Thursday, January 14, 2010


Part of my dissertation hinges on the notion of board effectiveness, and I am struggling to define it. There is an habit of defining board effectiveness by process rather than outcomes, since the latter are hard to observe, but let's set that issue aside for a moment - nontrivial as it is - and just talk about outcomes. But the question is, are we talking about board or institutional outcomes, and how can we separate them at top management levels?

This isn't just an education problem. Imagine a widget factory. Someone who works on the assembly line can easily be evaluated. More widgets = better performance, given a few caveats (ie, not sabotaging other workers). What about the manager of the assembly line? Once again number of widgets (produced by subordinates) is surely a part of it, but other things matter, too. A slightly lower production level may be worth it if turnover among workers is lower, depending on the company's cost structure, or a lower level of injuries or grievances. Higher up, another manager is deciding whether the widgets should be made with or without dongles and whether the plant should be retrofitted for efficiency or closed altogether. This manager's output is decisions and paperwork, which are hard to directly evaluate - do we compare them to the counterfactual, which is unknowable, or to the competition, which may perform better or worse based on unpredictable and unknowable factors?

By the time you get up to the president, there is almost nothing directly measurable (except for his or her treatment of employees, such as not sexually harassing them), and so the big cheese is measured on company performance. But we know that the performance isn't all about the president. Maybe the economy tanked, for example. Presidents are about as hard to evaluate as board members, except that most of their work is a group effort, not individual, so you ... what, take the company performance and divide it by 30?

Back to higher education boards: The specific, measurable components of their job are arguably only a small portion of what they ought to be evaluated on. If they're all donating generously, but the dropout rate is increasing and the campus restrooms are disgusting, are they doing a good job?

I'm sure there is a literature on this subject, not in specific reference to non-profits, but in terms of workplace evaluation. I don't know this literature, though, and it's not being used in any of the work I've seen on boards. Any suggestions or thoughts would be welcome.

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