The CEO Performance Evaluation is the primary and most formal process the Board has for measuring CEO performance. Regularly measuring performance is important because the Board delegates responsibility for day to day management of the business to the CEO. From a governance point of view, the Board MUST take steps to ensure they know how well the CEO is carrying out their mandate.
Feedback from the CEO performance evaluation process is important to the CEO as well as the Board. Through the evaluation process the CEO gains a clear understanding of the Board’s goals, receives well-deserved and positive feedback on accomplishments, and gets an opportunity to clarify the Board’s expectations around performance of the CEO role.
Here are the key goals of the CEO performance evaluation process:
- Objectively measure CEO performance vs. the goals and expectations of the Board
- Reinforce and strengthen as necessary the alignment between the CEO’s priorities and performance, and the mission, vision and goals of the organization
- Define and establish the criteria, process and expectations for CEO growth and development opportunities
- Build a stronger more productive relationship between the Board and the CEO
- Fulfill a primary Board governance duty to ensure that organization is well lead and if not, to provide a legitimate basis for terminating the CEO