Performance management for an elevated board of directors

Performance Management for an elevated board of directors
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Performance management is an essential aspect of any organisation’s operations. It involves setting clear goals, monitoring progress, and providing feedback to help employees and teams to reach their full potential. For a board of directors, performance management is crucial as it ensures the organisation is moving in the right direction. In this article, we will explore the importance of performance management for boards and provide tips on how to build an effective performance management system.

Understanding performance management 

Performance management is a process that organisations use to assess and improve the performance of their employees. It is the process of ensuring that an organization connects the company mission with the work of the emoployees. The method aims at developing employees to perform to the best of their ability, hence good performance management concentrates on improving employee’s skills to perform their jobs better. This demands a good alignment between each worker’s effort and the organisation’s goals. Performance management is characterised by good and continuous communication between managers and employees.

What are the goals with performance management? 

The goal of performance management is to improve the employees’ skill sets that are directly related to improving their jobs. This includes:

  1. Measuring or evaluating employee performance against set standards, and
  2. Helping employees so that they have the opportunity to improve themselves in their work going forward. 

As performance management is a process that aims to align individual, team and organisational goals, it is also a strategic process. Performance management is often discussed at the level between employees and managers. However, it is equally important, if not the most important that this is functioning higher up in the organisation, being in the board. Ultimately it is the board’s strategies and goals that trickle down to the rest of the organisation. If the board creates clear goals and an overall understanding of what is prioritised for the organization, good opportunities are also created for employees to elevate and do their best work.

Why performance management is applicable for boards of directors

Yes, performance management is applicable for boards of directors, even though, as mentioned earlier, it is more commonly discussed in the operational levels of an organisation. As the governing body of a company, it is the responsibility of the board of directors to ensure that the company is meeting its goals and objectives. This can be done through the use of performance management techniques, such as setting performance targets and regularly monitoring and evaluating the company’s progress towards achieving those targets. By using performance management, boards of directors can help to ensure that the company is moving in the right direction and taking the necessary steps to succeed.

The main benefit of using performance management for boards of directors is that it can help to improve the overall effectiveness of the board. By setting clear goals and regularly evaluating the performance of board members against those goals, organisations can ensure that their board is working towards the organisation’s strategic objectives. Additionally, performance management can help to identify areas where board members may need additional training or support in order to improve their individual performance. This can ultimately lead to better decision-making and more effective leadership at the board level, increasing the chances of the company’s success.

5 steps to build effective performance management 

The following section describes five steps you can follow to create good performance management:

1. Create the vision-list

Step one is all about the what. What do we as a team or board of directors want to achieve? At this stage, it is therefore important that all members of a team or board highlight their insights on what is working and what is not. Everyone should participate and give at least one thing that needs to be done or could be done more efficiently. The second step is to rank what is most important for the company right now. Once you have done this, you should have a list of 5-15 actionable things to do, written in order of priority. 

2. State your objectives 

Step two is all about the how. What do we need to do in order to achieve the goals on our vision-list?  To answer this, actionable objectives are written for each of the goals.These objectives should ensure the gap between vision and reality, namely what we actively do to achieve our goal and ultimately our vision. Ideally, these are specific enough to be written as to-dos and can be attributed to one or more people with a timeframe so that it is clear when the goal is supposed to be achieved.

3. Measure your results

In this step we should have a list with actionable todo’s and everyone should know what they are doing to achieve the goals. Once goals and objectives have been established, it is important to regularly monitor and evaluate the board’s performance to ensure that it is on track to achieve those goals. This can be done through the use of performance metrics, such as financial indicators or customer satisfaction levels.

4. Having performance discussions, provide feedback and support

This step is about monitoring the work process and this can be done by having organized and constructive meetings. In the meeting all board members should describe how their work process has gone since the last meeting. They should also report whether the objectives have been followed up as planned. The purpose of these meetings is to lower the threshold to reach the goals. The meetings provide room for reflection of unforeseen events. Finally, new objectives with targets should be set for the next meeting.

Here are three tips on how to make these meetings have a real impact:

  1. Meetings need to take place on a pre-determined and regular basis. For some boards, a lot needs to be done in a short period of time. Then it might be good to have such a conversation once a month. For other objectives and boards, a longer period of time is needed and once a quarter might be sufficient.
  2. Each objective needs to be owned by someone, the owner of an objective is responsible for its completion.
  3. It must be possible to measure the results of an objective.

5. Recognition and celebration 

Giving people bonuses for completing work is a concept that, by most studies, has been proven ineffective. However, it is very instructive to have a system where successful solutions are recognised and celebrated together in the board. This is a concept that has the good quality of creating a positive process going forward. 

How can I test my board? 

If you want more insights into how you can improve your team’s work and efforts we at Governance@Work can help! Quickly assess the current state of your board with a test that takes 2 minutes to answer. The survey allows for reflection on your boards efficiency and performance. However, if you are seeking an in depth analysis of your board we offer board evaluations. A proper evaluation helps you and your team to prioritise and optimise your board work. 

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