The Importance of CEO Evaluations

Video Transcript

Kim Bohr:

Welcome everybody. So happy to have you all here and to be joining us for today's CEO evaluation conversation with us, our four fantastic participants that have all had various experience in this realm of CEO evaluations. And I think from each of them, you will find an amazing amount of insight and value in what we get to speak to today.

So with us today, as I mentioned, we have four fantastic professionals here that are really looking forward to this conversation. And so to begin with, we have all Alejandro Grajal with us, who is the president and CEO of the Woodland Park Zoo. Alejandro will be able to speak to this experience as a CEO and as someone who's been involved with a CEO evaluation process for many years.

Next, we have Raquel Karls with us. And Raquel is the senior vice president of human resources for REI. Raquel is going to bring a really fantastic lens of the human resources professionals role in looking at CEO evaluations and what all the different decisions are that her role has to make in partnering to execute on something like this very well.

And then we have Nancy Pellegrino with us, and Nancy has been a board member and a board chair, and really very integral to this evaluation process. And today Nancy is a principal of her own consulting company called Pellegrino Advisory Services and is a very active board member on several boards, including Homestreet Bank. And so Nancy brings in the perspective of the responsibility that the board chair has over the years in really trying to make this happen.

And then we also have with us Mike Humphries, our president and CEO of Waldron, and he is really coming to us today from a practitioner's lens, as somebody who has been involved in CEO evaluations and the complexity in working through to really get it right for everybody for many years. And so we're thrilled to have everybody here with you today that will be able to give you a really fantastic insight and hopefully be able to answer all your questions.

So everybody here clearly has a different point of view of the process of CEO Evaluations and the experience. And so what I'd like to do is ask each of our panelists to share, from their perspective, how has that experience been? And so Alejandro, as our CEO representing us here today, would you kick us off in answering that question around, "how has the process been for you as you've engaged with it over the years?"

Alejandro Grajal:

So it's, it's been very constructive, I have to say. I'm a new CEO I've been in this role for now almost five years. So this, this was a big career move for me. And coming straight into external CEO evaluations was important. It was not super different, we're doing a 360 review, so it's not just the board, but I also have colleagues, executives are part of the team, external partners, elected officials. So it's a wide survey and it's helped me professionally. I mean, being new to this role you know, you take as much feedback as you want, and this has been particularly useful.

Kim Bohr:

Wonderful. Thank you. And Nancy, how about from the board chair perspective? Can you speak to that as well?

Nancy Pellegrino:

Sure. My experience in CEO evaluations is has been, you know, as Kim had mentioned earlier, from a board perspective, both as a chair of the Woodland Park Zoo board and chairing the CEO evaluation committee as vice chair and chair, and then more recently Puget Sound Bank and Homestreet Bank boards. Respectively, I've been on the governance committees where we have also run the CEO evaluation process there as well, but from a chair standpoint of the board, I have to speak from my Woodland Park Zoo experience, and in general I think the CEO evaluation process is critical to any organization and I've been very pleased and I'm in awe really of the process. We've taken it very seriously at every organization I've been involved in. The chair role at the time, Alejandro, it may be a little different now because this was between 2011, 2014, when I chaired the CEO evaluation committee at the zoo, but we worked very closely with Waldron. So we did use an outside partner in that regard. Transparency, full engagement with the CEO, I can go into more detail later on with some of the questions that you're going to bring forward, but I would have to say, it's really critical to the health of the organization to have it be comprehensive, and taken very seriously and thoroughly.

Kim Bohr:

Thank you. And Raquel, what about from your lens in holding the HR role? How has that been?

Raquel Karls:

Yeah. Besides tricky, it's been good. So I've been involved in probably four different CEO evaluation processes, review processes across two different organizations, all from the chair of the HR leader of the organization. It's been pretty critical and we'll talk a little bit more the exponential goodness effect it has on an organization. But it's been a good experience and really helps helps balance out the measurement of what a CEO is accountable for, and to, which I think is super helpful.

Kim Bohr:

Indeed. And Mike, can you speak to, as a practitioner, the importance of being able to have all three of these interests aligned in this process?

Mike Humphries:

Oh, absolutely, Kim. This is one of the things that over the years as we've kind of benchmarked through a lot of different angles through corporations and organizations, both for profit and not for profit organizations like the National Association of Corporate Directors, Board Source, looking at the way that people typically do this. One of the things that we have found is that the most the more inclusion, the more transparency, the better. And so what we've found works best is really to have the, of all of these different areas, the CEO involved in the creation and highly aligned and agreeing with what they're being measured upon. That's critical, absolutely critical. And I would kind of put that at the top of the list and then, the board members that participate as well, get to weigh in, get to have good dialogue even before the process starts. And so that inclusion is very important and then having the CHRO involved can be, and they're not always involved. Sometimes the boards go about this somewhat independent of the lead talent person. And you know, we always recommend inclusion there as well because they bring the voice of the organization, the perspective of the people working in the organization and a real cultural lens to it, which is also important.

Kim Bohr:

So when we think about the idea of CEO evaluations, I'm curious, I know Alejandro you, in the work that you've done, you were part of that co-creation process, but I'm curious from Nancy and Raquel's perspective, has the CEO always been a part of that in the evaluations you've administered?

Nancy Pellegrino:

Yes. In my experience, the CEO has been involved in co-creating core competencies, objectives, goals measures in all three cases, both the nonprofit and the public corporate sector. And to Mike's point, I think that's really critical. Transparency; good cohesive communication between the CEO and the committee or whomever is performing and creating the whole process. So, yes, that's been a co-creation in all of my experiences.

Kim Bohr:

Wonderful. What about you Raquel?

Raquel Karls:

Yeah. So if I know one thing about CEO's, they don't like surprises unless it's their birthday and I'm not even convinced they like surprises on their birthday. Am I right? Alejandro, I'm right? And i don't blame them. In the ones that I've been involved with, we've involved the CEO every time. I actually came into a role where they were coming off of a review where the CEO was not as involved in each step. And I saw the aftermath of that and the recovery of that and the amount of energy it took to then get that person to kind of sign back up with a different partner, to do that again, was challenging. And I don't blame him to some extent, right? You want to create an environment of trust and transparency. And so you want to make sure that's handled the right way. They're measured the right way. They get the chance to see the results and have the benefit of a conversation before the full board sees it. Even just those tactical steps along the way to create that transparency and the directness. So they have time to process, right. On the positive and on the negative. So then they can handle themselves well with the board. You want to set everyone up for success, assuming the outcome of this is something you're trying to do for their success. So again, I go back to trust and transparency in the process, at every point in the process, is really critical.

Kim Bohr:

Raquel let's stick with you for a minute, and I want to go a little deeper on that. So, so many CEO evaluations expand out to senior leadership and senior management, those direct reports to the CEO. So how have you gone about in your role in really fostering, as you mentioned that trust at the CEO level, but how have you really done that to allow for supporting trust and anonymity at that senior management level as well?

Raquel Karls:

I think that's really critical part to the process. And so what we've done effectively is really careful and good communication to the senior leadership team to say, "here's what we're doing, and here's why we're doing it. And here's how you get to be involved. And here's how that'll be handled," so that they understand it every step of the way, what that process is. Someone doesn't just pop up on their calendar and say, "I want to talk about so-and-so." We make sure that that's pre-managed and wired through the organization, and then you get into a rhythm and they kind of start trusting the process. Also again, back to trust and transparency, it goes both ways. So that's helped. We definitely have included the senior leadership team direct reports. And in some cases, even a couple of skip levels, where they work more closely with them, or it's a particularly transformational business agenda item that the CEO is taking a heavier hand in leading, you know, to make sure that they're focusing in some of those areas of business that are so important as well. So between the board and the team, you get a very well-rounded perspective.

Kim Bohr:

Alejandro answering that same question, what have you been able to try to do as a CEO to ensure people feel comfortable in participating?

Alejandro Grajal:

Well, for us critical has been the administration of the evaluation from the external partner, in this case, Waldron. First of all, the whole evaluation is run by a dedicated committee of the board, the CEO evaluation committee, which has a chair and members, and reports directly to the executive committee of the board. So that's important, because it's already established, and that committee runs through the yearly process of all the steps. And this doesn't happen in just one month or two months. It's a whole year process. Also, to create that trust and inclusion, it's clear to everybody participating that is administered by a third-party. And I think that has been critical on both ends. On my end, as a CEO at the receiving end of the evaluation, because I know that I'm not getting any personal grudges or any other things that are happening there. And the evaluation comes as an objective conclusion of the process. And then at the same time, the fact that all the participants in the evaluation know that it's going to be filtered through something that is not part of the organization. So, I think that that kind of triangulation has been critical in developing that process.

Kim Bohr:

Nancy or Mike, have you seen where this trust hasn't been able to be fulfilled in that senior leadership level and in anything there that you would maybe a little bit of advice people to be thinking about?

Nancy Pellegrino:

Not in a critical way. I would say that where you do have situations where there are challenges around the CEO's performance, you're going to have more issues around trust and otherwise. I've been fortunate to not have a tremendous amount of that to deal with, but I have had some of that to deal with as the chair of the CEO evaluation committee. And again, I think that it gets back to just that transparency and communication piece. Where there is a lack of trust between the CEO and the evaluation committee or the chair or whoever's involved in the communication, doing things like sitting down with the CEO, and Mike has done that in past days with the CEO evaluation at the zoo before Alejandro, you get the whole committee involved in communicating with the CEO and having discussions about what's happening. That unbiased third party objective piece I think helps with the trust issue. And I think just, again, the "no surprises," Like Raquel said, I think you have to be very clear. And again, it goes back to having the CEO be a partner and deciding what they're being measured on. And also, I'm adding in another element here that I wanted to make sure I got in at some point: the strategic planning process that every organization goes through, making sure that that is tied part and parcel to the CEO evaluation and measured and all through the year that you're looking back to the strategic plan and tying the objectives that are built into the plan, what the CEO's performance is and the CEO evaluation. So, again, it's not just sitting down once a year and having these discussions. It's a commonality that you have between the directors and the board and/or HR, whoever is involved in the CEO evaluation process and the CEO. I think that all ties in to helping with the trust.

Kim Bohr:

Absolutely. Mike, would you add anything to that?

Mike Humphries:

I would just add, in our experience where we tend to run into trust issues is the first time we enter into a process with an organization. Sometimes, not always. Sometimes we go in, there's already a lot of trust, particularly between the CEO and their board of directors, a great alignment between the CEO and their chair, which is essential, and things are pretty copacetic with the senior management team. And that's probably the most often as we're just bringing a new process to the table to really expand the areas on which a CEO is being evaluated and getting beyond just the operational performance and financial performance that everybody does. That's kind of like the price of entry, but there are lots of other CEO competencies around leadership capabilities, around behavioral capabilities, around motivation and these kinds of things that are also very important to look at, but we will run into situations where we're brought in in an environment that trust had been lost. And so one of the aspects of that, you know, you have to remember, this is a very high stakes process. You know, it's, somebody's career, it's the organization's lead strategic head, the person responsible for taking strategy and implementing it .and somebody responsible for motivating an organization and being the leader of culture. So we consider that incredibly high stakes. There's almost nothing more high stakes from a human capital standpoint than this effort. And so restoring trust is absolutely essential if it's not there, and retaining trust is absolutely essential. And you do that through inclusion. You do that through that through transparency as we've already discussed.

Kim Bohr:

Wonderful. So I'm going to actually insert one question, that's come in from our audience. And even though we've got a couple others to go through, it's related to the topic we have here. So I want to make sure we bring it into this context. So, Alejandro you spoke of a special review committee that gets set up, an executive committee that is really slated to help take the lead in this. So the question that somebody has is, "what are the downsides of having an executive committee or a chair or vice chair handle the review from the outset, or compensation committee, something like that." So what's the downside if, if they're handling it from the outside or perhaps they're handling it just internally and keeping it within the organization and not having a third party partner help?

Alejandro Grajal:

I will let the experts answer, because I'm the subject here in a sense. But the reality is that a dedicated CEO Review Committee has, as a mandate, the review of the CEO. An executive committee, a compensation committee, a chair, a vice chair, have different mandates and much more encompassing mandates that go beyond evaluation. So in that regard, most likely the chair, the vice chair, and the compensation committee is part of the review committee. But having a committee that the absolute mandate is a review takes all the distractions away from other things that are happening all day. And with chair and vice chair, usually you are so busy in the weeds with everything that's happening. You meet, you know, at least twice a month, if not more, in this case with a COVID 19 crisis, I'm meeting every week. So, you know, it's, it's a very hands-on period, and it's hard to be objective when you have that level of enclosed proximity. So my feeling is that the committee provides a mandate that is all inclusive about the review of the performance of the CEO without the distraction of everything else. I don't know what Raquel or Nancy think, but that has been my experience.

Nancy Pellegrino:

I would agree that that focus is really important and having a dedicated committee, whether it's directors or whatever the structure is in the organization, its focus on the CEO evaluation is really critical from a perspective of objectivity and bias and elements that would potentially create an environment where it's conducive to having an external consultant come in and help be a partner in this. I think it can be very valuable. Two of my three board CEO evaluation experiences have not used an outside consultant. With the CEO evaluation at Woodland Park Zoo, as I mentioned earlier, we used Waldron and we're still using Waldron there. And they were part and parcel a part of the whole process. And I think from a bias standpoint and an objectivity standpoint, anytime you bring in an objective third party, you're going to help with that. Sometimes you can get directors on the board who are on the committee charged with CEO evaluation, who have personal biases and have institutional history with the CEO and with the organization. And I think it's also very healthy to have a combination of the tenured board members who've been around for a while and new blood on the committee that's doing the CEO evaluation, because I think that that is a great balance. But the two bank boards that I have been on and am on right now have chosen to use HR resources along with director resources. We have directors who've been in the corporate world and run big corporations and other organizations and have had a great deal of CEO evaluation experience, proposing to do it organically, with the exception of using an outside consultant for Homestreet for the compensation part of the equation. But in a perfect world, my bias is I think it's great to have the expertise of a consultant looking at things and helping you bring new perspectives, and also being a buffer where needed between the board and the CEO. Not that that's always needed, but it can be very helpful.

Kim Bohr:

I agree. Raquel or Mike, do you have anything to add?

Raquel Karls:

I actually would push this to Mike because I think the impetus of the question is less about whether or not you use a third party and more about which committee on the board is best apt. I think that's the question here because I think it's one of my board directors asking it. Hi Carrie! I think what she's asking is, "what's the best committee to use, or should the chair and vice chair just do it?" In some cases, the nom-gov committee tends to handle this on a board, but Mike, I'm curious what you see in terms of which committee of the board, or a special committee, or do you use a standing committee?

Mike Humphries:

It's somewhat sector dependent. Where we see publicly traded companies, often the comp committee will handle this. We see a variety of different alignments of board members. We'll see comp committee, we'll see nom gov, we'll also see an ad hoc group be put together that is constituted from different board members each year. We strongly recommend that when you're selecting the participants that you're selecting people that really have relatively high IQ, they're sensitive to how high stakes this is, they don't have an axe to grind, you know they are really going to bring an open perspective and an open mind to the process. And I think that's probably the most critical thing that you can think about when you're constituting the group that's going to work with the CEO to develop it, whether it's facilitated by an outside party or not.

Kim Bohr:

That's a good call Mike. So Mike, let's stick with you. Let me ask this other question that has popped in here that I think is again very related to this piece of our conversation. So from a practitioner's lens, what do you recommend when it's regarding using a 360 or peer CEO review as part of this process? Do you recommend it, do you not, do you see it in certain cases where it's been more beneficial?

Mike Humphries:

Well, I highly recommend it. I think you have the potential to be most helpful to the CEO. And remember, this is all about your CEO being as effective in leading the organization as possible. That's the objective. And so what you want to be able to do is give them current feedback that's valuable feedback, that helps them as they navigate their role and navigate the organization's success. So we find that 360s are quite valuable in that. So, the involvement of all the board members, the involvement of at a minimum, all of the senior management team, and then at times some voices from the outside, perhaps it could be partners of the organization that are critical to the organization's success. We've had customers participate in the process and so on, but having that feedback from both the board members and the senior staff at a minimum really rounds out the perspective and you would hope that the senior executive team will bring the perspectives from the organization about how the CEO is showing up, leading, and resonating with the organization, how aligned are they with the culture that they are trying to impact and move forward.

Kim Bohr:

I'm curious, Alejandro, you had mentioned earlier in this conversation of having people outside of those two core groups involved in your evaluation. Can you speak a little bit to the benefit that, what you gained from expanding that even further?

Alejandro Grajal:

So, yes, we've included, for example, partner organizations, we've included elected officials that are involved in some way with the zoo, and business partners. As any enterprise, we run with a number of business partners, for example, all of our food and retail operations are run by external business partners. The zoo receives a significant amount of funding support from tax-based levies on the city and the county. And as such, I consider the voters and the taxpayers of Seattle and King County our biggest donor in that regard. So it's important to listen to those voices. I think it also brings up a wide perspective as a not-for-profit. We're always aiming for a diversified funding source. So a portion of revenues come from business and public support and private support and philanthropy, endowment investments, et cetera. So all of those components need to be included in how I am evaluated because I'm not evaluated on just how I run my staff or my executive team. I have this kind of role that I need to be a partner to all these players around the organization. So in that regard, my assumption is that if you have a much narrower business, maybe you can have a narrow evaluation, but in my case, and I would say mostl large nonprofits, or, or even for-profit corporations, you have an ecosystem of relationships. And as a CEO, you need to be evaluated in that ecosystem, not in just your performance as a manager of your own executive team, for example. That to me is essential because I need to be evaluated on managing that ecosystem of relationships.

Kim Bohr:

Wonderful. Thank you for adding that in, that's really helpful. So let's just take a shift here for a moment and recognizing that we are in a pandemic and that no strategic plan that started this year off is probably still in play. How have you looked at the CEO evaluations today? How have your decisions in evaluating the CEOs changed, or what are you considering in part of this process? Raquel, do you want to start us off?

Raquel Karls:

Sure. Yeah, you're absolutely right. The 2020 plan and metrics in January are funny now, if it wasn't so not funny. But it's completely shifted. Let me back up; I do think what's so valuable about this process is that it measures the CEO through other levers besides the financial metrics. So it force-fits 'the What and the How,' as kind of foundation to the answer of "in 2020." There has never been a more important How, because the How has delivered the What in a year like this. So at least I'll speak from an REI Co-op perspective. Shutting stores, having to go through a lot of cuts, figuring out the protocols, are all paramount to keep customers safe, to keep our employees safe, balancing all those priorities. So competencies like navigating ambiguity, leading through complexity, taking an organization with you and keeping them believing, while important in every atmosphere I've ever been in and certainly important in REI all along, never more important than in this moment. I have a relatively new CEO, he's been in the job for just under two years. So there'll be a component of that measurement for him this year as well, but the How piece is completely important given the kind of year that it is. And I mean, just good old fashioned leadership is more important for these organizations and the business' success more than ever. So I think we're going to be more heavily weighted in those areas.

Kim Bohr:

Thank you. Nancy, what about you from the lens that you have as you think about this year?

Nancy Pellegrino:

Well said, Raquel, I couldn't agree with you more. I so looking forward to our CEO evaluation, which will take place in January for 2020, for the CEO of Homestreet Bank. I couldn't agree more that the dynamics are different from ever before. Certainly the financial piece, that quantitative piece is as important as ever, but the other elements around subjective valuation, around how you rally your employees when they're on the front line and, and having to be face-to-face with clients in a COVID pandemic, and how you deal with employee situations with people at home who are trying to take care of their kids in school that are working remotely. All these challenges that all organizations are having today, being a leader around now, what we've seen that has been very positive about our CEO is that he has risen to the occasion like crazy. And he has taken on some real positive traits that he had before, but COVID has actually brought them out, so that mettle testing, you're either going to rise to the occasion during something like this, or you're going to probably not, and kind of break down and fall apart. So I think judging CEOs during this time around what I call the softer side of business, the subjective and the qualitative part of what they do in addition to the financial metrics is key because that is going to really set a true leader apart today. So yes, in our thinking forward to the CEO evaluation on the board and on what we call our HRCG Committee, which does the CEO evaluation, all of these things that are quantifiable, around how the CEO handled this situation, are going to be very important. I would also include the part about managing to all of your shareholders, all of your employees, all of your clients. As a CEO reaching out beyond just the borders of your company right now, and how you communicate beyond just your own staff is really critical as well.

Kim Bohr:

Absolutely. It's probably perhaps never more so than now. So Alejandro, when you think about the seat you're sitting in and knowing that things are so different than what you planned, what are some of the pieces that stand out to you as lessons learned through this and what you might hope to be evaluated on a little differently as you look at this new world we're in.

Alejandro Grajal:

So first of all, following on Raquel's first opening statement, we had a wonderful, beautiful strategic plan. In January of 2020, we were on the verge of launching a campaign mid-March that went out the window and literally it was survival. And what I would say is different this year that's going to be different from every other year is that it's been such a giant roller coaster, and I know this is kind of sounds corny because everybody says that, but from the CEO perspective, it's brought the best and the worst of myself to tell you the truth. It's been almost every week, we've had a giant blow up drama and a giant almost-tear-up success, and navigating the emotions of and the perceptions of that roller coaster, the almost constant reversal of decision, I'm predicting the most common comment that I'm going to get on my review is, "Alejandro shifted positions all the time." I know by now, the review is going to happen in January, but I know by now that I'm going to be classified as kind of weak or undecided or shifty or whatever word you want to use, because literally the conditions are changing from every point of view almost to the week. I mean, literally there's points where you can send a mandate or an email to do something in the morning, and in the afternoon, you have to say, "stop that we're going to do something else." And sometimes because of the speed, you had to roll over people and you cross people away, and you [lose] all the capital, all the trust that you built over the years to build your rapport with your own direct reports and other managers and other partners and external partners across the organization. There've been conditions where all the choices are bad and you end up really crossing somebody. There's no way that you don't do that. So in that regard, perhaps I'm coming from the more pessimistic point of view, but I don't know that any CEO will have a rosy review this year, and I would be very leery of somebody getting a positive gleaming review in 2020, because it has literally has been a year of bad choices. And as a CEO, it brings the worst and best of what you can do. So my feeling is that 2020 is going to be a particularly unique. And I'm really now looking forward to how I am going to build up the trust and relationships that have been damaged or twisted in this pandemic, because it's going to take me another few years to build that up, because it's been so traumatic for everybody. And literally my job has been to make everybody equally unhappy through the process. So I think using 2020 as a benchmark is going to be really tricky. But on the other hand, I I'm really looking forward to 21 and 22, where we are finally able to start building up on all the damage and all the good that we did in 2020.

Kim Bohr:

You've been so honest, and I think that what you've shared probably resonates with many people. The idea of 'agile' has never proven out to be more true than this year and that level of adaptability and agility, as we've said, many times, there was no playbook for this at this level. And so I appreciate you being so candid in that question, and recognizing that this is so unusual and yet, as painful as it's been, there's more positive that will come from that as well. Mike, let me ask you this question that has come in from one of our attendees. So what are your thoughts as a practitioner, and I'd love to hear from others as well, on encouraging and facilitating direct feedback from reviewers versus an anonymous level of feedback? So can you speak to that? And maybe perhaps even the bias and things that might come into play?

Mike Humphries:

Our philosophy is that anonymity is essential to the process, if you're going to get honest and useful feedback for the CEO. And even among directors, I mean, one tends to look at directors as being very senior experienced people and highly mature and all that, but the fact of the matter is among a board, you've got a group of people that has high variability in the degree of conflict that they are comfortable with. And that's just humans. We all have a different behavioral profile from that regard. So if somebody's conflict avoidant and they're asked [to give feedback], you can say all you want that they just need to put their big girl pants on and be straight, but people won't do that. So if you really want honest feedback, it really needs to be gathered in an anonymous way. And you don't have to use an outside party to do that either. You can do that quite well internally. But obviously somebody has to be in charge of administering and keeping it anonymous. About the worst thing that can happen is when a CEO or anybody else for that matter, a leader who's being evaluated, wants to know who said what, that is about the fastest way to shut down honest and transparent conversation that you'll run into in this process. May I weigh in just a second on the last question too? This year, I think really is the biggest test that most CEOs will ever find of how they project compassion and empathy. And what we are finding and observing is most successful is somebody's ability to just bring an unquestionable character to the table and to bring it no matter what those hard decisions are, Alejandro you referred to, as you're always going to disappoint somebody. But if they know honestly why you're making the decisions you're making, why it's essential to the organization's survival, to retaining the most people, it's a huge challenge to your leadership of culture and your leadership of people. You have this compact that you built so deliberately over many years, and in an instant it's been challenged. People say they committed to this culture that we built, and you have to make hard decisions. The only thing that a CEO can do to get through is be honest and transparent, help people understand. And you're never going to please everybody. You'll please some people, but you'll never please everybody.

Nancy Pellegrino:

I'm so glad you went back to that question, Mike, because relative to your comments, Alejandro, from a board perspective, from a CEO evaluator perspective, and factoring in COVID and the environment, I would hope that the people doing your evaluation or any CEO's evaluation would also have empathy and would also be able to recognize this is unprecedented, that it's not the norm. And so not to use COVID as an excuse forever, but there are many CEO evaluation committees out there today that are going to be looking at things differently through a different lens. And, certainly not to the extent that it would hurt the organization, to lighten up a little bit. But the reality is that I think we all have to look at things differently right now, and not just relative to performance and relative to results.

Alejandro Grajal:

Even within the 10 months of the year and the eight months of the pandemic that we've lived through, the mode of the reaction has been totally different. I can tell you that between March and May, I wasn't sure that my organization was going to survive. I wasn't sure that we were going to exist a year or two years from now. So that puts a certain amount of pressure on decision-making that is very different than the way I'm operating today. And it's going to be very different than the way I'm operating in December. Right now I'm actually setting budgets for 2021. And in December, I'm going to actually start doing operational planning. And those are different modes. I mean, truly fearing the demise of the institution is something that I've never experienced as a manager. You always have challenges, but the fact that it was a realistic possibility that the organization may not exist, it's terrifying. The decisions that you make in that context are totally different than decisions that you make as a manager on budgets or personnel or partnerships. So that is going to be totally challenging, not just for me, but for the board to review how my performance was driving through the year.

Raquel Karls:

I was actually going to pivot back to the anonymity versus direct feedback piece. I totally agree, Alejandro though, and Nancy's points are exactly right. I mean, let's all give a little bit of grace to the situation, and Darren said it in the chat, right? The conditions under which everyone's operating are pressurized like ever before. On the direct feedback versus anonymous, one of the things I think is really important about this process is what outcomes you're trying to achieve. So I'm going to come back around to the direct versus anonymity to say, one of the best practices here is you should be really squarely centered on what you're trying to achieve by doing a CEO review, and then staying true to that throughout the process. Good ones generally are about giving them feedback so they can adjust, learning, and, wow! Development! If you think about the real outcomes, that's what you're trying to focus on. If you're using it as a weapon, or you're using it as a cloak for intervention, you're going about it wrong, because then that's when 'who said what matters?' and 'how did this come out?' and that sort of thing. I think you need to start this in good times before you actually need it, because when things get a little bit choppier in the water, it's good to have a process and a system in place that's got some trust to it, that's got the outcomes of feedback, so they can adjust, of development, of learning. And that's the steady principles of your process, so that 'who gave what feedback' becomes irrelevant in good times or in bad. So I kind of tie those pieces together as being critical about starting it when you're not using it. And if you know you need an intervention, that's a different process. It's actually going to look the same, but I wouldn't couple it up with the review. Couple it up as "we've had a problem, and we're going to work on it. Here's one of the tools we're using to work on it." There's ways of doing that, but if you cloak it in the review process, that won't go well for anyone in the organization. So just thought I'd mention that as well.

Kim Bohr:

Raquel, I think that's a great point you make, and even in our chat, somebody asked along those lines of how do we encourage really deep and honest feedback. And I think that your points are very right at that foundational level, having it before it's needed. We explain the process in great detail, and then making sure that the questions being asked are really aligned with the values of the company, the objectives, and that's where co-creation is so important, which all of you that are on the screen today agree. And I think that also, as we think about the idea of the process unfolding one of the things that we hold really important in the process is also making sure that people can't figure out who said what. We look at the trends, the themes and the things that are most important and rich that the CEO needs to hear, needs to develop on. But not being able to have it pointed at somebody. So we keep it so important in that process. So we have about five minutes left if anybody else has questions, please submit them. I've been adding those as we go through as well, somebody just popped in one question that says, "does the review always need to be tied to compensation?" And so that's a great question; anybody in particular want to answer?

Raquel Karls:

I'm curious, Mike, you've probably seen it both ways, you probably have the advantages and disadvantages of that huh?

Mike Humphries:

I have. Yeah. As a matter of fact, right now, we're involved in one that's purely been intentionally separated from the financial review process and is focused purely on development purposes, so much so that instead of a CEO evaluation, it's being labeled as a CEO Development Assessment and run that way. This process is very similar, but as Raquel I think very wisely said, knowing what your objectives area, are key. So the quick answer is yes. Often it is tied, I would say more often than not, it is tied to the whole annual review. And, at least in the way that we approach it, it marries a set of benchmarks, CEO behavioral characteristics, leadership competencies, that get at interpersonal qualities and so on and so forth, leadership of culture and those kinds of things. It also then incorporates the organization's operating and financial objectives, and that gets blended together with whoever's going to be doing the review, and when presented as a whole. But it's just important, in the interest of inclusion, that it's very, very clear in the beginning how that's all going to be done because again, it's for the CEO's benefit, it's for the success of the organization and absolute clarity in that regard, which way you're going to go, is essential.

Kim Bohr:

So we have about two minutes left, and if anybody else has questions, please pop them in and we'll make sure that we get them into our panelists to get their views and get them sent back out. Is there anybody on the panel here that feels like there's some nugget of information that you want us to share? A lesson learned, or some pieces for the audience here that perhaps we just didn't get to?

Raquel Karls:

I think there's another benefit too, which is when you're reviewing the CEO, he or she is going to take the review and feedback of their employees more seriously. So we've seen the exponential goodness cascade through the organization. The CEO is getting feedback and getting reviewed. He or she then wants to make sure they give feedback and give good reviews, then that senior leadership team makes sure their teams are doing that. So it kind of begets some positivity in terms of sharpening feedback and making sure that that they're doing it. I think that's an important upside. That's a good sales point. If you're pushing a rope uphill on trying to convince someone to do it, the thing I noticed, a question we didn't quite answer in the threads that I think is important is, "how do you make sure that you get good quality feedback?" We talked a little bit about that. I think the other thing I'd add to that though is to prep them ahead of time. Senior leaders, board members, it's an open book test. Don't surprise them with the question; give them the questions ahead of time. Again, they should be based on what's going on in the business. Make sure that they have time to prepare as opposed to, I mean when an employee of mine asks me for feedback, I rarely give a good answer on the fly. But if, if they say, "next week in our one-on-one, I'd like to get some feedback on how that went," I will be prepared and I will do better. And it goes both ways. So I think it's important. Preparation is key.

Kim Bohr:

Thank you everybody, our panelists, for your candor and your honesty and everything you've shared with us, it's been tremendous. Thank you everybody who's attended. And certainly if there're questions we weren't able to get to, please send them along. We'll be happy to have our panelists weigh in. And we hope that the rest of this 2020 year goes well for everybody here. Thank you so much. Thanks everyone. Stay safe.