Most nonprofit boards lack a formal Executive Director (ED) performance management and evaluation process, or treat it as a once-a-year checklist. But when done well, ED evaluation is a powerful tool to strengthen leadership, clarify priorities, and advance organizational purpose. Like other aspects of governance, it involves balancing administrative oversight with generative, strategic thinking. When designing your organization’s approach to ED performance management and evaluation, it helps to focus on meeting three core objectives:
- Assessing progress on advancing the organization’s strategic or impact goals
- Ensuring that the organization is being managed appropriately and effectively
- Strengthening the organization’s board and executive leadership
Objective 1: Assessing progress on strategic and impact goals
The ultimate role of governance is to advance the organization’s core purpose. Boards typically delegate much of the organization’s impact work to the ED, guided by a strategic plan that the board sets or approves. That plan offers clarity, direction, and alignment, so everyone knows what the organization is focusing on in the short or medium term, and what ultimate end those goals are designed to serve.
It’s the ED’s job to implement strategic goals, using their depth of context and expertise to translate vision into action. Monitoring progress on these goals is important to the ED and their team (if they have one!), so that they will know if they’re on the right track. The board also wants to monitor progress on these goals, so they know that the work they have delegated is being carried out appropriately and effectively.
What’s challenging about it:
- Strategic goals that are too broad or vague make it challenging to find alignment on the organization’s direction.
- Many organizations skip the step of defining monitoring indicators or clear success measures for strategic goals.
- Boards may lack the operational context to interpret progress, while staff may struggle to frame day-to-day wins within a ‘big picture’ perspective.
- EDs can feel defensive if the board doesn’t appreciate how systemic or external issues may create barriers to success.
How to approach it successfully:
- Set clearly defined strategic or impact goals with specific monitoring indicators.
- Establish success metrics in advance and be willing to revisit them as needed.
- Adopt an approach that centers on an ongoing dialogue, rather than a one-time assessment.
- Shift the focus from subjective feedback to performance related to organizational impact.
- Recognize any systemic barriers that may hinder strategic progress, and address them.
Objective 2: Oversight of operations and management
This aspect of ED evaluation focuses on ensuring that the organization is being responsibly and effectively managed in areas such as financial management, governance support, stewardship of human resources and key relationships, and compliance with organizational policies. The ED plays a central role in operational effectiveness in these domains, which are essential to the health and sustainability of the organization. But since the board is ultimately accountable for these functions, monitoring the ED’s performance in these areas is essential to the board’s fiduciary duty.
What’s challenging about it:
- Many nonprofits lack a comprehensive policy framework, and boards may not be familiar with their organization’s existing policies.
- Boards often struggle to understand how to monitor and evaluate the ED in these areas, since they are not ‘on the ground’ with a direct way to observe the ED’s conduct.
- EDs may misinterpret the board’s desire for due diligence as mistrust or interference, especially if the board/staff relationship is already strained.
- The standard ‘360 review’ approach is frequently misused and often does more harm than good.
How to approach it successfully:
- Recognize that boards are already engaged in oversight through regular activities such as reviewing financial reports, speaking to the auditor in camera, and receiving ED reports.
- Ensure the ED’s role description and related policies are in place and reviewed annually, and require the ED to sign off annually on core policies like confidentiality, code of conduct, and conflict of interest.
- Implement annual organizational surveys that gather general feedback from staff, volunteers, clients, donors and partners for the benefit of the entire organization; this data can help inform the ED evaluation, without the need for a 360 review.
- Implement a whistleblower policy and internal complaints process to escalate serious concerns about ED conduct to the board as needed.
Objective 3: Strengthen leadership and the Board/ED relationship
As the ‘supervisor’ of the Executive Director, the board has a responsibility not only to manage and monitor the ED, but also to actively support them in their role to ensure their success. Boards need to ensure that the ED role is appropriately scoped and resourced, that their relationship with the ED is constructive and collaborative, and that the ED has opportunities and resources for professional growth.
What’s challenging about it:
- Evaluations are often backward-looking, missing the opportunity to proactively develop the ED’s leadership skills and competencies.
- Standard approaches to ED evaluation often feature one-way feedback, rather than facilitating dialogue between the board and ED.
- Boards rarely consider their own performance in shaping the ED’s success, but the two are tightly linked.
How to approach it successfully:
- Evaluate board performance as part of the ED evaluation process, and be open to shifting practices to better support the ED.
- Build opportunities for meaningful dialogue into the board/ED relationship on an ongoing basis.
- Support the ED in setting and achieving annual professional development goals, with adequate time and resources to pursue them.
- Develop a fair and transparent performance improvement process to address performance concerns constructively as they arise.
Key takeaways
ED performance evaluation isn’t just about accountability or fulfilling fiduciary duty, it’s about fostering a strong, collaborative partnership between the board and the Executive Director to advance the organization’s core purpose. When approached thoughtfully, it becomes a meaningful governance practice that builds trust, strengthens leadership, and advances the organization’s core purpose. By grounding your approach in these objectives, you set the stage for a more effective and aligned organization.
Nic Gagliardi is a nonprofit governance consultant with 18 years of experience helping boards and executive leaders build stronger, more effective organizations. Want to improve your ED evaluation process? Check out the ED Performance Management System designed for small nonprofits.