structures and processes, and accountability to stakeholders for the way in which business is conducted, how resources are used, and the results that are achieved.

There is a long held conventional wisdom that good governance practices are important to effective organizational performance. Increasing research evidence supports this intuitive notion although, for the most part, it suggests correlative rather than causal relationships. Regular assessment of board performance, active engagement of the board in planning, and regular opportunities for board and director development seem to be associated with higher performing organizations.

An infant learns to successfully grasp objects and navigate the world through sensory feedback. So it is with governing boards! They need to assess and improve their performance through feedback measured against established benchmarks and their own performance in relation to their duties, responsibilities and clearly stated objectives.

Common sense suggests that individuals and organizations committed to self-improvement are more likely to perform at or near peak capacity and achieve their goals. But a prerequisite of such improvement is having benchmarks to gauge where you’re starting from and knowing your destination so you can measure progress.

Performance assessment will allow the key players to affirm and gain assurance from what they’re doing well, identify things that need improvement, develop plans to guide and self-correct performance, and ultimately add value to the organization.

Who to assess...key players?

Three primary players in the governance of an organization need to be assessed...the overall performance of the board as a whole, the performance of individual directors, and that of the chief executive officer or executive director. Governance is a team effort that brings together the perspectives and skills of these players focused on advancing the mission of the organization and collaborating on achieving its more specific goals and objectives.

Where do we start?

The problems of assessing board and organizational effectiveness are entwined with those that afflict ‘outcomes evaluation’. What constitutes ‘good’ performance? What questions do we need to ask to determine whether a board is governing well or an organization is effective? How do we get the answers to those questions and how do we know that the information we get is reliable?

There may not be as many instruments for benchmarking board effectiveness as there are consultants, but the number is multiple. Yet, scarcely a handful of these tools can claim research validation. It’s a good idea to seek a board assessment tool that has been validated by published research to give you some confidence that what your board does, and how it does it, is likely to bear some relationship to the effectiveness of your nonprofit.

Most boards start with an initial self-assessment and, as their confidence grows and resources are available, may draw on outside expertise. Boards that are experiencing serious problems are well advised to seek outside help sooner.

Assessing the board

Board effectiveness is best gauged by performance along six dimensions:

  1. job descriptions for the board and committees
  2. a board work plan
  3. board structure (how the board is constructed and the parameters it establishes for its operation)
  4. board culture (board dynamics and organizational context)
  5. board responsibilities (functions, or the ‘what’ of governance)
  6. board processes (‘how’ governance functions are exercised)

All nonprofits, in this time of heightened concern about governance, ought to have written descriptions for the role of the board, board committees, individual directors, and the CEO. Those that don’t need to start with this, drawing from readily accessible templates. An important practice that is gaining ground is development of an annual board ‘work plan’ that outlines what specific activities the board will undertake, in its areas of responsibility, to contribute to the organization.

Assessment of board performance against job descriptions and a work plan can help guide a board’s contributions to overall organizational performance. In addition, periodic use of a comprehensive board assessment tool can help identify specific strengths and weaknesses assessed against benchmarked practices, sometimes compared to the performance of other boards.

Many board assessment instruments just measure a series of board responsibilities. Some may measure more abstract concepts such as political acumen, capacity to understand complexity, or strategic direction. It may be helpful to select an instrument that relates more to the way essential elements of board behavior affect performance directly, on a day-to-day basis, than instruments that measure more abstract concepts or those that focus on a single governance dimension such as board responsibilities.

Board tasks can generally be grouped within seven areas of responsibility: setting direction; financial stewardship; human resources stewardship; performance monitoring and accountability; stakeholder representation and advocacy; risk management, and; management of critical events or transitional phases. Board processes generally fall within three areas: board development, board management and decision-making.

It’s also important to assess whether you have the right board structure to support the governance of your nonprofit and whether the board and organizational culture, which establishes the leadership climate, supports collaborative team efforts.

It’s important to remember that the CEO is a key member of the governance team who should participate in the assessment. Since it’s generally accepted that the CEO is likely to have a broader perspective on the performance of the whole board, beneficial insights may be gained by comparing the CEO’s perceptions with those of the overall board.

Assessing individual directors

How individual directors fulfill the duties assigned to them in their role descriptions will determine how well the board works together as a collective body. Assessment of director performance is best initiated as a self-assessment followed by review with the board chair or governance committee. It should be based on the duties assigned to directors by law, board polices, and special roles such as chairing committees. More courageous boards may undertake a 360-degree assessment in which all directors anonymously assess the performance of each director and the board as a whole.

Assessing the CEO

The CEO is typically delegated responsibility for executing (implementing) board policies, administering and managing the organization. Evaluation of the CEO’s performance should be based on the job description and performance objectives negotiated annually between the board and CEO. These should be linked to the strategic and annual operating (business) plans and budgets. CEO job descriptions will vary by the type and size of the organization. However, they generally include duties related to executive support to the board; planning and organization; policy development; program/service management; financial administration; risk management; human resources management; and, board, staff, and community relationships.

What does a high performance board look like?

Research suggests that high performance boards are more likely to have:

  • competent board and staff leadership
  • board engagement in strategic planning
  • a customer and results focus
  • positive relationships with key stakeholders
  • a high degree of agreement on values and mission
  • a process for monitoring achievement of objectives
  • good financial stewardship
  • effective and efficient use of resources
  • clear lines of accountability
  • sufficient board independence from management to make objective decisions (based on sound information that is systematically gathered)
  • good meeting management
  • commitment to board self-evaluation and development
  • a constructive dispute resolution process
  • an organizational culture that encourages good teamwork, respect for organizational norms, values staff and encourages excellence
  • low levels of internal conflict
  • good balance between stability and flexible, innovative and adaptive responses to environmental changes
  • perceived legitimacy and credibility

Conclusion

Board assessment and development are affirmed by research findings and practice wisdom as a key to board performance that is effective and enhances organizational performance. If you don’t know where you’re starting from, and you’re not sure where you’re going, any road will get you there…but how will you know if, or when, you’ve arrived, or made any progress at all?

"We already have job descriptions for the board, directors, committees and CEO. I’ve identified a reputable board self-assessment instrument and can bring copies to the next meeting, if the board agrees. So let’s get started!"

Mel Gill is president of Synergy Associates, Consultants in Governance and Organizational Development, and the author of Governing for Results: A Director's Guide to Good Governance. Contact him at mel.gill@synergyassociates.ca.

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