Governance Pitfalls – The Standard Appraisal Process
Following on from last month’s blog, I want to continue to think about some of the possible pitfalls of typical governance reviews. If you remember in last month’s blog, I used the analogy of a car service to highlight the way in which an effective governance review process should be undertaken and to highlight some of the potential pitfalls of thinking that a skills audit is a governance review.
This month we will look at the standard appraisal methods processes.
In drawing attention to these methods, I hope to get you thinking about why it is that sometimes board appraisals just don’t work!
A number of criticisms have been identified of standard appraisal methods and processes, some of which are outlined here:
– Documented procedures may be none existent and should they be in place, procedures are often inconsistent or not followed at all by the board.
– Boards are not always clear about what success looks like, they have no tools for measurement they don’t agree their objectives.
– Cohesive deadlines with appropriate time constraints are often not agreed resulting in drawn out and sometimes incomplete processes.
– Monitoring mechanisms are not implemented to ensure board members are completing the process at appropriate times in the review cycle and when they are implemented at short notice without proper preparation they are ineffective.
– Forms and questions are often standardised, not taking into account the needs, culture or desired output of the organisation, rendering the findings irrelevant to moving the organisation forward.
– Appraisals for the chair and/or chief executive do not reflect the objectives of the corporate plan or even assessments are not based on the skills outlined in the respective job description, making the assessment ineffective.
– Skills audit forms are often basic, requesting only confirmation of skill in common areas, but no evidence of experience to verify how skill has or can be applied.
– No appraisal report is completed following an appraisal; therefore findings are not followed up.
– No integration between appraisal results and training needs where personal development has been identified.
– Solutions to any issue highlighted through the appraisal process are often generic and the support provided, if any, does not always meet the needs of individual members or is delivered collectively.
– Boards do not or are unable to interpret the evidence from the appraisal process, they don’t seek outside professional advice and/or there are disagreements about what the evidence suggests.
Whilst many of these procedures are the beginnings of good governance mechanisms, a lack of detail, challenge, alignment of corporate objectives or consistent procedures will lead to cracks appearing in the way the organisation is governed. It is often these small cracks that lead to the FIFA, Polly Peck, Global Financial Crisis or Enron sized scandals that can have a devastating impact on a sector or an economy.
The essence of good corporate governance lies in the function of the resources, competency and execution of the work that the board undertakes. My TGF Governance Framework alludes to the fact that none of these functions can work alone and it is the collective attention to the compliance drivers of resources, competency and execution, coupled with attention to the performance drivers transparency, impact and behaviour that constitute a successful board appraisal or governance review.
So, when planning your board appraisals, beware of these things that have the potential to make your board appraisal ineffective.
Until next time…
**For more information about the TGF Governance Framework and board behaviour, visit www.thegovernanceforum.com to purchase ‘The Little Book of Governance’ and ‘Boards Behaving Badly’ from the TGF Little Book Series. **
