A Nonprofit Board’s Guide to Executive Director Performance Evaluations

The Board, as the employer, is responsible to manage the performance of the Executive Director. This includes providing timely and appropriate performance feedback, both formally (through a policy and annual evaluation, which is considered best practice, even for long-term Executive Directors) and informally (feedback and conversations throughout the year). The performance evaluation is a formal process of discussing performance and expectations, which allows the Board and the Executive Director to improve communication and productivity in the organization.

BEST PRACTICE: It is important to keep an open dialogue between the Board and Executive Director where concerns can be brought up by either party if/when they arise; performance-related or other concerns should not be saved for the formal performance evaluation process, as that compromises trust in the Board-Executive Director relationship.

BEST PRACTICE:  If your organization has not regularly evaluated the performance of the Executive Director, it is important that the Board and Executive Director discuss this process and establish a mutually-agreeable starting point for the evaluation schedule.
 

Benefits of a Performance Evaluation:
When utilized and conducted properly, the performance evaluation process:

  • Builds understanding and trust
  • Is a constructive process with active participation from both the Board and Executive Director
  • Validates and recognizes good performance
  • Identifies challenges and areas that may require training or development
  • Ensures that the organization’s mission, vision, and strategic plan are being implemented
  • Maintains written record of performance on file

BEST PRACTICE: The performance evaluation process is a two-way conversation, and it should also provide the Executive Director an opportunity to provide feedback, ask questions, clarify responsibilities, discuss ideas, etc. 


The Executive Director Performance Evaluation Policy:
The organization should have an Executive Director Performance Evaluation policy in place that outlines:

  • The timing/frequency of the evaluation (i.e., annually) – note:  if your organization has hired a new Executive Director, their performance should be evaluated prior to the completion of their probationary period
  • Roles of those involved:
    • The Board President typically leads the process
    • Board Directors complete the evaluation form
    • The Executive Director completes the evaluation form
    • Senior Managers may also be asked to complete the evaluation form – see below* 
  • Procedures related to compiling results, reviewing with the Board, meeting with the Executive Director, and filing the evaluation report.

*This is a good option if your organization’s staff structure is such that there are multiple Senior Managers to get feedback from, as they would interact with the Executive Director to an extent where they would have insight regarding key performance areas; it is not recommended to seek input from staff members outside of management (i.e. support workers), as they would not interact with the Executive Director in those ways and to invite their feedback may be perceived as a “staff satisfaction” survey; while there is value in assessing staff satisfaction, this is not the time or place for such comments.   

Refer to the Executive Director Performance Evaluation Policy and adjust it to reflect your organization’s needs. The Board may wish to strike an ad-hoc committee for the development of or revision to this policy, which would then be approved by the Board. Regardless of how the work is undertaken, the Executive Director should be involved to provide input. This policy can be reviewed each year following the evaluation process (that is when ideas or recommendations for change may be freshest in everyone’s minds) or as part of the organization’s regular review of all policies.

BEST PRACTICE: Use a standardized Performance Evaluation template, with sections for the Board Executive Director, and Senior Managers (if applicable) to complete before the evaluation meeting occurs.  Refer to the Executive Director Performance Evaluation Template and adjust it to reflect your organization’s needs.

The Board will follow the process for gathering feedback and compiling results as per its policy.  


Compiling Results:
The Board President should be the one to collect responses and consolidate into a report in order to review with the Board and then with the Executive Director. The easiest way to create the report is simply to enter the scoring and comments in the appropriate section within the Executive Director Performance Evaluation Template. Here are some things to keep in mind:

  • SARC’s Executive Director Performance Evaluation Policy refers to the respondents’ comments being entered verbatim (while preserving confidentiality); this way, the Board President does not have to apply subjectivity to the comments
  • If using numerical scoring, rather than supplying an average score for each section, state, for example: “7 people ranked as a 4; 2 people ranked as a 3”; if an average score is used, the Executive Director will not see the high and low scores and may wish to know that.

The Performance Evaluation Meeting:

As part of the process, it is necessary for the Board President to meet with the Executive Director to review the results. Here are a few points to consider to establish a positive and professional atmosphere for the discussion:

  • A one-on-one conversation between the Board President and Executive Director is ideal to allow for open and frank discussion, and it is less intimidating for the Executive Director compared to meeting with a “panel” of Board Directors
  • Arrange for a private location that is free from distractions, so candid discussion can take place
  • Set aside approximately one hour for the meeting – this should allow sufficient time so the conversation is not rushed  

Following the outline of the Performance Evaluation Form:

  • Review and discuss feedback received
  • Review the accomplishments and progress made towards goals, validating and recognizing good performance and decisions that the Executive Director made
  • Discuss job skills and standards
  • Identify and address challenges and areas of concern
  • Plan areas for professional development and learning 
  • Establish goals and action plans for the next evaluation period

BEST PRACTICE:  If the Executive Director disagrees with any part of their evaluation, an opportunity should be given for them to attach comments to the final report.

The evaluation form should be signed and file according to the organization’s policy.

A special note on Executive Director compensation: How an organization compensates its employees (including the Executive Director) should be outlined in a Compensation Policy with an attached compensation grid.  Every organization must decide for itself if it ties compensation to performance. Whatever the decision, the Executive Director should be treated the same as all other employees. Performance-based compensation systems are more commonly used in the for-profit sector. Creating one requires careful consideration related to performance benchmarks/measures and can be difficult to implement, particularly in nonprofit organizations. More and more nonprofit organizations are utilizing a compensation grid with a certain number of annual increases to reach the top of the grid and not using performance as a factor in whether or not that step movement occurs, with the thinking being that unsatisfactory performance is dealt with through coaching and the progressive discipline process. SARC’s performance evaluation resources do not include the compensation element as it is our viewpoint that the two should remain separate.
 

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