Evaluating Your Executive Director

G O V E R N A N C E

A Guide for Boards of Nonprofit Community Development Organizations

Launched in 1982 by Jim and Patty Ro u s e ,

The Enterprise Foundation is a national,

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Table of Contents

Introduction 2

The Evaluation Process 3

Who Should Conduct the Evaluation? 7

Gathering Information for the Annual Review 8

Preparing and Presenting the Evaluation 11

Interim Evaluations 13

Appendix 14

Sample Executive DirectorJob Description 14

Sample Evaluation Form 16

Additional Sources 19

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About This Manual

Why evaluate an executive director?

The performance of a nonprofit’s executive director is critical tothe organization fulfilling its mission. Because the person in thisrole directly influences the organization’s success and financialhealth, it is incumbent on the board of directors to set standards and objectively and fairly evaluate the performance of its executivedirector against these standards. In fact, it is one of the board’s centralresponsibilities. Although it is time consuming and may be personallychallenging for some board members, establishing a strong evaluationprocess will ultimately save the board time and enhance the capacityof the organization’s staff leadership.

A strong exe c u t i ve director evaluation process is characteristicallycontinuous, forw a rd-looking and clarifying. Although it identifiesa n d c r i t i c i zes poor performance, an effective process will pro m o t et h e b o a rd’s overall approach to fulfilling its mission by ensuringe f f e c t i ve leadership.

The evaluation process establishes the board’s expectations of theexecutive director, directs organizational resources in support ofhis or her professional development, and enhances communicationbetween the board and its staff leadership.

Evaluating Your Executive Directoris designed for board membersof all nonprofit community development organizations that havestaff. This manual includes information on:

■ Characteristics of the evaluation process

■ Developing performance standards

■ Who should conduct the evaluation

■ Collecting and summarizing the information

■ Presenting the evaluation

This manual is one of the books within the Governance series ofThe Enterprise Foundation’s Community Development Library™.The series provides detailed information on:

■ Board roles and responsibilities

■ Board leadership skills

■ Building and managing a better board

■ Evaluating the organization

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Editor’s note: Throughout this manual, we use theterm “executive director,” or ED, because it is themost common title given the chief executive officerof community development organizations, althoughthe title of CEO or president is sometimes used.We also refer to the head of the board as president,although this term can also vary.

Supervising and evaluating the executive direc-tor is among the most important responsibilitiesfaced by the boards of nonprofit communitydevelopment organizations. Unfortunately, thisevaluation is seldom undertaken eagerly. It isnot uncommon for board members to feeluncomfortable in a role that may involve criti-cism of an individual on whom the organizationrelies. Effective, objective evaluation is easilydeferred by the press of immediate business.

However, failure to properly evaluate an execu-tive director comes at substantial cost to anorganization. A strong evaluation process canstrengthen the individual filling that critical roleand thereby strengthen the organization. Toquote Kenneth Dayton, former chairman andCEO of the Dayton Hudson Corporation anda member of many nonprofit boards:

It has been my observation over the yearsthat most CEOs spend an inordinateamount of time worrying about whetherthey are doing a good job or not, andwhether they are satisfying their board. Ifthey knew where they stand, they wouldwaste a lot less energy in worrying andcould therefore exert a lot more energy indoing an even better job.

Properly planned and executed, the process ofevaluating an executive director is an integralpart of the organization’s planning. It draws onthe goals and objectives of the strategic planand directs the organization’s resources in thestrengthening of its primary staff leader.

A strong process consists of several steps:

■ Establishing performance standards — draw-ing on the goals and objectives established inthe organization’s strategic plan and on theED’s own assessment of the critical tasks ofthe position

■ Gathering performance information fromcritical stakeholders in the organization,including board members and senior staffas well as critical external partners, such asmajor donors

■ Tabulating and summarizing that informationinto an overall evaluation

■ Discussing that evaluation with the executivedirector, identifying actions toward enhancingperformance and establishing a new set ofperformance standards for the coming year

A board and the ED may find it useful to con-duct several less formal interim reviews through-out the year. These reviews could includeintermittent observations, performance reportsby the ED to the board, and regular discussionsbetween the board president or executive com-mittee and the ED about performance.

Introduction

Before you begin your evaluation process, it willbe helpful if the board and organization haveaccomplished several things. These include:

Establishing clear and appropriate bylaws —Nearly eve ry nonprofit organization has by l a w s .They can facilitate the supervision and eva l u a-tion of the exe c u t i ve director by providing guid-ance on the relationship between the ED and theb o a rd. Is the ED a member of the board? Do e sthe ED have sole authority over the rest of thestaff? Is there a standing committee or an indi-vidual with specific responsibility for communi-cation with and evaluation of the ED? T h e s equestions can be answe red with a good and cur-rent set of by l a w s .

Establishing a strategic plan — The planshould re v i ew the organization’s internals t rengths and weaknesses, evaluate the oppor-tunities and threats apparent in the enviro n-ment in which it works, and establish generalgoals and specific objectives for the organiza-tion over several years. The objectives of theplan should include a timetable for theiraccomplishment and a delegation of re s p o n s i-bility within the organization.

Developing an annual plan — This involves areview and update of the strategic plan, with thespecification of objectives for a single year.

Creating business plans — This is particularlyimportant if an organization is engaged in morethan a single business line (such as housingdevelopment and housing management). Thebusiness plan examines the competitive environ-ment in which that particular enterprise mustoperate. It evaluates the strengths and weak-nesses of the organization as they relate to theparticular business. It generally includes bothcapital and operating budgets for the particularbusiness line. Like the strategic plan, it coversseveral years of the development of the business.

Writing a job description for the exe c u t i ved i rector — The job description establishes thegeneral areas of duty and responsibility for theperson holding that position. It may also a d d re s sthe relationship of the ED and b o a rd, includingp rescribing re q u i red communications and re p o rt s .See the sample job description in the Ap p e n d i x .

CHARACTERISTICS OF THE PROCESS

With as many of these in place as possible, anda consciousness on the part of the board of whatthey say, the creation of an evaluation processfor the executive director can begin. A strongprocess for evaluating the executive director hasthree important characteristics. It must be:

■ Ongoing

■ Forward-looking

■ Clarifying

An ongoing evaluation process is not an annualspasm of activity by the board or a few of itsmembers. Rather, it is a continuous processthroughout the year. It begins with establishingperformance objectives and continues with reg-ular reviews of the ED’s progress toward thoseobjectives. The process culminates in a formalperformance review at year’s end, which also setsthe stage for establishing a new set of perfor-mance objectives. These objectives should drawfrom, and be consistent with, the organization’sother planning activities, including the strategicplan and, if it exists as a separate document, theannual plan.

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The Evaluation Process

An ongoing evaluation process is not an annualspasm of activity by the board or a few of itsmembers. Rather, it is a continuous processthroughout the year.

The evaluation process must also be forward-looking, guiding the ED in performing on thejob. It should also help in planning how theorganization’s resources are invested to enhancethe ED’s professional capacity. While it looksback to determine the ED’s strengths andweaknesses, it does so primarily to determinethe proper approach to enhance future per-formance. In short, it is part of a continuousimprovement process for the individual and the organization.

Finally, the process should clarify communi-cation between the board and the executivedirector. It should assist the latter in under-standing the board’s expectations and helpthe former appreciate the challenges faced bythe ED and that person’s skills and talents inaddressing them.

DEVELOPING A PROCESS

Your evaluation process should enhance the like-lihood that the three characteristics — ongoing,forward-looking, clarifying — are present. Startby identifying who among the board of direc-tors should be involved.

The short answer is that the entire board islikely to be invo l ved in some part of thep rocess. Howe ve r, there are certain aspectsthat may be accomplished best by a committee

of the board (exe c u t i ve com-mittee, personnel committeeor an ad hoc c o m m i t t e eestablished for this par-ticular purpose) or by anindividual member (usuallythe board’s pre s i d e n t ) .

There are several major steps in the process:

Developing performance standards — Usingthe other planning efforts of the organizationto help, determine what the executive directorshould have accomplished, and what is impor-tant in his or her performance. Standards areusually generated by a committee and approvedby the full board. This step is completed at thebeginning of the review year.

Determining who should conduct theevaluation — The full board should assignthis responsibility, usually to a committee ofthe board. The committee (probably thesame one that developed the performancestandards) should include both the boardchair and treasurer.

Gathering information for the annual review — The committee should determinewho among board members, staff and outsidepartners of the organization should be asked tocomplete individual evaluations (assessments)of the executive director. In general, all boardmembers should complete assessments. The restof the list should be carefully thought throughby the committee and reviewed with the ED.The executive director should be required towrite a self-evaluation. Creating the form forthe written appraisals and self-evaluation is animportant committee task.

Tabulating and reviewing responses —The committee then has the responsibility oftabulating the individual appraisals, togetherwith the executive director’s self-evaluation, andsummarizing them as a coherent evaluation ofthe ED’s performance.

Presenting the evaluation — The evaluation(including the committee’s compensation rec-ommendation) is then presented to the execu-tive director, usually in the form of a meetingwith the board chair. The ED may respond tocertain points in the evaluation and should beafforded the opportunity to draft written com-ments for attachment to the final evaluationreport. This meeting should generate the outlineof a plan for investment in the ED’s furtherprofessional development. Finally, the ED andboard chair may discuss the development ofperformance standards for the new year.

Approving the evaluation by the full board— A well-developed and executed processshould require no amendment at this stage.

With the annual evaluation complete, thecommittee may turn its attention fully to thedrafting of an appropriate set of performancestandards for the executive director for the coming year.

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The executive directorshould be required towrite a self-evaluation.

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DEVELOPING PERFORMANCE STANDARDS

The board’s first task is to develop a set of per-formance standards for evaluating the executivedirector. We mentioned earlier the sorts of plan-ning and documentation that can be helpful inthis regard: bylaws, a strategic plan, an annualplan, business plans and a job description forthe executive director. To the extent each ofthese exist, they contain information that can beused to establish standards by which to measurethe ED’s job performance. It is essential that theperformance standards be consistent with otherorganizational planning; otherwise, the ED willbe confused as to what the board really expectshim or her to accomplish.

The annual plan and business plans may bethe most useful in developing performancestandards for the ED because many of theperformance standards to which the executivedirector will be held will mirror specific strategicor business plan objectives. In them, the boardwill have identified the organization’s goals andobjectives, established timelines for accomplish-ing them and delegated responsibility. As theleader of the entire staff, the executive directoris likely to bear much of the responsibility foraccomplishing these goals and objectives.

Strategic and business plans may not addresseverything an executive director needs to do,as they are likely to focus on the organization’sproduction and resource development. Often,support functions, such as employee supervisionand office management, will not be addressedsubstantially unless the plans contemplate majorchanges in how such functions are approached.

For this reason, it’s important to take stock ofeach of the ED’s areas of general responsibility.These should be outlined in a job description.They may vary from organization to organiza-tion, but the following list includes those areasmost common and important to nonprofitcommunity developers:

■ Providing leadership and assistance to theboard in developing and reviewing the organi-zation’s mission and strategy

■ Managing and directing the organization’soperations, business lines and other activities

■ Implementing board policy and directives

■ Reporting the organization’s activities to the board

■ Ensuring the organization’s financial resourcesare properly managed and reporting the orga-nization’s financial position to the board

■ Hiring, supervising and evaluating staff

■ Developing and implementing plans for staffdevelopment, retention and compensation

■ Communicating the goals, purposes and pro-grams of the organization to partner organiza-tions, the news media and other audiences

■ Assisting the board in developing and implementing a fund-raising and resource-development plan

DECIDING WHAT TO MEASURE

In considering each of these areas of responsi-bility, it is important to answer the question:What do we want to measure?Just as it is impor-tant to establish clear and measurable objectivesin your strategic and business plans, the perfor-mance standards to which you hold your execu-tive director must also lend themselves toobjective review.

Suppose your organization has determined it isimportant to improve its visibility with severalcritical audiences. Rather than saying that theexecutive director is responsible for improvingthe organization’s public communications, youmight establish the following as a performancegoal:

E x a m p l e

The executive director will increase the frequencyof written and in-person communications initi-ated by the agency with local government policy-makers, including quarterly reports to thedirector of Community Development and thechair of the City Council’s DevelopmentCommittee on the agency’s accomplishments andn e e d s .

This is a goal with specificity. The ED’s perfor-mance can be objectively measured against itand it also helps guide the director in achievingthe board’s directive. Another goal in this areacould be:

E x a m p l e

The executive director will develop a plan forapproval by the board, by the end of the firstquarter, with budget and timetable, for increas-ing the positive exposure of the organization innews media that reaches our target market ofc o n s u m e r s .

This goal does not say what the media outletsshould be, nor does it establish how many newsstories will be generated. That is the purpose ofthe media plan. The critical measurement isthat a plan be created by a certain date with acertain purpose. In evaluating the ED, we needto know: Was the plan created?

A committee of board members is probably bestsuited to developing these performance stan-dards. It would translate the strategic and busi-ness plans, the ED’s job description and otherspecific directives into a specific set of objectivesfor the ED. The full board, however, should beasked for its approval of the committee’s draft.

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Usually, a committee performs much of theexecutive director’s evaluation. With most non-profits, this is either the executive committeeor personnel committee; sometimes an ad hoccommittee is formed for this specific function.

For most community development organiza-tions, the executive committee is the best groupto handle this responsibility for several reasons.First, that committee already includes two ofthe key board members who will be involved inthe evaluation: the president and the treasurer.The board president is the individual mostresponsible for ongoing communication withthe ED, so these two individuals should alreadybe working together closely. The treasurer iscritical because of this person’s familiarity withthe organization’s financial condition andfinancial management system, which arealways among the central responsibilities ofthe executive director.

A second reason for the exe c u t i ve committee toh a ve this responsibility is that in most commu-nity development nonprofits there are (or shouldbe) regular meetings with the exe c u t i ve dire c t o rb e t ween full board meetings. Not only is thisadvisable for general operations, it also support sthe ongoing re v i ew of the ED’s perf o r m a n c eb e f o re the more formal annual re v i ew.

Finally, many nonprofits, especially youngerones, have a relatively simple operations struc-ture and seldom have established committees.If the staff is small, a personnel committeeprobably does not yet exist and forming onejust to evaluate the ED may not be the bestuse of the board’s resources.

Howe ve r, if an organization has a stro n gpersonnel committee in place, that is pro b a b l ythe appropriate group to manage the eva l u a-t i o n p rocess, especially if the committee isi n vo l ved in developing the re v i ew pro c e d u re sfor other staff. Make sure that your pre s i d e n tand tre a s u rer are invo l ved in establishingp e rformance standards as well as interimre v i ews and annual re v i ew s .

Forming an ad hocevaluation committee shouldonly be considered if the executive committee issubstantially overburdened and a strong person-nel committee does not exist. Such a committeeis appropriate if the board thinks it is critical toinvolve members who are not already membersof those committees.

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Who Should Conduct the Evaluation?

The performance of your executive directorshould be reviewed annually by measuring per-formance against the standards established at thebeginning of the year. By setting a date anddelineating what will be measured and how,both the board and the executive director will beclear on the goals, the objectives and the time-lines. And probably even more important, eitherparty can raise issues during the year if meetingthe goals appears to be in danger.

A review must be objective, not subjective. Itmust be fair to the executive director and to theboard and the organization. So, to conduct anequitable annual review, the organization mustdetermine how, and from whom, it will collectinformation about the ED’s performance. Thereare several possibilities, such as:

■ Evaluations and reviews by people within theorganization and others outside of the non-profit who have knowledge of its work

■ Evaluations and reviews by outside agencies

■ The organization’s own treasurer’s reportsand its annual independent audit

■ Surveys by individuals with knowledge ofthe ED’s performance

■ A self-assessment by the executive director

To ensure objectivity, use a written form andgive people time to answer it thoughtfully.Written reports, rather than oral, ensure thateach person is asked to review the ED in thesame manner, according to the same criteria. Italso improves the process of reviewing andsynthesizing the appraisals.

A word of caution: An evaluation form must bewell thought out and well written before it cancapture accurate and valid information.

Every board member should be asked to writean appraisal. The committee may also seekappraisals from key people outside of the orga-nization, such as donor representatives, partnersin joint efforts or public officials with whom theagency has a close relationship.

ORGANIZING THE APPRAISAL

The appraisal process must be properly man-aged. First, the executive director, who hassubstantial responsibility for managing theorganization’s relationships, should be told whois being asked to participate. The ED shouldalso read and comment on the appraisal formbefore it is disseminated.

Recognizing that some people may be uncom-fortable participating in such a review, it maybe appropriate for committee members to firstask potential informants if they wish to partici-pate. Unlike board members, they have noinherent responsibility.

The committee may also want to gather infor-mation from senior staff. (Nonboard volunteerswho have a critical role in the agency’s work aretreated as staff for purposes of this discussion.)This is a very sensitive area, given the division ofresponsibilities between the board and the exec-utive director. Again, the ED must be informedas to which staff are participating and how, asthe ED probably has the sole responsibility formanaging the organization’s staff.

However, given the importance of the evalua-tion process to the organization and the levelof insight senior staff may be able to provide,it is often beneficial for the board to ask fortheir participation. Everyone must appreciatethe sensitivity of it, however.

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Gathering Information for the Annual Review

An evaluation form must be well thought outand well written before it can capture accurateand valid information.

THE FORM: THE DEVIL IS IN THE DETAILS

The evaluation should be carefully scripted,ensuring questions do not lead appraisers to aspecific answer. Questions should relate directlyto the performance standards established by theboard at the beginning of the year. The objec-tives should be measurable, and the questionsshould clearly identify what is being measured.

Because respondents may not be aware of thedetails of each area of the ED’s responsibilities,it is important to ask questions that point tospecific expectations in each area. This maymean, for example, that several questionsaddress specific responsibilities under a generalcategory, such as financial management.

Both what and how may be important ques-tions. In one example of a performance standardpresented earlier, the executive director wasexpected to increase contacts with public offi-cials. This is a what question. The how questioninvolves the quality of those contacts, whichmay be just as important as the quantity: Werethe public officials motivated by those contactsto help the organization accomplish its mission?Asking objective questions to quantify the qual-ity will take some deliberation and thought.

Does this sound like each question should bean essay question? Although this would proba-bly be best, it is seldom feasible. In light of thetime it would take to write and review essayresponses, you can use a rating system of:

■ Exceeds requirements

■ Achieves requirements

■ Needs to improve

■ Fails to meet requirements

■ Not sure

■ Comment

This approach to evaluation is beneficialbecause it is quick to complete and to tabulate.Because this is true, always — always — ask forcomments to draw out important information.For example, a partner in a particular housingproject might provide insight into the ED’sability to manage the real estate developmentstaff. It will also help draw out the how.

Helpful Tip: You do not have to re-invent thewheel — ask other nonprofit organizations howthey review their executive directors’ perfor-mance and ask for copies of their review forms.Incorporate approaches and questions that areappropriate to your organization and discard therest. Remember, your nonprofit has a specificmission, purpose and set of goals that your exec-utive director is challenged to meet. Yourappraisal should measure your ED’s achieve-ment, personal growth and potential.

TABULATING AND REVIEWINGE V A L U A T I O N RESPONSES

The results of the appraisals may be incomplete.Some respondents may not feel competent torate the executive director in every area. (Byinviting a “not sure” response, respondents willbe comfortable in responding only in areas inwhich they have a degree of competence.)Others may not return their forms. Nonetheless,it is the committee’s responsibility to tabulate allof the results before it applies its own judgment.

The National Center for Nonprofit Boards sug-gests a point system ranging from one point for“very dissatisfied” to four points for “very satis-fied.” Results for each area can then be tabulatedby adding the number of points and dividingthe total by the number of respondents (exclud-ing “not sure” responses). It also suggests re-cording key words and themes that appear inopen-ended responses to requests for comments.(Jane Pierson and Joshua Mintz, Assessmentof the Chief Executive,National Center forNonprofit Boards, Washington, D.C., 1996.)

The ED’s self-assessment should be reviewed aswell. This may be somewhat shorter than therespondents’ survey, which asked very detailedquestions, assuming not all the respondentswould be familiar with the ED’s particularresponsibilities in each area. The ED can beexpected to be very familiar with these andcapable of summarizing overall performance ineach general area of responsibility.

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The self-assessment should include open-endedquestions that gauge the executive director’spersonal understanding of the position’s primaryobjectives and responsibilities and his or hersense of important accomplishments and great-est difficulties. To invest in strengthening theED as well as to prepare a set of performancestandards for the coming year, ask where theED thinks he or she needs help and how theboard can help.

WHAT TO WATCH FOR

In reviewing the gathered information, takenote of:

■ Areas of greatest competence and weakness asreported by the survey respondents. Are theseborne out by other evidence, such as programreviews and assessments?

■ Specific themes that recur in responses toopen-ended questions. Are there certain adjec-tives frequently used to describe the ED?

■ Major differences between the ED’s self-assessment and those of the other reviewers.Do they point to a different understandingof the ED’s responsibilities? Which amongthe reviewers differ most from the ED’s self-assessment?

WHAT TO GUARD AGAINST

At this point, the committee must summarizethis information into an overall evaluation. Intheir essay “Performance Appraisal of the StaffChief Executive,” Conrad and Rubin note sevencommon errors in assessing the executive direc-tor’s performance. (William R. Conrad andHank Rubin, Performance Appraisal of the StaffChief Executive,Voluntary Management Press,Inc., Downers Grove, Ill., 1983.) These include:

■ Halo effect — preoccupation with oneoutstanding quality

■ Tendency to rate personality traits above performance

■ Subjectivity — substituting personal likes and dislikes for an objective appraisal of performance

■ Leniency tendency — reluctance to rate unfavorably

■ Severity tendency — inclination to rate as unfavorably as possible

■ General tendency — avoiding judgment by picking middle ground, rating on the average

■ Dramatic incident effect — judging on the basis of a single incident, avoiding total performance

If the evaluation process has been developedproperly, you can avoid these problems. Butbeing able to focus on how well the organiza-tion’s goals and objectives have been metrequires planning, a written job descriptionand established performance standards for theED. Plus, the executive director must be fullyaware of these expectations.

Your appraisal form should also determine ifyour executive director is using his or her skillswell enough to meet the organization’s goalsand objectives. If you appreciate certainstrengths (or the ED self-identifies them), butthey are not in evidence to many of those withwhom they work, there may be a problem.

Finally, be very careful in assessing personality.To the extent that it interferes with or enhancesperformance, it is a legitimate concern. Be care-ful, however, that the committee members’ ownlike or dislike of the ED as an individual doesnot get in the way of an objective assessment of how well this person does the job.

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After gathering and analyzing the appraisals,the committee must draft its own evaluationin writing. This document should outline theoverall performance of the executive director,as well as note specific areas of strengthsand weaknesses set against the establishedperformance standards.

Avoid general descriptions to describe areasof strength or weakness, using such terms as“initiative” or “creativity.” This tends to dragthe evaluation into subjective judgments, awayfrom the goals and objectives the board set forthe executive director. If, however, the boardand ED agree there is an area of general skill orstyle they would like to strengthen, it can beaddressed in the plan for professional develop-ment (see Investing in the Future below).

Until this evaluation has been reviewed withthe executive director, it should be seen as adraft and only part of the final document. Atthis stage, the document can be shared withthe full board, but generally it’s best to movedirectly to the conference with the ED.

PRESENTING THE EVALUATION

With the written evaluation in hand, it’s timeto present it to the executive director. Althoughthe conference can involve the broader commit-tee, a one-to-one meeting is often best. In thebest of situations, this is but one of many meet-ings between the ED and the head of the board.After all, there should be a strong relationshipbetween the two.

The meeting should be scheduled well inadvance to the benefit of the ED and the evaluation committee.

At the meeting, the ED should feel free tocomment on the evaluation. Important pointsand considerations aired during this sessionmay be included in the final document.

The executive director may disagree with someaspects of the evaluation. The ED’s disagree-ments should be included in the final evaluationdocument, if he or she wishes. Nevertheless, it isthe board that has the final word. The boardchair may emphasize that the evaluation is thecollective judgment of a broad range of peoplefamiliar with the ED’s performance (which wasagreed to by the ED in advance).

The evaluation should not be changed, unlessthe board’s representative believes a serious pro-cedural error has been made, such as evaluatingthe ED on a performance standard which wasnever communicated to the ED. In that case,the board chair may agree to take the matterback to the committee, which might then agreeto exclude that standard from the overall evalua-tion. If the committee took the earlier step ofsharing the evaluation instrument with the EDin advance, however, such a problem shouldhave been identified and addressed prior to theissuance of the document.

INVESTING IN THE FUTURE

In keeping with the forward-looking natureof the evaluation process, one of the moreimportant outcomes of this meeting is thedevelopment of a plan that outlines the execu-tive director’s continuing professional develop-ment. This plan should address those areasin which the ED needs to improve as well ashow to rectify them, such as receiving training,mentoring or technical assistance. Any weak-nesses or strengths that have little or no impacton the organization’s ability to fulfill its missiondo not need to be addressed here.

Preparing and Presenting the Evaluation

One of the more important outcomes of theevaluation meeting is the development of a plan that outlines the executive director’scontinuing professional development.

The president and ED must also agree onhow the plan will be financed and on thetime commitment from both the ED and theboard. The two should also establish responsi-bilities (including who will draft the plan)and timelines.

Because this plan addresses an important ele-ment of the organization’s future, it should beintegrated with the evaluation into the organi-zation’s overall plan.

This meeting is also the appropriate time todiscuss the executive director’s compensationpackage. This discussion should be based on theorganization’s compensation policy, if there isone. If there is not one, use the organization’sown history as well as the practices of othernonprofits for guidance. Of course, the boardpresident should have discussed this issue withthe board in advance of the evaluation confer-ence with the ED.

After the conference, the evaluation, includingcomments by the executive director, the plan tosupport the ED’s professional development andthe compensation recommendation should bepresented as a package to the board for itsapproval. This document then becomes an offi-cial record of the organization and a part of theED’s personnel file.

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Organizations that successfully accomplish anevaluation process — drawing performanceobjectives from the organization’s strategic goalsand objectives, evaluating the executive directoragainst those objectives and making recommen-dations for the ED’s further development —have accomplished a great deal. These organiza-tions will likely benefit from enhanced perfor-mance by their staff leaders. Nonetheless, theprocess can be further strengthened through asystem of interim reviews.

Two processes can be used to accomplish this:intermittent observation and periodic reviews.

INTERMITTENT OBSERVATION

Intermittent observation requires board mem-bers, and particularly members of the evaluationcommittee, to adopt as their responsibility aconsciousness toward how the ED is performingagainst the performance standards. They mustmake a point of observing the organization andits ED in action.

For example, a board member might participatein the organization’s home-buyer trainingcourse, paying attention to how it accomplishesthe organization’s objectives in that area.Another board member might attend a staffmeeting, especially if there is an item on theagenda to which that member could contribute.

The treasurer, of course, will have firsthandinformation. This officer has the continualresponsibility of working closely with the EDand the organization’s financial managementstaff to prepare budget recommendations andfinancial reports, review financial managementsystems and prepare for and review the annual audit.

PERIODIC REVIEWS

These observations can be supplemented byperiodic reviews (perhaps once a quarter)with the executive director to determineprogress toward the objectives identified inthe performance standards document. If theED evaluation is performed by the executivecommittee, this may become a routine part ofthe meeting every three or four months, andmembers of the committee should take theopportunity to bring forward their own obser-vations concerning the ED’s progress againstthe performance standards.

Having these regular, less formal reviews willhelp the board and ED stay in touch with eachother. They will also continue to communicatethe board’s overall expectations for their staffleader. In addition, it will help to overcome thetendencies to lose track of the ED’s overall per-formance in light of a dramatic incident, eitherpositive or negative.

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Interim Evaluations

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AppendixSAMPLE EXECUTIVE DIRECTOR JOB DESCRIPTION

The following is a sample job description for the executive director of a medium-sized communitydevelopment organization with a diversified program. It contains many of the elements critical toexecutive performance in such organizations, but should not be viewed as entirely adequate or appropriate for any particular organization. It should be used, rather, as a guide for developing a job description appropriate to the mission and goals of your particular organization.

GENERAL DUTIES AND RESPONSIBILITIES

The executive director will work with the board of directors to meet the following pri-mary goals:

■ Develop and maintain the organizational capacity to implement a diverse housingdevelopment program.

■ Enhance the management of the organization’s existing multifamily rental housingportfolio.

■ Diversify the funding base to ensure the organization’s continuing ability to providequality affordable housing.

■ Develop and sustain the staff and volunteer resources essential to the pursuit of theorganization’s mission and program.

■ Increase understanding of, and support for, the organization’s mission and programamong community residents, public- and private-sector leaders, potential donors andpotential customers.

SPECIFIC RESPONSIBILITIES

The executive director will develop and maintain organizational systems essential to sus-taining a vigorous housing development program, including:

■ Financial management systems

■ Personnel management systems

■ Program management systems

The executive director will assist the board of directors in the development of strategicplans, annual plans and fund-raising plans.

The executive director will have primary responsibility for the development, for approvalby the board of directors, of business plans for each of the organization’s main lines ofbusiness, including single-family development for home ow n e r s h i p, multifamily re n t a ld e velopment and rental pro p e rty management.

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The executive director shall be responsible for the development, for approval by theboard of directors, of a plan for communications with the organization’s primary con-stituencies, stakeholders and audiences.

The executive director shall coordinate the implementation of each of the aforesaidplans and shall be responsible for the implementation of these plans insofar as theyrequire the direction of staff resources.

The executive director shall be responsible for the direct supervision of all senior staffand through them the overall supervision of the organization’s staff and volunteers.

The executive director shall prepare, for approval by the board of directors, an annualbudget, and shall ensure that an annual financial and program audit, in compliancewith Office of Management and Budget Circular A-133, is performed.

The executive director shall prepare, with the treasurer’s review and approval, a reporton the organization’s financial condition for each meeting of the board of directors.

The executive director shall provide a general report on the operations of the organiza-tion at each meeting of the board of directors.

The exe c u t i ve director shall ensure operational compliance of the organization with allfederal, state and local laws and regulations governing its activities as an organizationengaged in real estate development and management.

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Instructions to the respondent: The response form is grouped into sections corre-sponding with major responsibilities of the executive director. Each section includesseveral statements relating to particular performance objectives for the executive direc-tor in that area. For each of the statements, please respond as follows:

1 = Exceeds major requirements of this area of responsibility

2 = Achieves major requirements of this area of responsibility

3 = Needs to improve in this area of responsibility

4 = Fails to meet major requirements of this area of responsibility

N = Not sure; I lack firsthand knowledge in this area

Each section also contains an area for comments regarding strengths the executivedirector exhibits and opportunities for improvement in his or her performance in that particular area of responsibility. We encourage your responses.

Note: “Not sure” is a useful category if the evaluation respondent group includes individualswho are donors or otherwise key partners outside the organization. If more than 25 percentof board members provide this response, it may indicate an important communication prob-lem between the executive director and the board.

SAMPLE EVALUATION FORM

He re is an example of an evaluation form for use with the exe c u t i ve director of a nonprofit com-m u n i t yd e velopment organization. While we provide a sampling of questions in various likely a reas of re s p o n s i b i l i t y, an actual form could include questions more specifically addressing particular aspects of the performance standards established for the executive director at the beginning of the year being reviewed.

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SECTION 1: STRATEGY & PLANNING

■ The executive director has worked with the board to develop a clear vision for theorganization and understands his or her own leadership role.

■ The exe c u t i ve director has organized the development of a written strategic plan,including measurable goals and objectives, consistent with the organization’s mission.

■ The executive director organized the strategic planning process as a collaborativeeffort involving volunteers, staff, community leaders and potential donors.

■ Up-to-date business plans exist for each of the organization’s main business lines.

What are the major strengths of the executive director in this area?

What can the executive director do better in this area?

SECTION 2: PROGRAM MANAGEMENT

■ The executive director demonstrates substantive knowledge regarding the organiza-tion’s programs and services.

■ Programs and business lines are operating in accordance with their respective busi-ness plans.

■ The executive director recommends new programs and business lines and the modi-fication or discontinuance of current programs and business lines, as appropriate.

What are the major strengths of the executive director in this area?

What can the executive director do better in this area?

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SECTION 3: PERSONNEL MANAGEMENT

■ The executive director selects and cultivates qualified senior staff, models effectivebehaviors and skills, and builds morale among staff and volunteers.

■ The executive director delegates tasks and responsibilities effectively.

■ Clear and attainable performance standards are established for staff members.

■ Annual performance reviews are conducted with staff members.

■ A professional development plan in support of staff is in place, and appropriate training is provided to encourage competency and develop new skills.

What are the major strengths of the executive director in this area?

What can the executive director do better in this area?

Some of these questions are reproduced from Board Assessment of the Chief Executive: A ResponsibilityEssential to Good Governance,a publication of the National Center for Nonprofit Boards, copyright1990. Others are reproduced from Evaluating Executive Directors, A Process Guide for NonprofitBoards,a publication of the Neighborhood Reinvestment Corporation, copyright 1993. For moreinformation on either NCNB or Neighborhood Reinvestment, see Additional Sources on the nextpage of this Appendix.

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ADDITIONAL SOURCES

Michaels, Mark D. “ Performance Evaluation.”The Nonprofit Management Handbook:Operating Policies and Procedures.Edited byTracy Daniel Connors. New York: John Wiley& Sons, Inc., 1993.

National Center for Nonprofit Boards. BoardAssessment of the Chief Executive: A ResponsibilityEssential to Good Governance.Washington,D.C.: 1990.For more information, contact:NCNB2000 L Street NW, Suite 510Washington, D.C. 20036phone: 202.452.6262email: ncnb@ncnb.org

Neighborhood Reinvestment Corporation.Evaluating Executive Directors, A Process Guidefor Nonprofit Boards.Washington, D.C.: 1993.For more information, contact: Neighborhood Reinvestment 1325 G Street, NW, #800Washington, D.C. 20005phone: 202.376.2400Web: www.nw.org

Smith, Bucklin & Associates. The CompleteGuide to Nonprofit Management.Edited byRobert H. Wilbur. New York: John Wiley &Sons, Inc., 1994.

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Notes

THE ENTERPRISE FOUNDATIONThe Foundation’s mission is to see that all low-income people in the United States have accessto fit and affordable housing and an opport u n i t yto move out of poverty and into the mainstreamof American life. To achieve that mission, westrive to:

■ Build a national community revitalizationmovement.

■ Demonstrate what is possible in low-incomecommunities.

■ Communicate and advocate for what works incommunity development.

As the nation’s leader in community d e ve l o p m e n t ,Enterprise cultivates, collects and disseminatesexpertise and re s o u rces to help communitiesa c ross America successfully improve the qualityof life for low-income people.

A C K N O W L E D G M E N T SAuthor: Matt Perrenod, consultantContributors: Bill Batko, Carter Cosgrove +Company, Ben Hecht, Catherine Hyde, Jane Usero, Joan Woods

SPECIAL THANKSResearch and development of this manual wasmade possible by the National CommunityDevelopment Initiative, which is a consortiumof 15 major national corporations and founda-tions and the U.S. De p a rtment of Housing andUrban De velopment, and score s of public andprivate organizations. NCDI was created tosupport and sustain the efforts of communitydevelopment organizations.

FOR MORE INFORMATIONThe Enterprise Foundation10227 Wincopin Circle, Suite 500Columbia, Maryland 21044-3400

tel: 410.964.1230fax: 410.964.1918email: mail@enterprisefoundation.org

For more information about The EnterpriseFoundation or the Community DevelopmentL i b r a r y™, visit us at w w w . e n t e r p r i s e f o u n d a t i o n . o r g .To review our online community magazine, checkout w w w . h o r i z o n m a g . c o m .