Chief Executive Officer Performance Evaluations: Tips for the Governing Body and CEO
From our Fall 2022 e-newsletter
Evaluating your entity’s chief executive officer’s (CEO) performance is one of the governing body’s most important tasks. While there is not a “one size fits all” evaluation process, there are several key elements which your entity should include in the process. The overall goal for a performance evaluation should be to help the CEO, the governing body, AND your entity.
What is the purpose of a performance evaluation? There are many purposes, which include discussing performance (obviously!), meeting contractual requirements, celebrating accomplishments, providing a means to discuss needed improvements, and enhancing governing body and CEO communications.
As alluded to above, there is more than one way to conduct a performance evaluation, and each entity should do what works best for it. Typically, the CEO’s performance is evaluated on an annual basis, usually on or around the anniversary date of the CEO’s hiring. A formal written evaluation is the best practice, but requires more effort up front. The good news is that once a formal written evaluation process is put in place, the framework can be used year after year (with minor updates) and does not have to be onerous or time consuming.
Developing an evaluation form can be a collaborative effort between your governing body and CEO, and a rating system should be defined. Rather than just numerical ratings, it is helpful to allow for written comments. A good place to start when establishing performance standards is to review the CEO’s job description, aligning the standards with the essential functions and abilities set out in the job description.
Another useful tool that can be implemented as part of the performance evaluation is for the CEO to submit a self-evaluation to the governing body in advance of the formal performance evaluation. In this self-evaluation, the CEO should provide self-reflection on the performance standards and goals which have previously been set by the governing body. The CEO’s self-evaluation helps the employer understand what has been accomplished and makes them aware of obstacles that may have prevented accomplishment of goals.
Remember that the meeting to conduct the CEO’s performance review must comply with the Oregon public meeting laws. That law requires you to provide sufficient advance notice of the planned executive session to allow the CEO to decide whether to request that the governing body hold their performance evaluation instead in open session.
Another cautionary note is that discussion of the CEO’s salary may not be conducted in executive session. Instead, job performance may be evaluated in executive session, but any associated discussion of compensation for that officer must be held in open session.
In summary, conducting a fair and productive performance evaluation of your CEO does not have to be a stressful or unpleasant task. A performance evaluation should be a positive, objective process that is performed in a supportive atmosphere. It should be a tool to guide any needed changes, as well as a method for promoting your entity’s goals, values, and continuous improvement.