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Mirror, mirror ... when the board looks at itself: self-examination is no longer merely an option. The board and management team need an evaluation process that is an effective tool for gauging performance and facilitating needed changes.

Article Excerpt
EVALUATING themselves objectively, either individually or as a group, is probably one of the most difficult things for boards to do well. Boardrooms are a far cry from the queen's chambers in the Snow White fable, in which a simple look in the mirror revealed all. Today honest board self-assessments, done regularly, are required for New York Stock Exchange companies and other firms that want to ensure governance excellence for their stakeholders.

There are distinct benefits from conducting a well-thought-out and well-executed evaluation. A good evaluation provides a disciplined forum for discussing how the board, the CEO, and leadership team can find better ways to work together and get to the ultimate mutual goal--building shareholder value.

A good evaluation also provides a catalyst for the board to address needed change within its own ranks--especially in making much more rational and effective the very difficult conversations with directors who should be moving on. Having no or poor evaluations leads to recalcitrance and inaction when a change in the status quo is needed.

A way to avoid the headlines

I've been continually surprised to find how many CEOs do not insist on in-depth annual evaluations and how many boards try to avoid self-evaluations (as well as other good governance practices that get performance and interaction issues front and center). It's probably one of the reasons why average CEO tenure ranges only between five and eight years and why companies sometimes undergo significant crises. An honest and ongoing appraisal process might have...