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Appraising the CEO

Nine arts organisations were represented on Monday 1st December at ‘Appraising the CEO’, BoardConnect’s second Round-table forum for Chairs, held at KPMG.  The forum was scheduled in follow-up to topics raised by Chairs in their first Round-table session in October. Host Liz Crawford, KPMG’s Senior Manager of KPMG’s Executive Search and Selection, provided an introduction to the forum by highlighting the importance of a framework to ensure role clarity – beginning with a CEO’s recruitment/promotion, through their daily working life, to their annual appraisal.  As such the CEO’s position description, and selection criteria designed to identify and prioritise vital job roles, provide the foundation elements of a CEO appraisal toolkit.

Participants discussed the need for arts boards to agree upon realistic recruitment goals in relation to the moderate salaries offered, the incorporation of training opportunities to compensate for associated skills gaps and non-financial incentives (eg flexible working hours) and financial incentives (some participants referred to commission for additional income sourced) to compensate for salary gaps.  The importance of the incumbent CEO nurturing internal talent was also identified as being particularly useful to the arts organisation’s succession planning.

Liz Crawford identified that position descriptions should flow logically through to the board’s definition of CEO Key Performance Indicators, and further be linked directly to organisational strategy.  David Fishel highlighted that arts organisations’ strategies and KPIs are substantially defined by agreements with funding bodies.  Participants agreed that a key role of an arts organisation CEO was owning and adapting their KPI achievement.  Liz Crawford highlighted that management of funding stakeholder relationships should therefore be a weighted KPI, and flagged that 3-5 KPIs is an ideal number to ensure effective focus within a CEO role.

David Fishel opened up discussion by highlighting that CEOs generally want feedback.  Various elements of the feedback process were explored:

Who should undertake the appraisal?

  • Participants expressed support for a whole of board pre-appraisal discussion, with the appraisal itself undertaken by a smaller panel of board members

What inputs and preparation are needed?

  • The pros and cons of various information sources were discussed, including funding bodies, staff, clients, a combination via 360 degree feedback, event attendance etc – various levels of formality of information seeking were evident across the participant organisations
  • Several participants concurred that the Chair and CEO’s relationship is key to ongoing performance management, so that ideally appraisal becomes more of a formality than a revelation
  • Participants agreed that financial management is an important element of review, and may require the board Treasurer’s direct input

What should be covered in an appraisal meeting, how should the discussion be documented, and what follow-up is needed?

  • David Fishel highlighted that feedback and issues for discussion should be documented pre-appraisal by both CEO and the appraisal panel, and a targeted action plan should be the key outcome of the appraisal meeting, subject to ongoing monitoring by the board

Typical problems and opportunities

  • Several participants raised concerns that generally being non-executive directors who do not have day-to-day contact with the organisation, it is possible for arts board members to be over-dependent upon information from the  CEO.  There have been occasions when this power has been misused.  Boards need to ensure they have confidence in the quality and thoroughness of information they are receiving
  • Numerous participants reported incorporating criteria in addition to KPIs as part of the appraisal process – these indicators, impractical to measure, but important to delivery of a CEOs KPIs include: interpersonal skills, quality of the organisation’s internal communications, demonstration of innovation/initiative, promotion of organisational values

The forum closed with a return to the topic of improving strategic goal prioritisation in arts organisations generally -- and the importance of flowing priorities down through the board to the CEO and to the team.  ‘Do less and do it better’ rings particularly true in the arts sector at present.

Participants received hand-outs covering the broad dos and don’ts of appraisal, and  forms to guide the practical appraisal process – also available for download from the BoardConnect web site’s Resources section.