It’s Time to Uplevel Your CEO Review

By Kaitlin Quistgaard

All CEOs benefit from meaningful feedback that helps them understand how they are perceived, which of their qualities are most valued, and where they have blind spots — but many don’t receive a formal performance review.

Annual performance discussions often focus primarily on the financial metrics tied to compensation or take the form of an informal review. A more robust approach is an objective 360 review in which board members, management team members, and the CEO all assess specific leadership competencies and share open-ended feedback, and the resulting input is analyzed and synthesized to provide a picture of strengths and development areas.

Done well, the process can foster self-awareness, strengthen the CEO’s alignment with the board, and support continued growth no matter how advanced the executive is in their career.

A valuable review, however, requires a thoughtful approach to the process: what feedback will be gathered? How? And by whom? Sometimes the board chair or compensation committee chair will gather input from fellow directors and synthesize it for the CEO; or outside counsel is engaged to facilitate the process. While these approaches can be useful, there are inherent challenges when a board chair, director, or external counsel is responsible for eliciting, interpreting, and delivering the collective perspective of the board. (The management perspective is rarely solicited in such instances.) Those challenges can affect the objectivity of the process, the depth and usefulness of the insights it produces, and ultimately the value of the review to both the CEO and the board. Here are three considerations for boards weighing an in-house approach against an independent CEO review.

3 Reasons to Retire the Good Old-Fashioned Call-Around Review

1. There’s a perception of bias.
When the board chair or compensation committee chair, or even outside counsel if they regularly attend board meetings, solicits feedback from other board members about the CEO’s performance, everyone recognizes there is an opening for subjectivity to creep in. More than one CEO has felt disillusioned by a review that seemed overly shaped by the interviewer’s opinions or has been left to wonder whether the feedback received reflects the views of the full board. After all, it’s nearly impossible for anyone who is routinely involved with board-CEO interactions and decisions to set completely aside their own perspective as they select the questions to ask or decide which topics merit inclusion in a summary of responses.

It is also natural for the person conducting the interviews to be influenced by prior conversations with the person they are interviewing or by information gathered in prior interviews. This can lead to subtle changes in the questions asked and, therefore, in the feedback received. At the same time, there is a tendency for directors not to mention observations or insights they assume the interviewer is already aware of, or that they believe will contradict the interviewer’s perspective. In other words, when the two parties have an existing relationship, it’s harder for the interviewer to ask objective questions and harder for the interviewee to offer objective responses.

Even in the fortunate case that none of these issues arise, a process conducted by anyone who would naturally have personal views about the CEO’s performance often creates a perception that the review is subjective or not a totally accurate representation of the board’s collective sentiment. This can lead the CEO or others to downplay or dismiss critical feedback.

2. A robust CEO review requires more time and expertise than it may appear.
At first glance, a call-around review appears pretty straightforward—talk for 15 or 20 minutes to each board member and summarize your findings to share with the CEO. It’s not unreasonable for a board chair to see this as a good opportunity to hear directly from each board member and collect some candid thoughts about the CEO, and maybe other board issues as part of the call. But there’s a lot more to delivering a useful review than the calls themselves.

To provide a substantive review the interviewer will want to consider a number of leadership qualities beyond financial performance, likely including strategy, talent development, organizational effectiveness, stakeholder relations, and more. This requires developing an appropriate question set, and potentially sharing it with other committee or board members to ensure alignment, which can be time consuming. So too can the aftermath of the conversations: collating notes and analyzing the input to determine the collective sentiment on each topic. In fact, turning that data into useful feedback is a discipline in itself. Findings are most helpful when grounded in objectivity and clear in their articulation of strengths and challenges, while sensitive or conflicting perspectives may require particularly careful interpretation and communication. There is an art to delivering a robust review that covers all of the important topics, highlights the areas worthy of attention, and creates an opening for discussion and future goal setting with the CEO.

None of this suggests that a capable chair couldn’t undertake the work. Though for most board members, who are deeply engaged in the company’s most significant strategic issues and governance initiatives, taking on that work personally is unlikely to be the best use of their time.

3. The process can inadvertently undermine board relationships.
At times a CEO review led by a board chair or other insider can have relational costs for the whole board and/or the board and CEO. If the person leading the review is perceived to have allowed their personal perspective to influence the review, or if one or more directors feel that their own perspective wasn’t well represented or that the findings mischaracterize the board’s collective opinion, there’s an opening for mistrust to take hold.

Similarly, if there are divergent opinions about CEO performance that aren’t addressed during the review process, factions can develop within the board—inviting division between those who agree with the chair’s assessment and continue to trust the chair’s judgment, and those who feel their voices are not being heard, or that the CEO is not being treated appropriately (whether too leniently or too harshly). This can lead to questions about the motives of board leadership, spark mistrust, and ultimately compromise board dynamics.

A transparent process led by a trusted facilitator can have the opposite effect. With an objective performance review in hand, board members have the basis for a constructive discussion about rewarding successes and developing plans to address growth areas. There may be differences of opinion about the actions to take or message to deliver, but not about the information itself or the motives of its preparer.

Why a Formal 360 Review Process May Yield Better Results

A review facilitated by an independent third-party has several benefits that can’t be replicated by an in-house process:

1. Objectivity
When you hire a reputable firm that uses a comprehensive question set to evaluate performance, you automatically eliminate the potential for bias: The project leader has no personal agenda beyond ensuring an insightful report. The broad base of questions provides opportunity for feedback across a breadth of skills and leadership attributes, preventing the skewed results that can come from asking about a narrow range of topics in which opinions are already known to skew positive or negative.

2. Greater Candor & Insights
A third-party process that offers anonymity to those sharing feedback opens the door to more candid and nuanced feedback. Management team members then have a rare opportunity to provide feedback, which can be eye-opening for the board. It’s not unusual for board members, who interact with the CEO occasionally, to have a different impression than colleagues who work with them every day. Differences in the perceptions of the two cohorts can be especially revealing and deepen the board’s understanding of the CEO’s leadership.

3. Expert Framing & Guidance
A professionally written report that articulates the collective perspective on accomplishments and development areas can be invaluable for a CEO, and for a board that is eager to support ongoing growth. An experienced review leader will have the gravitas and finesse to communicate about complex issues, leadership challenges, and development areas, balancing honesty and delicacy so that sensitive messages have the best chance of being well received. They can also be a helpful resource to the board chair or compensation committee as plans are made for delivering the review and potentially setting goals related to the feedback.

Conclusion: You Get More from a More Formal Process

For a CEO to succeed and for a board to feel confident about its leadership oversight, an objective, comprehensive 360 review process is invaluable. It’s an opportunity to step back and identify successes the CEO can leverage to greater effect and uncover challenge areas the CEO may need to address or blind spots that would benefit from greater awareness. It’s a check on how well aligned the board, management team, and CEO are in their expectations and perspectives—and creates a chance to address any misalignments discovered through the process. Importantly, it’s a critical component for a CEO to build a roadmap, with or without explicit board input, to their own ongoing growth, development, and success. That’s something everyone needs, especially your organization’s leader.

About the Author

Kaitlin Quistgaard is Senior Vice President of Board Excellence at Boardspan. She advises boards on governance and performance with a focus on fine-tuning board practices to increase the opportunities for board members to make their greatest contributions. She also oversees Boardspan's CEO Review practice, bringing deep expertise to the process of evaluating performance and delivering constructive feedback to chief executives. Her work supports effective oversight and equips directors to lead through complexity and change.

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