Because the success of a credit union is so closely aligned with its CEO, many boards don’t consider a CEO performance appraisal necessary until there is a problem. However, there are many benefits to implementing a thorough CEO appraisal process from the moment the CEO is hired.
In his white paper, written exclusively for the Credit Union Executives Society, A Pivotal Investment: The importance of the CEO Assessment to CEO and Credit Union Success , David O. Renz, Ph.D., director, Midwest Center for Nonprofit Leadership, University of Missouri, Kansas City, says it is much easier to initiate a CEO appraisal process when things are going well between the CEO and the board. When things are going well, the benefits of an appraisal can be gained without waiting until something negative occurs, Renz adds.
There are many benefits to having a formal assessment procedure in place, including:
Facilitating a strong and well-rounded relationship between the CEO and the board
People can be more productive when they feel they are working together collaboratively. An effective appraisal process sustains and nurtures the relationship and provides psychological support to all.
Building board competency by reinforcing the board’s role in the CEO’s performance and success
The process provides a vehicle for the board to explicitly discuss the roles and responsibilities of the board and CEO and how they will communicate with each other about progress in meeting goals.
Enhancing the CEO’s professional development by effectively framing the ways he or she makes changes
A candid discussion between the board and the CEO, where each explains what they believe is not going well, is useful to the CEO who is working to be as effective as possible. It also provides the CEO with a complete explanation of the board’s view about his or her performance, clarifies areas where the CEO might make changes, and outlines professional development strategies.
Motivating by celebrating and rewarding accomplishments of the CEO
Regular motivation encourages future performance by recognizing, rewarding, and celebrating the results and value of the work of the CEO. It also prevents discussions from becoming focused only on matters that may be going poorly.
Protecting the credit union
The formal process ensures that CEO employment, evaluation, and compensation decisions are implemented in a fair, systematic, and legally-defensible manner; it also guarantees that decisions are formally documented.
To learn more about the CEO assessment and how your credit union will benefit, join Renz for a free Webinar on Tuesday, January 29 from 10:00-11:00 a.m., Central time., where he will discuss the value of performing a CEO assessment, the six phases of the process and how to ensure it is fair and effective. To sign up visit cues.org and click on Webinars from the Quick-Links drop-down menu.
A credit union has a responsibility to its members to protect their assets and that is best done by effectively managing the credit union. Having a formal CEO appraisal process in place is one of the best ways to do that.
To download Renz’s free white paper, A Pivotal Investment: The importance of the CEO Assessment to CEO and Credit Union Success or, to find out more about how to conduct your CEO assessment using CUES’ CEO Assessment for Credit Unions, visit http://www.cues.org/ceoassessment/.