Board self assessment approaches

Help Your Board Assess it’s Way to
High Performance
June 11, 2015
Les Wallace, Ph.D.
1© Signature Resources Inc. 2015

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
© Signature Resources Inc. 2015 2

© Signature Resources Inc. 2015
3
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

4
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

5
 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

6
 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?

7
 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 Assessment
Setting The Foundation

8
 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

9
 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

10
 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

11
 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

12
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

13
 What might [name] do to add even greater value to
our Credit Union governance and governance
processes?
-----------------------------------------
 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

14

A High Performance
Governance Assessment Elements
15

16
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.

17
 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?

18
 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?

19
 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?

20
 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?

21
 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?

22
 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?

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 Education
http://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
23

Questions and Discussion
24

Les Wallace, Ph.D.
President
Signature Resources Inc.
www.signatureresources.com
303-680-7555
les@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
© Signature Resources Inc. 2015 26

Board self assessment approaches

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