Let’s be honest: most people are not big fans of the annual performance review process – regardless of what side you are on. Managers typically see them as an inconvenience and employees tend to dread them. Add in awkward vibes and convoluted processes and you’ve got the potential for a lot of blood pressure to rise!
So knowing the above, how does this play out for the Executive Director/CEO of a non-profit?
In this month’s article, I break down 6 tips for delivering successful ED/CEO annual performance reviews as follows.
1. Create an ED/CEO performance review policy and supporting procedures
The policy should include assigning the person/people responsible for overseeing the process. This could be the Chair or a Performance Review Committee, which is typically a sub-set of the board. Some organizations use their Executive Committee. The procedures should include time frames such as the start date, how and when to compile and deliver the results and when the process should be completed.
2. Keep the process simple
I’ve seen forms and very lengthy review processes that can make your anxiety go through the roof! A one or two page form is enough, provided that it captures the key components of a review, such as:
- High level overall results of the review
- Brief details on whether or not they’ve met their objectives (which should be linked to the strategic plan and organizational objectives)
- Areas/specifics to celebrate
- Areas/specifics for improvement and potential professional development opportunities
- Any salary increase or bonus details
- A space for the ED/CEO to provide their response to the results and process, including their thoughts on how the board can better support them in their role
- If possible, confirm SMART (specific, measurable, achievable, realistic and timely) objectives for the following year. Set expectations.
And try to follow the same simplicity principle when delivering results to the ED/CEO – stay within one to two pages in length instead of a short novel.
3. Get the right contributors to provide feedback
While it’s crucial that the board provides feedback in the process, you might want consider going beyond that group and engaging other important stakeholders such as direct reports, other staff (sometimes done through a staff survey), funders, sponsors and other volunteers. Pick those people that make sense and that would value add to the overall process.
4. Document the annual review process
Believe it or not, some organizations do not have complete records of ED/CEO annual performance reviews. Sometimes when Chairs change, the documentation can go with them. Keep good records of the process and store them where all other staff records are kept. Make sure the ED/CEO and board are comfortable with, and have bought into the process – this includes what is discussed with the board regarding results. There should be no surprises for anyone!
5. Use external salary benchmarks
Many boards do not use external benchmarks to make decisions on ED/CEO compensation. It’s important to not pull numbers out of the air and instead, to use some type of framework to ensure that the executive is properly compensated in accordance with the current market. Not only will this be a fairer process that the ED/CEO can support, but it also can alleviate any perception of excessive or inappropriate compensation.
6. Don’t put all of your eggs in the annual review basket – provide feedback throughout the year
Even though the review process is an annual exercise, it’s very important to provide feedback to the ED/CEO throughout the year. Remember, there should be no surprises at a performance review, particularly if there is ongoing healthy communication and dialogue.
Don’t fear! Even many high functioning boards approach these reviews with anxiety and uneasiness as they know the ongoing success of their ED/CEO has important consequences for the health, sustainability, and future of the organization. Managing the performance of the ED/CEO is critical for ensuring that the organization is meeting its goals.
As always, if you need help with any governance projects, don’t hesitate to reach out.
This article was originally published on the Pinpoint Governance Group’s blog, and is reprinted with permission.
Heather Terrence is a Certified Association Executive (CAE), a non-profit governance expert and President of Pinpoint Governance Group. Prior to consulting, Heather worked in the Canadian non-profit sector for over 20 years in various executive roles. Heather proudly serves as Treasurer on the Board of Directors at the Native Canadian Centre of Toronto. She is a long-standing member of the Canadian Society of Association Executives (CSAE) and also serves on their Board of Directors.
