Executive Evaluation - Nonprofit Organizations

To start, I will disclose, I am not a human resource expert. What is expressed is a personal opinion on executive evaluation. That said, after having been evaluated over thirty times in my nonprofit career, and doing hundreds of evaluations on senior executives, I have real-life experience. I've read articles. I've learned about employee reviews. They are always intended to be objective, supportive or even enlightening. I have come to the conclusion that most formats are too complex, and less beneficial than the theorists envision.

In the nonprofit world, executive evaluation concerns two employee classifications. The first is an evaluation done by the board on its executive leader. The other is the evaluation done by that executive on other executive staff. While the evaluators are different, the process that we think is best works for both evaluations. The difference is that a board must work as a team to determine their "one voice" on the executive leader's performance, whereas the executive leader must speak his or her own voice in evaluating executives.

The outcome for any employee evaluation is to provide useful feedback. The aim is to reinforce positive work behavior and help improve less than stellar performance. When evaluating any executive, we suggest there is one additional outcome: successful implementation of the organization's vision. Expectations of the executive director have to be clear, derived from mutual consent, and articulated in both an achievable, and measurable format. The process we recommend is a performance contract. Since this term may not be defined the same by all, our definition of a performance contract is a one-page - or less - list of very clearly written expectations based on improving the individual's and organization's performance, derived from the priorities in the strategic plan. All expectations are clearly stated.

Executive Evaluation Example

John Smith has served as executive director of a youth development organization for four years. During his tenure, the organization has increased the number of youth served and added new programs. The board of fifteen meets monthly. Six members of the board meet more often and provide ongoing advice to John. John has a tendency to work too many hours and has not taken more than few days off at one time since he started. Over half of the staff's twenty employees left last year. Members of the board are concerned about employee morale. In addition the executive committee is concerned that some board members are not really engaged. The board completed a strategic plan last year and determined that over the next five years they want to increase revenue, improve the board, and become better known in the community in order to increase services.

Performance Contract John Smith 2006-2007 Evaluation-May 2006

Develop a report for the board by the July meeting on employee turnover. Determine the factors that may be the cause for the turnover and prepare a list of options for the board to consider in helping reduce turnover. Reduce employee turnover by 50% by April 2007. (40%)

Work smarter and fewer hours to set an example for all employees by coming in to the office no earlier than 8:00 AM and leaving no later than 5:00 PM at least two days per week, and taking at least two continuous weeks of vacation before May 2007. (25%)

In order to help the organization become better known, join one community service organization (Chamber, Rotary, Lions, etc.) and speak to at least eight community groups on behalf of the organization by May 2007. (20%)

Develop a report for the board by January 2007 on how members of the board can better support revenue generation. (10%) Work with the chair to engage all members. (5%)

(signature)

John Smith, Executive Director

Date: _____________

(signature)

Jane Doe, Chair

Date:_____________

Evaluation Key Points

The format is simple. The percentages in brackets indicate the board's priority for that expectation. When conducting the annual review, a salary adjustment or bonus reflects the outcomes for those expectations. In practice, expectations are developed by the board with input and agreement from the executive. While the expectations used in this example could be met in many ways, these were chosen to emphasize common issues.

The first expectation is that the executive should determine why turnover is occurring and then report to the board. Too often, boards rush to the conclusion that employees leave due to poor morale and that poor morale is the result of poor management. While poor management can be a cause for low morale, in the nonprofit sector other factors are equally dominant like mission related stress, or low pay and benefits. In addition, nonprofits often have disproportionate numbers of younger employees working to gain experience to improve their career options; their exit is not only expected but encouraged if the organization has a value of leadership development or an established mentoring program.

The board's job is to govern, which includes monitoring, not managing activities. Organizations with employees need personnel policies that include a grievance procedure for employee/management concerns. Boards should follow the organization's policies. When employee turnover is the result of poor management, employees should use the approved grievance policy to voice their concern to the board. We would advise boards to not speak with staff about management, unless the board has observed a problem. Otherwise, the board should assume there are other factors impacting morale. When there are management problems, and policies followed, then the board could address the problem by editing the performance contract to include expectations for the executive's improvement, like management training or professional coaching.

To many, working long hours translates into dedication. In the nonprofit world, executives work excessive hours because of dedication, but many have difficulty with prioritizing their efforts. In a performance contract, like the one used in the second expectation, boards can help the executive prioritize. When a performance contract dictates that working normal hours and taking time off is required, the executive then has permission to stop work; time deadlines help people learn how to set priorities. The best supervisor I ever had told employees to get their jobs done in a forty hour week. "I am paying you for forty hours, I expect you to work forty hours, no more, no less. If you can't get the job done in that amount of time, maybe I need to find someone who can."

The third expectation includes a proven technique to increase community recognition for any nonprofit. If the executive stays in the office, few people outside the organization understand the mission. The best public relations strategy for any nonprofit is to expect the chief executive and senior staff to be out in the community as often as possible. The fourth expectation is clear: it's a staff job to develop reports for the board. The fifth expectation deserves some explanation. It is not the executive's job to engage the board. It's the board's job to engage the board. However, it could be appropriate for the executive to work with the board on this issue. Since board engagement is a board job, it was given the lowest priority for the executive.

Evaluation of Other Executives

When this process is used for executives other than the CEO, the chief executive and the employee discuss and agree upon expectations. I will often ask board members to provide insight on the performance of senior staff, especially when I know a member of the board has expertise in the function that staff provides, like a board member/CPA advising on the performance of a finance director. However, I am not a fan of surveying employees and community members about the performance of an employee. We live in Alaska. If you want to know how an executive is performing, look around, keep your ears open. If the organization is meeting needs, securing funds, partnering with other organizations, meeting goals, then the executive is usually performing. There will always be a few people who complain about performance, even if there is little cause. Complaints offer insight, but it's best to not over-react to one or two concerns. When many complain and this criticism continues over some time, there is usually a problem. Other signals for poor executive performance include a sense that the executive does not value the board's input, or she exhibits overly competitive behavior toward "sister" nonprofits, or if funders start getting upset.

The person conducting an evaluation should have a relationship with the person reviewed, meeting with them at least once a year. They should agree on priorities and develop a performance contract. If possible, they should meet more than once a year and encourage ongoing communication especially when there are difficulties with an expectation in the contract; no surprises. Since the contract is short and can be easily remembered, it's easy to discuss the expectations in almost any conversation.

Conclusion

In conclusion, while there may be more scientific methods of evaluation, we suggest that managing people is not a science, it's a relationship. Like all successful relationships, good communication and trust is the key. A performance contract, though not perfect, is fair, straight-forward and ultimately serves the person, the organization and the community.

Author

The author of this article is Dennis McMillian.

Dennis McMillian is President and CEO of the Foraker Group.

Dennis has devoted his professional career to helping nonprofit organizations better meet the needs of their communities. For 21 years he served as a development officer, and then as a CEO with United Way in numerous communities around the country. He came to Alaska in 1992 to lead the United Way of Anchorage. Since moving to Alaska, he has helped build the state’s philanthropic infrastructure through his work with United Ways across the state and through his support in developing the Alaska Community Foundation. He is a strong advocate for Alaska’s nonprofit sector.

In 2001, Dennis led the effort to start The Foraker Group with the mission of building sustainability and organizational capacity in Alaska nonprofits. During his career, he’s trained thousands of professionals and volunteers, spoken at numerous conferences and consulted across America, Canada, Asia and Russia. He serves on numerous national nonprofit committees and is a regular speaker at conferences including The Council on Foundations, Tides Foundation, Philanthropy Northwest, and the National Council of Nonprofits. He sits on the board of Nature Conservancy in Alaska, and on the national boards for Camp Fire, Inc., the Alliance for Nonprofit Management, and the National Council of Nonprofits.