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.
However, 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:
The Art of Meaningful Comments:
- BFOQ: 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 work!
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 decisions.
- 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 time.
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