Many organizations view board member peer reviews as one of the most relevant ways to gauge effectiveness and to work to change any negative behaviors occurring in the boardroom.
Peer reviews can, however, be very tricky evaluations to administer since they carry a strong element of critique. While yearly board evaluations are required for all NYSE-listed companies, peer reviews are not mandatory.
Before choosing to implement peer reviews, board members should discuss the potential value that they would bring to their processes. Then, the chairman can make the decision to implement peer reviews as needed.
If your board does feel that peer reviews will provide significant boardroom insight, here are four suggestions for how to go about administering and utilizing them.
Hire an independent facilitator to administer the reviews.
Some companies allow their board chair to administer these reviews, but we encourage you to seek out an external party to conduct the questioning. The third party will be able to provide a neutral setting, and it will allow directors to be more forthcoming with their answers, since they will maintain full anonymity. Have the facilitator conduct the questionnaire or interviews individually in order to glean the most useful information.
Make sure the facilitator asks about strengths and weaknesses.
Peer reviews should be about more than just criticism. Make sure that you also ask directors to call out their peers’ strengths and ways that they have enhanced the board overall. When it comes time for board members to consider their reviews, it’s much easier to take a grain of critique with a spoonful of sugar, so to speak. Plus, it’s important to acknowledge and celebrate each director’s dedication and hard work.
Make a plan in case you have a “problematic” board member.
It’s possible that the outside facilitator will encounter a situation where a board member has largely negative reviews from their peers. Don’t ignore these results.
Have a plan in place, in which the outside facilitator will be able to bring these concerns to the chairperson. This will allow that leader to consider how they would like to approach the board member in question. Perhaps, it could lead to a one-on-one meeting aimed at helping the board member make adjustments moving forward.
Compare results moving forward.
Don’t see peer reviews as a one and done kind of evaluation. Like holistic board evaluations, peer reviews should be used to compare results from previous years. Encouraging sustained individual growth and strengthening will only lead to an improved board overall.