Friday November 28, 2014

Turning Evaluations Into Actions

A board evaluation is only effective if the directors take action, using the information to strengthen the board.

In past blog posts, I’ve discussed the need to take an honest assessment of your board and the key questions boards must ask themselves. Regardless of your company’s industry or size, evaluations provide critical insights into how the board can become stronger and support the organization’s strategic objectives.

Steven R. Walker

Steven R. Walker

That said, such assessments are merely superficial if they are not acted upon, if the strengths revealed are not leveraged, or if the weaknesses identified are not remediated. In our experience with boards that range from family-run firms to companies ranked in the Fortune 10, we find that boards are looking to evaluations for useful feedback, which can be used to develop specific action plans. Below are the three actions a board should follow to ensure it does not just “check the box” in an evaluation, but instead uses the resulting data for improvement.

1. Sanitize and Summarize

Sanitizing the results of the evaluation is critical to ensuring comments cannot be attributed back to specific directors, which can create mistrust and reluctance to be candid in future evaluations. The goal of an evaluation is to be constructive, not destructive. Directors must feel they can provide honest feedback, without retribution.

The amount of data that results from an evaluation can be overwhelming even to experienced directors. While the nominating/governance committee should review the report, for the full board, results should be synthesized into the key themes emerging from the evaluation. Highlighting the critical areas allows the board to focus on identifying specific actions to build on its strengths, address its weaknesses and define the next steps.

2. Take the Sting Out

Let’s be honest. No one likes to hear about their weaknesses. However, we’ve found that weaving the results of an evaluation into an interactive full-board learning session can be very successful in taking some of the sting out of the results. The directors hear the findings in a way that enables them to connect to the issues without pointing fingers. This approach also allows the board to benchmark against other boards of their size and in their industry.

3. Delegate and Follow Through

Even the most thorough evaluation will flop without an agreed-upon road map for improvement. Members of the board and senior management should be assigned tasks that address each gap identified in the evaluation. These initiatives should be included in the agendas for future board meetings to track progress, ensure accountability and ultimately optimize the board’s role as a strategic asset to the company.

Steven R. Walker is NACD’s general counsel, secretary and director of Board Advisory Services.

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