As the most senior officer in the organisation, it is vital that the board ensures the performance of the chief executive officer (CEO) is reviewed on a regular basis. We believe that a well-conducted review is a gift to the leader, as it helps them to realise their full potential while ensuring the organisation’s strategy remains on track. But if we are being honest, this is often one of the most dreaded dates in the boardroom calendar, and it is frequently pushed to the back of the queue because people simply do not know where to start.
What is a CEO performance review?
A performance review is a formal and systematic analysis of the contribution of the CEO to achieving the objectives of the organisation. It provides a snapshot of how the CEO is achieving their goals, which builds into a much bigger picture over time. It allows the leader to take stock of where they are and clarify exactly what is expected of them in the coming months. These reviews are not intended to replace regular and immediate feedback, but rather to provide a dedicated space for the CEO and chair to identify any support or training needed for the leader to succeed in their role.
Who should carry out the review?
The chair of the board, or a relevant nominee, should carry out the review. Some boards also involve the vice chair, and we often find it useful to have two minds focused on the conversation to ensure a balanced perspective. It is absolutely essential that, whoever carries out the review conversation, they have a clear understanding of the views of the whole board. The board sets the strategy, so the board must be the ultimate judge of whether that strategy is being delivered.
Moving from Personality to Performance
One of the biggest mistakes we see is a review that focuses too much on the CEO’s personality rather than their actual effectiveness. While leadership style is a significant factor in any organisation’s success, it must be measured against clear, agreed-upon objectives that were set at the beginning of the year.
A fair and robust review should consider these key areas:
- Strategic Outcomes: Has the CEO delivered on the strategic goals set by the board, such as financial targets or service quality? See a handy video on questrion s
- Operational Leadership: Is the organisation being run safely and is the risk being managed appropriately by the senior team?
- The Evolving Role: The role of a CEO often evolves as the organisation grows. It is very useful to review the job description during the performance review to see if it still accurately reflects the tasks being undertaken. If not, the job description should be updated with the approval of the board to help with future succession planning.
A Step-by-Step Process for a Painless Review
If you are looking to improve your current approach or are starting from scratch, we suggest following a structured process to take the heat out of the conversation.
Gather Feedback and Self-Assessment The first step of a CEO performance review should always be a self-assessment by the CEO of their own performance. This forms the basis of the conversation with the chair. To get a full picture, it is also helpful to gather feedback from senior staff and key stakeholders, which we often refer to as a 360-degree review.
Review the Development Plan The performance review should include a review of progress since the last meeting. This helps track the effectiveness of the CEO’s development plan and ensures that any learning opportunities taken up have had a positive impact on their work.
Focus on Strengths and Challenges It is useful to record the tasks the CEO finds most enjoyable, and those which they find difficult. This will help clarify the skills of the leader and suggest areas where they might need more support or perhaps a different approach.
Agree Future Goals The final part of the meeting is the opportunity to agree goals for the forthcoming period. These should always be set in the context of the organisation’s strategic plan so that everyone is pulling in the same direction.
Supporting your Governance Journey
We know that many boards find the thought of creating their own review forms and questionnaires a bit overwhelming, which is why we have developed a comprehensive library of practical tools to help you embed these processes into your daily work.
Take the Stress out of your CEO Review
Take the stress out of your boardroom duties. Joining as a member of the Leading Governance website gives you instant access to everything you need for a successful CEO performance review. You will also find all the practical tools required for running a successful board and delivering the great outcomes your organisation deserves. Our members get immediate access to:
- A ready-to-use Sample CEO Performance Review Form.
- A structured CEO Self-Evaluation Questionnaire.
- A guide to Setting Strategic Objectives.
- 360-Degree Feedback Templates for senior staff and stakeholders.
To get access to these essential documents and everything else you need to run a successful board, please click here to become a member.
Good governance is ultimately about making the world a better place through capable and ethical leadership, and we would be delighted to support you and your board as you strive to achieve those great outcomes for the people you serve.
Frequently Asked Questions
How often should a performance review be carried out?
The performance of the CEO should be reviewed at least annually, but it is very common for reviews to be carried out more frequently. This is especially true if the CEO is new to the post, has had difficulties in the role, or if the organisation is undergoing a period of significant change.
What happens if the CEO’s job description has changed?
This is a very common situation as organisations evolve. If you find that the tasks being undertaken no longer match the job description, the review is the perfect time to flag this. You should then update the description and seek formal board approval to ensure that everyone is clear about the current requirements of the role.
Should the whole board attend the review meeting?
In our experience, it is usually best if the review is led by the Chair and perhaps one other designated board member. Having a large group in the room can feel like an interrogation and often prevents the CEO from being truly open about their challenges. The full board should, however, be involved in agreeing the final objectives and receiving a summary report from the Chair to maintain accountability.
Why is a CEO self-assessment so important before the meeting?
We find that when a CEO takes the time to reflect on their own performance, it makes the actual review meeting much more productive. It allows the Chair to see where the CEO is already aware of their own strengths and weaknesses, which means the conversation can focus on support and development rather than just pointing out problems. It is a sign of a mature and confident leader to be able to look honestly at their own work.
What criteria should the board use to measure CEO performance?
The most effective criteria are those that are agreed upon in advance. We suggest a mix of quantitative targets, such as financial stability or meeting service delivery levels, and qualitative measures, such as the quality of relationships with stakeholders and the health of the internal culture. If you only measure the numbers, you might miss the fact that the organisation is suffering from poor morale or high staff turnover.
How do we handle the review if the board is divided in its views?
This is a tricky situation that requires real leadership from the Chair. Before the review meeting, the Chair should facilitate a private discussion with the full board to reach a consensus or, at the very least, a clear “majority view” on the CEO’s performance. You should never go into a review meeting with the CEO if the board is bickering or sending mixed signals, as it will only confuse the leader and damage their confidence.
Further Material
Useful Video Guide here.
