Self-Assessment Metrics for Board Evaluation

By Len Norman – Founder of Conquest Consulting Pty Ltd and Inventor/Developer of Skillspeak software for performance and skills assessment – Phone 61  (0)2 8765 9876

Organisations need boards with the necessary skills, capability and experience to steer through difficult times. Appropriate skills are needed to ensure they are run efficiently, comply with government regulations and have due regard for cultural mores.

Current Experience

Assessment metrics are growing steadily in popularity as a means for boards to employ self-help in pursuit of performance improvement. As there is no natural evaluation authority available at board level, the options are external or self-assessment.

Some observers claim there are limitations of the self-survey approach. They cite subjectivity, the difficulty of asking the right questions and the danger of simply achieving a tick in the box to appease the regulators.  Today, the best self-assessment tools eliminate these issues. Carefully designed studies and sophisticated mathematical analysis overcome all of these perceived concerns.

A good self-assessment process will identify where new skills or further training is required, both for the board as a whole and at a personal level. The payback is a better board, collectively and individually, with the right mix of skills and capabilities.

What are the Benefits of Automated Metrics for Self-Assessments?

Self-assessment can be scientifically designed and the data mathematically analysed to eliminate the drawbacks of other assessment methods. Where the appropriate level of analysis is employed, a high degree of precision is achieved. This ensures that the most important issues are isolated and highlighted for early corrective action.

The process is relatively unobtrusive and if conducted correctly, will deliver excellent, objective results with a minimum investment of time by individual directors, usually less than two hours each. Best practice processes allow boards to customise the standards that will be used for their own evaluation and provide maximum confidentiality of both director input and results.

Whilst it is true that any individual’s opinion is likely to be subjective, consolidation will lead to isolating the objective opinion and hence capturing the true assessment value.

It is a well-established process in the conduct of external audits that selected issues are studied in each yearly cycle. Over several assessment periods, all aspects of the operation can be tested. In an automated self-assessment, all areas of board responsibilities can be assessed every year. Special attention can be given to those items revealing less than ideal scores. This can be achieved with reduced cost and less disruption to board operation. The process facilitates extra analyses such as trend reports, opinion reliability testing, gaps against targets and the ability to prioritise actions by taking account of the relative importance of various board responsibilities.

Results, usually provided within a few days of completion of a study, come in easily-read forms such as summary flash reports, changes since last survey, top issues and strengths, produced in a range of graphical forms making interpretation easier.

Self-assessment will identify potential problems leading to more opportunities to reveal direct remedies. The process ensures these issues are objectively determined. Giving remedial attention to the identified top issues will derive a high quality performing board.

What will Flow from the Metrics?

The board needs to tune its performance across the responsibilities of control, execution, leadership and strategy. This must satisfy the expectations of regulators. There are certain layers of assistance boards can rely on. These are the audit, metrics and consulting layers. All of these are available and sit between the board and the regulators. The audit layer is for compliance, risk containment and business protection. The “metrics” layer works to achieve accurate and comprehensive diagnostics. The consulting layer is the realm of more detailed specific diagnostics, solutions and remedies which may involve director education among other actions.

All three should work smoothly together. If the metrics process can efficiently deliver the equivalent of quality MRI pictures, then the auditors and consultants can perform the needed “treatment” to reliably deliver performance improvement. The most attractive outcome of self-assessments is the consistently higher quality and lower cost of board diagnostics. The results are then available to all who need them.

But our Board Wants to do Internal Assessments Every Two Years !

Boards often choose to alternate internal assessments with external providers on a bi-annual schedule. For these internal assessment years, the board is committing to an unknown but significant amount of work. In addition, the depth of analysis is limited lest the workload becomes unmanageable. A well-designed automated metrics assessment process will provide a board with the benefits of tested metrics but relieve them of a very heavy work assignment in the conduct of internal assessments.

What Constitutes a Suitable Metrics Assessment?

There are several features you need to consider to determine if a particular metrics solution is suitable for your needs. The following is provided as a checklist.  Ideally, you should ensure your chosen solution has as many of these features as possible.

  • Limited time investment needed by each director – guideline less than 2 hours.
  • Measurement standards or Key Result Areas are flexible and allow for customisation by users.
  • Each measurement standard has a target and relative importance factor.
  • Data gathering uses a secure secret ballot method.
  • Results distribution methods are flexible and should allow a secure, private option, where all receive only their own results and that of the common assessment, the board.
  • Results should deliver more than the input raw scores. They should include in-depth interpretive analysis. For example, extra depth is gained from trend reporting, gap analyses, consensus mapping, performance range reporting, qualitative comment, summary reporting, issue prioritising and summary benchmarking. At the end of the process, you should have access to a detailed review of your performance position to enhance the ensuing audit and consulting engagements leading to superior, remedial plans and actions.
  • Ratings choices for each measurement should be objectively defined to increase the probability that the calculated result is more representative of the true status of the criterion being assessed. Sliding scales and the use of scales offering only implied yes/no options should be avoided. Objective ratings will have separate defined meanings and be sufficiently differentiated to permit unambiguous selections to be made.
  • It is imperative that objectivity defeats subjectivity. All opinion is subjective if taken in isolation. However, a proper analysis of the opinions of several people observing the same behaviour can yield an objective result when there is sufficient agreement to make it statistically reliable.