board self assessment approaches

Help Your Board Assess it’s Way to High Performance

June 11, 2015

Les Wallace, Ph.D.

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Who is this guy? Ideal 21C job: Grandparent!

University professor / administrator Hospital administrator—traditional Board International consulting company…

Touch 20,000 people yr. / Coach 18 Execs / 17 Boards a year

50% for-profit / 50% government & not-for-profit clients Served on a Bank Board of Directors (2003-2008)

Counterpart International Board of Directors World Future Society Board of Directors

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Speed: blinding, touching every aspect of life.

Complexity: quantum leap mixing related forces.

Risk: upheaval raises risks of “new ideas.”

Change: sudden, radical, constituent demands.

Surprise: unimaginable—challenging sensibility.

Organizational Size: enterprise complexity, geo-footprint, governance competency, member needs tracking, consensus building, speed of decision-making are all impacted.

The 21st C—It’s Different

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Engagement /Service /

Level

Economic Value

Volunteer @ hourly level (events, meetings, focus groups,

surveys)

$35/hr.

Committee / Task Force Service

$150/hr.

Board Director $300/hr.

Economic Value of Board Service

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Credit Union Governance is demanding.

Annual self assessments are commonplace with high performance boards.

In the high risk world of publically traded companies, the Securities and Exchange Commission requires an annual board self assessment.

Regulators look favorably on governance self-assessment.

Continual learning is important to sustain excellence.

Board Self Assessment

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High Performance governance is a strategic advantage.

All complex systems benefit from tune-ups.

Assessment drives continual learning and excellence in governance.

Timely corrections and interventions smooth out wide fluctuations in performance.

Give voice to all board members.

Create confidence in governance.

Confirm governance learning commitment to regulators.

Why Self Assessments?

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Adopt a board policy committing to some type of self assessment annually.

Typically a Governance / Nominating or Executive Committee responsibility.

Annually: broad spectrum or micro: doesn’t matter—do something.

Broad spectrum governance assessment every four years—more targeted assessment in other years.

Always confidential!

Board Self AssessmentSetting The Foundation

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Real Time discussion each meeting.

Annual survey assessment of one element of governance.

Full spectrum governance assessment survey.

Customized telephone survey.

Board member to Board member feedback.

Outside Expert Review.

6 Self Assessment Models

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Real Time discussion each meeting. Agenda well prioritized? Sufficient dialogue on topics / decisions? Sufficient time on strategic issues? Pre-meeting materials adequate / timely? Adjustments identified for next board

meeting?

Plan-Do-Assess-Act.

Real Time Assessment of Each Meeting

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Financial oversight / reporting. Strategy building process and

tracking. Member feedback and data

tracking. Committees / task forces. Enterprise Risk Management. Meetings and agendas. Board recruitment and

development.

Annual Assessment of 1 Element of Governance

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Mission, vision, values. Strategy Process and Tracking. Fiscal performance and

oversight. Board Roles / responsibilities. Board structure, makeup,

recruitment. Board dynamics. Enterprise Risk Management. Meetings / agendas. CEO feedback / evaluation.

Full Spectrum Governance Assessment

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Conducted by outside objective third party. Selected governance processes (fiscal, planning,

committees, etc.). CEO / Board partnership. Strategy. Board development. What’s working well, needs attention.

…other targeted, organizational specific Q’s.

Customized Telephone Interviews

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What might [name] do to add even greater value to our Credit Union governance and governance processes?

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Or… a series of specific questions about: Participation / engagement. Preparation / knowledge regarding Credit Union. External awareness of financial industry. Development.

Confidential—best facilitated by a 3rd party.

Member to Member Feedback Requires a Mature Board of Directors

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A High Performance Governance Assessment Elements

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1st Things 1st?

…the House is in order! Organizational activities aligned & producing acceptable

achievement.

Financial health stable with 6-12 mo. operating reserve.

Audit committee evolving into ERM mindset.

By-laws, policies, up to date (3 yr. review cycle).

Constituent support stable: membership #s, wallet share.

Highly competent constituents available for Board.

Board makeup mirrors geographic and demographic footprint.

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Board job descriptions ID leadership competencies required.

Nominations / applications / candidate forums confirm competencies.

Term limits (formal or informal) assure board and officer turnover and

infusion of fresh perspectives.

Governance Leadership succession program in place develops future

leaders from the field early… 2-5 years out.

No active emeritus status board members.

Board members failing the involvement / attendance / conduct

standards are removed for cause: bylaws are specific to these

expectations.

Competent?

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Meeting agendas are strategic and high priority focused vs

operational & activity based.

Real time assessment of effectiveness following each board

meeting.

Annual self-assessments and development plans drive

improvement.

All committees / task forces have written charters and clearly

identified outcomes or deliverable expectations.

A dose of governance leadership development at every meeting.

Competent?

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70% of board agenda devoted to strategic topics—future facing.

Strategic plan in place looking 3-5 years out.

Annual re-confirmation / refresh of strategic plan.

Plan draws heavily upon market data and industry trends.

Inclusive input on strategic plan:

past board members

committee members

professional thought leaders

focus groups

potential board members in your succession pipeline

Strategic?

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2-4 x year checks on “member” value & satisfaction (two different issues).

Satisfaction =

Value = meets my needs.

Board voice represents a diverse broad spectrum of membership.

Strategic agenda helps brand the organization.

Robust & open communication strategy links members to Board: newsletter, Tweets, Facebook, dynamic website, communities blogs.

Member Focus?

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Unrushed board agendas assure generative dialogue occurs

with 50%-75% of board agenda.

Characterized by candid discussions with appreciative respect

for diverse points of view.

Transparent—no back room agendas, limited use of

“executive / closed session.”

Transparent--robust information available to constituents

through dynamic web site / publications (performance

indicators / dashboards available on web site).

Greater use of “virtual meetings”. Governance As Leadership (Richard Chiat)

Transparent / Generative Tone?

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Platinum quality alignment between Board and CEO on goals and performance.

Twice a year performance feedback to CEO (brief mid-year & full annual review)—competency based

CEO/ key staff reports are “outcomes” & “exceptions” based vs “activity” based; strategic vs administrative detail.

Effective use of “executive summaries” and “consent agenda.”

Clarity in Direction to the Executive Team?

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Governance References The NonProfit Answer Book, Board Source (2007) Boards that Make a Difference, John Carver (2006) Governance as Leadership, Richard Chait, et al. (2005) Owning Up: 14 Questions Every Board Member Needs to Ask, Ram Charan (2009) Boards that Lead, Ram Charan et. al. (2013)

Principles of 21st Century Governance, Les Wallace (2013)

Center for Credit Union Board Educationhttp://skybox.cues.org/2014/01/13/four-moves-to-ease-the-board-chairs-job/

http://skybox.cues.org/2014/03/24/what-ceos-want-their-board-to-know/

http://www.cues.org/article/view/id/Good-governance-board-officer-development

http://www.cues.org/article/view/id/Good-governance-year_round-future-proofing

CUES.org/selfassessment

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Questions and Discussion

Les Wallace, Ph.D.President

Signature Resources Inc.www.signatureresources.com

303-680-7555les@signatureresources.com

25© Signature Resources Inc. 2015

Les Wallace, Ph.D.President, Signature Resources Inc.Les@signatureresources.com

Dr. Wallace is recognized for tracking business environment and workplace trends and their impact upon business and government. His publications have appeared in Leadership Excellence, Personnel Journal, Credit Union Management, Public Management, and Nation's Business as well as numerous research and conference proceedings. His latest book, co-authored with Dr. Jim Trinka, A Legacy of 21st Century Leadership, outlines the leadership organizations need in a global, fast moving business environment. His book, Principles of 21st Century Governance (2013) is being used by many boards in the profit and not-for-profit sectors to design governance development approaches.

His new book, Personal Success in a Team Environment (2014) is used by individuals and organizations to improve teamwork, career building and success at work.

Les is a frequent consultant and speaker on issues of organizational transformation and leadership, employee engagement, strategic thinking and board of directors development and governance. His clients include Fortune 100 businesses, Government agencies, and not-for-profit organizations world-wide. Dr. Wallace is also the host resource on the 9Minute Mentor, a series short video tutorials governance.

Les has served on the Board of Security First Bank and currently serves on the international Boards of the World Future Society and Counterpart International. He is a member of the National Association of Corporate Directors. Les writes an on-line column for CUES Center for Credit Union Board Education.

Preview his video series on governance: www.signatureresources “Dr. Wallace on Camera.”

https://twitter.com/9MinuteMentor

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