The Importance of Annual Chief Executive Evaluations

By Karen Lehman September 25, 2023

One of the most important opportunities the board has to ensure they are aligned with the chief executive is to have an annually scheduled time for discussion about the chief executive’s performance.

The governing board has many responsibilities, one of the most important being the relationship with the chief executive. The chief executive is responsible for carrying out the strategy of the organization, but the board is responsible for setting the strategic direction. Without a positive, collaborative, and aligned relationship with the chief executive, the organization’s overall focus and strategic direction can be at risk.

One of the most important opportunities the board has to ensure they are aligned with the chief executive is to have an annually scheduled time for discussion about the chief executive’s performance. Not only to discuss the performance of the executive and the overall status of the organization but also to ensure that both the chief executive and the board are on the same page in terms of the short and long-term goals and priorities.

An annual assessment of the chief executive is a time for both the board and the executive to evaluate specific areas of performance. Stated expectations from either the previous years’ assessment or the current strategic goals can be reviewed and considered. Clarifying expectations, reviewing personal and professional aspirations and goals, and considering any changes that either the board or the executive wants to make in the coming year are all valuable opportunities that an annual assessment provides.

MHS Association has developed a CEO Assessment tool that formally measures the chief executive in the following areas:

This tool allows for the executive to complete a self-assessment, board members to complete their assessment, and if desired, the senior leadership team to complete an assessment as well. The feedback and information are compiled into an executive summary and provided to the board chair. The CEO Assessment is an MHS Association tool provided at no cost as a membership benefit. The tool is also available for non-members at a fee.

The MHS Association CEO Assessment tool provides in-depth feedback to the board and chief executive that often requires more than a one-year timeframe for consideration and benchmarking purposes. It seems most appropriate that the annual review process for the year following the formal CEO Assessment is less formal and may include a documented conversation with the chief executive on their goals and items they are working on pulled from the CEO Assessment.

Another tool that may be considered for the chief executive evaluation is a 360 review. This is a tool that is generally not completed by the board, rather it is comprised of feedback from the leaders of the organization. It is more in-depth in terms of specific traits and behaviors of the chief executive that only those working most closely with the chief executive will know. The board generally reviews the chief executive based on their perceptions and the outcomes or status of the organization, while the staff work with the executive daily and have greater insights into the organization’s culture.  The 360 evaluation is not an MHS Association tool, however is available via contract with MHS Consulting.

Assessing the chief executive should be part of an annual board work plan and is the responsibility of the board chair to schedule and ensure follow-through. The board chair works with the full board on the process and the outcomes, but it is generally the board chair and/or the executive committee of the board who work most closely with the executive and should establish a multi-year process in order to ensure continuity and consistency.

The health of the organization is often most dependent on the relationship and rapport between the board and the chief executive. The chief executive annual evaluation plays a critical role in ensuring effective and efficient leadership, promoting organizational growth and success, and maintaining accountability and transparency. For more information on chief executive evaluation processes or consultation on other tools and resources, contact MHS Association.