Assessment

Blog

16 March 2018

Most employees are assessed regularly. This also applies to executive managers (directors) of a corporation. In those cases, the supervisory board is usually responsible for holding the assessment interviews. Often members of the supervisory board do not find this an easy job. Clear arrangements about this are frequently absent and sometimes the members of the supervisory board are only informed of the acts and omissions of the executive board to a limited degree. They experience even more difficulty when they need to be assessed themselves. There are several reasons for this. First of all, there is no relationship of subordination. Members of the supervisory board perform their supervisory activities in relative independence. Secondly, it usually regards experienced (former) directors who now fulfill the role of member of the supervisory board. Due to their seniority they do not always appreciate being assessed on the quality of their performance. Certainly not if this is done by a younger person. Thirdly, there is not always sufficient knowledge and experience about the way that supervisory boards can assess themselves and their fellow board members. 

“A good and sustainable form of (self-) assessment is the result of a process that can well take one or more years. ”

Nonetheless, most of the corporate governance codes prescribe that these assessment interviews should still take place. Nowadays it is no longer a question of wanting to or not, but rather a matter of dealing with this process in the best way possible. If a supervisory board lacks the tradition of assessing and being assessed, it is important not to get ahead too fast. A good and sustainable form of (self-) assessment is the result of a process that can well take one or more years. This process can start by talking about the desirability and necessity of (self-) assessments. Once it is clear that this desire or necessity exists, a first step can be made. For example, the various members of the supervisory board can periodically, for instance once or twice a year, assess their joint performance based on a number of previously established questions. If desired, this can be done anonymously. It is important to formulate the questions on the basis of a jointly supported opinion on the requirements that can be imposed on a member of the supervisory board within the specific corporation. In this respect there is no need to reinvent the wheel. Numerous proper examples of assessment questions for members of supervisory boards at smaller and larger sized corporations are available on the internet.

The results of the joint assessments can be discussed during a board meeting. The first-following year, it is possible to opt for a farther-reaching form of assessment. Different variants are plausible. What generally works well as a second step is that every supervisory board member assesses himself on the basis of a previously established questionnaire. These assessments are collected. The chairman of the board then discusses the results of this assessment with every individual. This provides the chairman of the supervisory board the possibility of indicating individually to what extent he agrees with the self-assessment of the relevant member of the supervisory board. The third step in this process can be that every member of the supervisory board does not only assess himself but also all other members of the supervisory board individually and on the basis of the same questionnaire. These results are also collected and inspected by the chairman of the board who discusses these with every individual. This way the content of the assessment of every individual member of the supervisory board by all other members of the supervisory board is only known to the chairman of the board and the relevant person. The chairman is usually assessed by two other members of the supervisory board who have held office for a longer period of time.

“The most far-reaching form of assessment is a 360-degree assessment. This implies that all members of the board do not only assess each other, but that they are assessed by the members of the executive board as well. ”

The most far-reaching form of assessment is a 360-degree assessment. This implies that all members of the board do not only assess each other, but that they are assessed by the members of the executive board as well. All on the basis of the same list with assessment criteria. There are supervisory boards that jointly discuss the outcome of these assessments. This is not necessarily required for a proper functioning of the board. It is, however, required for a proper functioning of the board to discuss the feedback of every individual about the functioning of the board as a whole. Remarkably enough this only a bit awkward at the beginning. Soon the members of the supervisory board start noticing that their professionalism improves quickly and significantly due to the feedback. At that moment, a true step has been taken.

This blogpost is also available in Papiamentu. Click here to download a pdf version.

Do you have a question about corporate governance yourself? Please e-mail it to governance@ekvandoorne.com and perhaps your question will be discussed in the next blogpost.