Good Governance #5: Board Evaluation and Development

A regular process of evaluation to obtain feedback on the collective performance of the board, improve understanding of the current skill set and review the contribution of individual board members is necessary for effective board function, ongoing development and improvement.

Ideally an independent body facilitates the performance evaluation process, provides feedback on strengths and makes recommendations for future improvement. This information may also inform board development and training requirements.

5.1. Governance Health Check

Good governance is central to ensuring that boards and committees are effective at leading the organisation while also meeting their legal and compliance responsibilities.

The State Government of Victoria has developed a Good Governance Checklist that is a quick reference guide to ten principles of good governance to help your board or committee understand and discuss its performance. This Good Governance Checklist is based on the “Good Governance Principles and Guidance for Not-for-Profit Organisations Guide” published by the Australian Institute of Company Directors.

Good Governance Health Check (State Government of Victoria / AICD)

5.2. Board Performance and Evaluation Policy

The board performance and evaluation policy should clearly describe the purpose and process of assessing board performance. It is important that organisations introduce an evaluation process that suits the needs and interests of the organisation. If your organisation is introducing a board evaluation for the first time, you may like to introduce a simple process and add complexity to the process in the future.

Surveys provide a convenient and confidential way to measure board performance. Vicsport recommends that the collective performance of the board as well as the performance of individual board members should be assessed during the evaluation.

It is also recommended that boards use an independent facilitator to ensure that the process is carried out independently and confidentially.

Board Evaluation Policy (Vicsport)

5.3. Performance Evaluation and Skills Audit

An evaluation which assesses the overall performance of the board is useful to identify areas of strength and highlight particular areas that require improvement from the board. As part of the Good Governance Project, Vicsport developed a board performance evaluation survey and individual self-assessment tool.

The individual self-assessment tool allows board members to reflect on their own personal skills, attributes and contribution to the board. It also helps to identify possible development opportunities for board members. The results should also be used to undertake a skills audit of the board. Knowledge of the current skill set of the board may be used to inform future board recruitment and communication with members.

It is strongly recommended that an external facilitator conducts the evaluation process and provides a professional assessment of the results. The board evaluation and self-assessment survey which was developed as part of the Good Governance Project is included in this Toolkit as an example only.

Board Performance Evaluation and Individual Self-Assessment (Vicsport)

5.4. Skill Gap Analysis

A skill gap analysis allows the board to gain a clearer understanding of:

• The relevant skills, qualifications and experience required to meet board goals,
• Current gaps in skills and diversity,
• Current strengths so that board member skills can be utilised to their full potential,
• Areas for professional development, and
• Information required to communicate with members and inform future recruitment strategies.

To have an accurate understanding of current board skills, and to accurately complete the skill gap analysis, it is recommended that the board first undertakes a skills audit.

Skills Gap Analysis (Vicsport)

5.5. CEO Performance Review

The board is responsible for developing and documenting a regular (usually annual or six-monthly) performance review process for the CEO.

The CEO review process should be confidential and treated as a constructive exercise to provide feedback to the CEO on their work. It should also to identify ways in which the board can assist the CEO to be more effective.

The performance indicators for the CEO should be clearly linked to the strategic goals and objectives set by the board and should be measurable.

Board Connect has developed a fact sheet on the CEO performance Appraisal process as well as an appraisal template.

CEO Performance Appraisal Fact Sheet & Template (BoardConnect)