Purpose of the performance appraisal

The performance appraisal gives both the board and the executive director the opportunity to review the executive director’s agreed-upon goals and outcomes for the past year and to set goals and objectives for the coming year. It provides a mechanism for discussing opportunities for improving performance and achieving the organization’s goals and objectives.

Since the executive director plays a significant leadership role as the organization’s chief staff officer, the organization’s success is often linked directly to how the executive director is performing in his/her job. Evaluating the executive director is, therefore, an integral component of the board’s responsibilities and should be set out in board policy.

Relationship to the strategic plan

The performance appraisal should be linked directly to the organization’s strategic plan and, in particular, the goals and measurable objectives for the planning period. In many organizations, specific goals or key result areas are identified at the beginning of an appraisal year by the executive director and the executive committee or board. These goals/result areas should be based on those set out in the strategic plan. The appraisal then focuses on achievement in those areas, rather than just day-to-day operational matters and the job description.

Frequency of appraisal

The performance appraisal should be conducted annually, usually coinciding with the executive director’s employment anniversary date or in conjunction with the organization’s annual planning cycle and fiscal year-end. Since most executive directors will receive compensation increases based on achievement of performance goals, it is especially important that the annual performance appraisal process be initiated at or near the conclusion of the program/financial year.

Appraisal options

Since the success of the organization is often largely related to the successful performance of the executive director in implementing the organization’s goals and objectives, it is important to obtain input from a variety of key stakeholders. It is recommended that a 360° performance review approach be used, whereby input is sought and received from the board of directors, the executive director’s direct reports (managers, administrators, etc.), and a self-assessment prepared by the executive director. All input should be treated with the utmost confidentiality. The 360° performance review approach can be time-consuming to carry out but the feedback can also be invaluable as a way of identifying both areas for improvement and strong performance.

Assigning responsibility for appraisal

The board should delegate the performance appraisal process to the executive committee or a group of senior officers (e.g., chair, immediate past chair, vice-chair) with the understanding the board will be informed of the outcome. This should be spelled out in board policy. It would be rare for either the entire board, or the board president or chair acting alone, to be responsible for conducting the evaluation, but all board members should have an opportunity to provide input, as outlined above.

Overcoming bias/personality conflict

The criteria for evaluating the executive director should be agreed upon in advance, and should be based on achieving the organization’s goals and objectives. Criteria should be objective and measurable. By doing this, it removes much of the danger of blatant subjectivity, personal bias or personality conflicts from entering into the process, as the focus is on organizational goals and measurable outcomes, rather than individual characteristics.

Preparing and conducting an appraisal

The performance appraisal process should be initiated annually within two to three months of the executive director’s anniversary date or in conjunction with the compensation cycle. Usually the president or board chair takes responsibility for leading the process, and the evaluation team will assist. A written evaluation tool which is agreed upon by the evaluation team and the executive director will be used to gain input.

Board members should be invited to provide input to the evaluation team using the evaluation tool provided. If the evaluation involves the 360° feedback approach, the executive director’s direct reports should also be invited to provide input. The executive director will do a self-assessment, based on accomplishment of previously agreed-upon objectives and action items, and the evaluation team will use it for discussion and comparison with other input received. The team should meet and prepare a summary of the feedback and then meet with the executive director to discuss. At that time any salary adjustment, and incentive pay or bonus if applicable, should also be discussed.

Mutual goal setting

The executive director’s performance appraisal should be linked to the organization’s strategic plan, and in particular, its objectives and strategic priorities in the annual business plan. Specific performance goals for the executive director should be negotiated at the beginning of each evaluation period between the executive director and the evaluation team. It is preferable for this to be put in writing and signed by both parties. Goals can either be very specific with numerical targets, or more general, depending on the type of goals being discussed and the organization itself. Remember the advice of Peter Drucker — “what gets measured gets done.” Performance goals for the executive director should not be determined by the employer without the executive director’s agreement.

Addressing performance issues in a positive fashion

If any performance issues arise in the course of the performance appraisal process, care should be taken by both the executive director and the evaluation team to discuss these in a constructive, positive, solution-focused manner. Receiving negative feedback is difficult for all employees, regardless of their level within an organization; the person or persons giving feedback on performance problems should always try to keep the balance in being helpful and ego-enhancing. The language used is important, and care must be taken to ensure that what is said is constructive and helpful.

Appraisal as an outgoing process

Although the formal performance appraisal process should be undertaken once a year, the board president or chair should not wait until that time to raise issues with the executive director if they are affecting the executive director’s or organization’s performance. Positive and negative feedback should be provided on an ongoing basis so there are no surprising issues at the time of the formal appraisal. The executive director should also ask for feedback from the board chair periodically. This can sometimes prevent a flare-up later and also gives the executive director an opportunity to take corrective action sooner, if necessary.

Corrective action

Both the board and the executive director have likely invested a great deal of effort, energy and emotion into the employment relationship. All human beings fall short at some point, and rather than terminating the relationship, there is considerable wisdom and fairness in trying to better the situation through corrective action. If the executive director’s performance is seriously deficient, the evaluation team should develop an action plan with the executive director to turn the situation around. The action plan will identify specific steps, such as additional training; expected outcomes; the improvement in performance is defined in measurable terms (e.g., a balanced budget), and the timeframe to achieve the improvement (e.g., the result must be reached within six months, at which time another review will occur in the specific area).

Boards should also be mindful of their legal responsibilities. In most situations, employees must be informed of how their performance is deficient, the expectations of the employer, and given reasonable time to remedy the situation. The only exceptions are where the conduct of the executive director is so egregious that immediate termination is legally justified (e.g., proven theft of property or sexual harassment of staff). When in doubt, the board chair should always consult qualified legal counsel with knowledge of current employment law.

Content is © Jack Shand and is reprinted with permission.

Jack Shand, CMC, CAE, is president of Leader Quest, a management consulting firm providing expert advice to not-for-profit organizations since 1997. Leader Quest specializes in executive search/staff recruitment, strategic planning, governance, and organizational reviews. Jack can be reached at 905-842-3845 and 1-877-929-4473, or jack-at-leaderquest-dot-com.