CEO Evaluation Article-JR 2-05

by Kenneth R. Cohen, PhD

Published in Society for Human Resource Management, 1996

 

'The affairs of organization must be managed under the direction of the Board. This does not mean, however, that the Board manages organization on a day-to-day basis, since most, if not all management functions have been delegated to the CEO. The Board, however, retains the ultimate direction and control over the activities of the CEO and where appropriate, others on the senior management team. '

The statement above is a sample of is what is typically contained in the by-laws for governing boards of many organizations. Fundamentally, it says that the board sets broad direction for the corporation with the CEO along with his/her staff, who, acting as agents, carry out these directives. Essentially, the CEO is the single linking pin, connecting the organizations human, financial and physical assets back to the Board.

Thus, there is no more important duty of a board than the hiring of the CEO. Secondly, once the hiring decision has been make, an equally important duty is to, at least annually, provide a thorough, thoughtful and directive performance evaluation of the CEO. This article explores emerging changes in the oversight role of boards and how these changes are likely to alter the manner and substance of the CEO performance evaluation and the process use to conduct such a review.

'The answer my friend, is blowing in the wind'



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