Who Gives CEOs Performance Reviews?

Like any other employee from the entry-level clerk to the senior executive, CEOs are expected to improve their performance over time. Just because they're on the top of the ladder doesn't mean they are unable to develop professionally and immune from criticism.

But how exactly do CEOs get their performance reviewed and evaluated? You can't expect regular employees to objectively critique their boss's abilities. They want to stay in good standing and keep their jobs, after all.

Still, if the goal is for your CEO to become better and better at their job, it's critical that their performance is reviewed on a regular basis. That way, the CEO will know exactly what they're doing wrong (or at least what they could be doing better) and can take proactive steps to improve.

While your employees aren't in a position to assess the CEO's performance, the members of the board of directors are. Unfortunately, grading a CEO can be tricky - there's not really a rubric that clearly defines what the head honcho is expected to do. Sure, they're supposed to grow the business and maximize profits. But other than that, how can CEOs be graded?

There are a number of things members of the board of directors should consider while filling out their CEO's report card. Here are five of them:

1. Is the company fulfilling its mission and vision?

There's no sense in spending time building a company vision and writing a mission statement if you're not going to follow through on either. While reviewing CEO performance, the board of directors should consider whether the top exec is steering the team where the company plans on going.

2. Are employees engaged?

A recent Gallup study revealed that only 13% of workers are engaged worldwide. How engaged is your team? If employees are producing less and less, your organization might have an engagement problem. That falls under the CEO's purview too.

3. Is the company culture a strong one?

According to our Engagement Report , coworkers are the number one thing employees like about their jobs. If you want your organization to succeed, it's critical you build a culture defined by cooperation, inclusiveness, and support, among other things. That's how workers get excited to show up every day and contribute. If your culture is weakening and morale is low, your CEO will have to do better.

4. Does the CEO respond well under pressure?

No one can predict the future. While a CEO might meticulously plan out the next few months, invariably there will be unforeseen challenges that arise and need to be dealt with swiftly. Does the CEO make tough decisions in a timely manner? Are those decisions the right ones? These are questions the board will have to ask.

5. Do employees have the resources they need to do their jobs?

It's true that line-of-business managers and leaders of smaller teams often have the ability to get their employees the tools and technologies they need to get their work done. But at the end of the day, the buck stops on the CEO's desk. If workers are constantly complaining about not having access to critical technology or they're often talking about how much easier life would be if they could use a freelancer for certain projects, chances are the CEO has dropped the ball.

Just because the CEO is at the top of your organization doesn't mean they're flawless professionals who do everything right. That being the case, the board of directors should take the time to review CEO performance on an annual basis. As a result, stakeholders can be sure that all employees - from the bottom to the top - are working on becoming better versions of themselves.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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