The board evaluation process aims to identify and improve the current state of a board’s performance. However, something that many boards fail to realise is that making informed judgments requires the benchmarking of results of comparable organisations.
Failing to do this almost guarantees misinformed judgments and inappropriate conclusions. Without this, you create an echo chamber for your internal board performance and effectiveness. Relevant benchmarking is the key to success; you can read on to understand why.
The outcome of board survey items without benchmarking
There are challenges when interpreting survey item responses without benchmarking, and to prove this, we tested this by putting the same responses to every survey item in our database.
This was done using our seven-point scale in which:
1 = strongly disagree
2 = disagree
3 = slightly disagree
4 = neither agree or disagree
5 = slightly agree
6 = agree
7 = strongly agree
With an eight-person board, we assumed the following responses:
One x 7 = strongly agree
Four x 6 = agree
Three x 5 = slightly agree
The following examples are of the survey items with the same survey response.
The average score is the same for all six survey items at 5.75, which may at first glance appear to be high leading to the following questions:
- Is the board effective overall?
- Is the board effective in all these areas?
- Is there equal effectiveness in all these areas?
- Which areas is the board most effective in?
- Which areas is the board least effective in?
As every response to the relevant survey items is the same, you may assume the board is equally effective in all of the above areas. But can you be confident in your conclusion that the board is very effective in all these areas?
The difference with benchmarking
Now, let’s consider a survey that is benchmarked against responses from boards of similar organisations. A quality survey provider should be able to show you whether your organisation sits in a top quartile, middle 50th percentile, or bottom quartile for each of the survey items.
In situations like this, it becomes easier to answer each of the above questions while identifying the relevant areas for further discussion and review. To demonstrate this, let’s look at how the survey item responses are benchmarked. In this example, the survey items and responses are all the same as above, but with survey items benchmarked against the responses of other boards.
Why benchmarking is the new gold standard
Simple and clear reporting that lets you know whether your board sits in the top quartile, bottom quartile, or middle 50 percentile when stacked against comparable responses is easy to achieve. It also makes a big difference to the usefulness and benefits of your survey exercise.
The outcome is a quick and easy identification of the hot spots that require further investigation. If the relevant survey items are grouped using psychometric and statistical analysis, you can easily identify the most appropriate dimensions that measure a board’s overall effectiveness.
This is why our benchmarked Board Effectiveness Report, which offers survey results benchmarked against a larger database, sees amazing results. If your organisation is a not-for-profit, you want to be compared with other not-for-profits. The same can be said for financial services organisations and every other sector that needs to understand their performance when stacked next to peers or competitors. Our extensive benchmarking incorporates boards from organisations in every industry and sub-sector, which is why Board Surveys offer the gold standard of board evaluation.
A real-world case study
A stock exchange-listed company ran an internal survey and found its board was performing well with no areas of concern – great news!
However, they did this without any benchmarking. So, the board decided to complete one of our surveys, which had the benchmarking feature, only to discover that the results were much worse than their internal survey indicated. For our experts, this was not a surprise.
When benchmarked against other listed companies, the board was in the top quartile on only one of the 20 factors listed as critical for high performance and effectiveness. In addition, they found themselves in the bottom quartile in seven factors. While this sounds like bad news, it is not. It is actually an opportunity for improvement, enabled by a detailed blueprint of the specific areas in which the board needs to improve.
After this exercise, one of the directors stated, “The benchmarking of our results has provided new insights which made all the difference. My fellow directors and I agree that these identified areas need our focus to ensure improvement. The results were spot on.”