In a previous article, my business partner, John Gregoire, wrote about BARS…. not the bars where you can get a drink, nor the bars that keep criminals in jail, but a process that greatly enhances and even simplifies performance ratings. In John’s example, he describes how BARS (Behavioral Anchored Rating Scales) can produce more reliable and accurate assessments by Boards on their CEO’s. BARS provide concise definitions of not only the performance factor (Leadership, Communication, Board Relations, etc.) but it provides concise definitions of each level of performance – 1 through 5. I not only agree with John, I completely endorse the process; it reduces subjectivity, rater bias and recency bias; in short, provides a validated CEO rating.
most all CEO evaluations are accompanied by a “Comments Section”. In essence, an area where board members can
write a justification comment on their rating and provide further insight and
direction for their CEO’s. From our
experience in working with not only boards but also CEO’s, we’ve found that
comments pack an incredible “punch” for a reviewing CEO. The ratings may determine the final score,
but the comments tell the CEO what the Board really thinks of him/her. In fact,
an inappropriate comment can even erase (at least in the CEO’s mind) what might
have been a very high CEO rating or score.
While the rating is important and can’t be diminished, the comments go
to the CEO’s very core. Accurately
rating a performance factor may be considered a science, but connecting
the rating with an appropriate comment, is a vital art. Following are some hacks to consider when
constructing meaningful comments to justify CEO ratings:
Art of Meaningful Comments:
Bonafide Occupational Comment
— or in other words, the
comment should be job related.
Non-job-related comments can cause a riff of concerns that not only can be
inappropriate but can even cross-over into legal issues. Old school thinking just can’t exist in
today’s world of correctness. Following
are two examples of a BFOQ; one is bad, one is pretty good. See if you can figure out which one might
Example 1: Sally is a great CEO but I worry and hope she
can balance her work load with her family and home responsibilities.
Example 2: Sally is a great CEO because she focuses on
the objectives and strategic mission of the credit union. Her financial acumen is at the highest level
and she is dedicated to ensure safety and soundness in all of her credit union
- Justified: The comments should support and validate your
rating. Let’s test your skill
again…which example is more effective?
Example 1: Bill is clearly a level 4 to 5 CEO. He has exceeded 5 of the 6-credit union
financial metrics (ROA, Net Worth, Membership Growth, etc.) and met the goal of
loan growth. He is highly respected in
the community as evidenced by the involvement in several local functions and
committees. His board reports are
concise and succinct, but thorough. I am
unaware of any major problems or concerns confronting the credit union at this
Example 2: Bill does well and I would rate
him quite high. He works hard to make
the credit union better. He’s a likeable
guy and dresses fashionably. I can’t
imagine him doing anything wrong.
- Realistic: The comments need to have or show a
sensible and practical idea of what can be achieved or expected.
Example 1: Susan should involve the
Board in making investment decisions.
The credit union’s return on investments is not as good as I think we
could do if the Board was in charge and made those decisions. Many of us are retired and are involved in
our 401(k)’s and IRA investments, so we understand the market quite well.
Example 2: Susan keeps us informed of all lending activity, both good and
bad. She is developing a higher level of
lending expertise within her staff ranks and, when necessary, brings in talent
to assist in training. I see this as
very positive because nothing can replace experience, seasoning, and expertise
in such a critical area of the credit union.
- Fact-based: Just like a legal proceeding, there
should be enough facts or details to support your comments.
Example 1: Robert is a very good CEO. My gut not only tells me this, but my innate
instincts clearly evidence my high rating.
Example 2: Robert
has had a number of issues that have diminished his effectiveness as our
CEO. Several members have voiced their
concerns (both verbal and in writing) of inadequacies at the credit union. For example, inflexible hours of operation,
lack of mobile banking, too rigid of credit standards and his own
inaccessibility to the members.
- Constructive: There is a fine line between critical
and constructive; constructive comments show concern and hope; critical
comments can illicit anger and hard feelings.
Build on strengths, not weaknesses.
Example 1: Stan has done a somewhat adequate job in
community relations, but clearly below expectations. It’s hard to say exactly how effective he has
been since he rarely advises the Board or his staff. His personality is somewhat abrasive so I
doubt he has many strong followers in the community and I doubt his ability to
turn this around.
Example 2: Stan has had some
challenges in developing strong community support. It is something that is out of his comfort
zone, but still critical to the success of the credit union’s mission. He is a smart and ambitious individual so I
would encourage him to place an emphasis on getting out more to visit the
community and increase his involvement…his high marks in other leadership areas
should be able to carry over to this area by making this more of a priority.
If you haven’t figured it
out (I’m sure you have) the answers to the correct comments are: 1) Example #2
— 2) Example #1 — 3) Example #2 —
4) Example #2 — 5) Example #2.
I hope this article can serve as a productive guide the next time you need to support a rating with a comment…. Best wishes & success!
Jerry P. Nelson is a partner with KNG & Company