Featuring guest Mike Humphries, SparkEffect CEO and former Fortune 500 Executive.
Welcome to Courage to Advance, hosted by Kim Bohr and brought to you by SparkEffect, in partnership with The Empathy Edge.
Our show is launching off on its own! Come check us out for twice-monthly episodes at www.CourageToAdvancePodcast.com or subscribe to Courage to Advance on your favorite player.
Kim Bohr opens with a striking boardroom paradox: “The person who can most impact your organization’s success or failure, your CEO, is also the person most likely to receive the least comprehensive, least rigorous performance evaluation.” In this conversation with Mike Humphries, they explore why traditional board-only CEO evaluations fall dramatically short.
Mike reveals why most boards focus on KPIs that capture only 15-20% of a comprehensive CEO evaluation, missing critical competencies like adaptability and stakeholder leadership. The conversation unveils how co-creating evaluations with CEOs prevents feedback rejection, why different stakeholders experience CEOs differently, and how independent assessment creates psychological safety for honest feedback in the loneliest executive role. To access the episode transcript, please scroll down below.
To access the episode transcript, please scroll down below.
Key Takeaways:
- Most CEO evaluations focus only on KPIs—missing 80% of a comprehensive assessment
- CEOs who help design evaluation processes can’t honestly reject feedback
- Board members and executive teams experience CEOs in different environments
- Independent evaluation eliminates bias and creates safety for honest feedback
- Early warning signs surface first with direct reports, not board members
- Comprehensive evaluation covers adaptability, stakeholder leadership, and culture stewardship
- Longitudinal analysis tracks CEO growth and identifies systemic challenges
“I don’t think any board goes into this process thinking that they’re taking a superficial approach… but there is a different way, and especially for this unique role.” — Mike Humphries
About Mike Humphries: Mike Humphries serves as Chairman and CEO of SparkEffect. He joined the organization in 2001, bringing experience as a successful entrepreneur and business executive with deep knowledge in finance, technology, and administration. Over two decades, he has served on numerous corporate and nonprofit boards, giving him a unique perspective on effective governance and leadership evaluation.
Connect with Mike Humphries:
LinkedIn: https://www.linkedin.com/in/mikehumphries/
Website: sparkeffect.com/about/mike-humphries
Connect with Kim Bohr and SparkEffect
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LinkedIn: linkedin.com/company/sparkeffect
LinkedIn for Kim Bohr: linkedin.com/in/kimbohr
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FULL TRANSCRIPT:
Welcome to the empathy edge podcast, the show that proves why cash flow, creativity and compassion are not mutually exclusive. I’m your host, Maria Ross, I’m a speaker, author, mom, facilitator and empathy advocate. And here you’ll meet trailblazing leaders and executives, authors and experts who embrace empathy to achieve radical success. We discuss all facets of empathy, from trends and research to the future of work to how to heal societal divisions and collaborate more effectively. Our goal is to redefine success and prove that empathy isn’t just good for society. It’s great for business. Hi everyone, and welcome to our last partner episode with courage to advance and our wonderful host, Kim Bohr, they have brought you such wonderful episodes this year to help you really leverage leadership as a competitive advantage within your organization and bring your team along to optimize performance and win in the market. And today’s last partnership episode is no exception. Today they’re talking about making sure that you are properly and effectively reimagining how you evaluate your CEO. They’re going to be talking about a 360 degree approach that every board needs, and this episode is full of advice and insights with their guest, Mike Humphries. So take a listen, and then please tune in to courage to advance as it launches off on its own into its own podcast. Subscribe to it on your favorite podcast player, at courage to advance or go to courage to advance podcast.com and check out episodes there. Take a listen.
Kim Bohr 01:52
Here’s a boardroom paradox that should cause every director pause. The person who can most impact your organization’s success or failure, your CEO is also the person most likely to receive the least comprehensive, least rigorous performance evaluation. I’m Kim Bohr, president and COO of Spark effect, and host of the courage to advance podcast. And on this episode, I’m joined by my colleague Mike Humphries, who’s the chairman and CEO of Spark effect. Mike joined spark effect when it was known as Waldron back in 2001 and he came as a successful entrepreneur and experienced business executive, bringing deep knowledge in finance, technology and administration, along with a strong commitment to the social sector. Over more than two decades, he’s served on numerous corporate and nonprofit boards and worked extensively with both enterprise and nonprofit leaders, giving him a unique perspective on effective governance and leadership evaluation. Mike, welcome to the courage to advance podcast. Thanks very much. Kim, as many know the CEO is the only person in an organization who must excel at strategy, operations, finance, leadership, really Stakeholder Relations all at once, and yet, most boards evaluate them narrowly, only on performance, KPIs and operating objectives, or in some cases, take an approach that they might take with any other executive. And we really think that this is such a critical role, it really needs a very unique approach for a wholly unique role. Today’s discussion is really allowing us to dive deeper into that. So my first question is, there’s this wide spectrum of CEO evaluation approaches out there, from something very basic board questionnaires to comprehensive third party assessments. What are the key elements that separate a superficial evaluation from one that actually drives meaningful insight and development?
Mike Humphries 03:50
My immediate reaction to that question is that I don’t think any board goes into this process thinking that they’re taking a superficial approach. I mean, after all, they are the board, and on the other hand, they are talking to the CEO, this wholly unique position among executive leadership. I think everybody is really doing the best job that they can, based on what they know about how to evaluate a CEO the most common, and as we know from the research that we’ve done in the benchmarking we’ve done over the years, the most common approach is that a director, sometimes the chair, or sometimes a designee, go out and they interview each of the board members. Sometimes they’ll take a measured approach to that and sort of pre select the questions and have everybody agree on them. Then they’ll interview the board members, and then they’ll write up a summary, which ultimately gets shared with the board and gets shared with the CEO, and that’s the feedback that they get. It’s typically heavily focused on operating performance, on, as you say, the KPIs, and it does accomplish one thing. Thing, which is, did the CEO accomplish the operating and profitability and other metric performance attributes that they were asked to perform from the prior year? Like I say, Nobody goes into this thinking that they’re taking less than a great approach. But there is a different way, and especially for this unique role, for this role where no other executive has to exhibit the range of talents and personal characteristics and performance that the CEO has to execute, and they don’t typically live in a world where it’s completely honest with them all the time. They have this unique power position where with their board, they have to constantly be thinking about how the board perceives them, and therefore their actions can be very transparent and so forth, but they could be guarded. On the other hand, their executive team is not likely, unless they have an extremely great situation due to their transparency and their openness to feedback, that people are going to be completely honest with them and then internally, can they be completely honest about their own self doubts, about their own fallibility. And the answer is typically no. There needs to be a process that cuts through all of that in a very non intrusive way, in a very non threatening way, so that they can get nuanced feedback that covers that entire spectrum for the unique role.
Kim Bohr 06:40
I know that it sounds very much like as well intended as people are. There’s this incomplete nature of how many boards approach this, and yet, through the work we’ve done, through the research we’ve done, we think we’ve got the solution in that way, one of the areas that you and I have talked about is really how critical CEO buy in is, and how critical it is in making these evaluations so successful. We often refer to this as that co creation process. Can you talk a little bit about what happens when organizations try to evaluate their CO without involving them in the process? Why is that inclusion so important?
Mike Humphries 07:17
Right? Well, I think that it’s useful to start with an example and a story, and this is a client story of ours, ran into a situation where I was called by a board to talk to them about our process. And the reason was that the CEO had completely rejected the process by which they were being evaluated. This was a CEO a couple years into the job they had, essentially, at the board’s behest, just inherited the approach to the evaluation that a prior outside, independent consultant had been executing with the former CEO. And everybody thought, Okay, well, we’re going to do this evaluation. The CEO is busy. They just said, okay, yeah, let’s just do that. And the board said, yeah, that’s been good for us in the past. When the feedback came back and had some challenging things in it, the CEO really rejected, not only the feedback, but they also rejected the consultant, and thus the call to us so one of our deep philosophical pillars, if you will, about this work, is that the CEO needs to be involved. One of our deep seated pillars, after deeply benchmarking this over several years, is that the CEO and the executive committee of the board, or the board chair, or some representation of the board, need to be involved in the construction of the evaluation, and they need to be involved right down to what is the CEO being evaluated on? How is that being done? What questions are going to be asked of the participants and have full visibility to all of that evaluative research that’s going to go on, so that they can be comfortable that the right questions are being asked, that they’re being asked in a way that they might ask them, and that the feedback is going to be aligned with something that they have embraced as the right way to measure my performance and the board, because they’re participating, is in agreement as well. What we end up with is, in the end of the process, we end up with a CEO who’s totally bought into what they’re being measured upon and can’t honestly, really reject the feedback because they participated in the construction of this, and then a board that also has a full understanding of what the process is going to be, what’s going to be asked. These are important CEO competency areas. That are going to be examined in addition to the operating and KPI portion of the performance.
Kim Bohr 10:07
Let’s take that just a little bit further. We talk about how important it is for the CEO’s buy in that there’s challenges if the board alone is the one evaluating and not taking additional input. Let’s talk a little bit more about why is expanding beyond the board so critical from that stakeholder gathering and input,
Mike Humphries 10:27
well, this is one thing that is similar to other executive evaluations. It is very, very useful for a person to get feedback, where they understand themselves and they also understand the stakeholder perspectives around them and stakeholders with whom they need to work, either on a day to day basis or over long periods of time. And these can be internal stakeholders like the executive team or other people that have direct working relationships with the CEO. Or they can be external stakeholders. They could be business partners. They could be political organizations that the enterprise needs to be involved with and has a perspective on that CEO’s performance in that particular area of relationship. It’s useful for them to have the perspectives of the entire stakeholder environment.
Kim Bohr 11:21
You and I often talked about you don’t know what you don’t know. And I think what’s so critical about what you’re describing here in the different category of stakeholders that have interests, is that often there can be some very different experiences in those different categories. And one of the things I know you and I have seen more than one occasion, is that boards often can feel very positive about the experience of how they engage with their CEO and what they’re experiencing, and yet some of the most critical stakeholders may be those CEOs direct reports and finding out what their experience is, could sometimes be very different you think about those inputs and outputs right? And sometimes we have the sense that the outputs are the only thing that matters, and yet our argument is the inputs perhaps matter. Maybe even more so when we encounter organizations where the CEO is hitting the numbers, the outputs look great, the performance looks great, and the board feels good about the performance. There’s sometimes these underlying issues that we’re starting to discuss right now, what are some of those early warning signs that boards might be missing in a way that perhaps this sort of approach could really surface.
Mike Humphries 12:30
If you think about the environment in which the board operates with the CEO, and you think about the environment that the senior leadership team operates in with the CEO. They’re very different environments. The board is focused on strategy, longer term, sort of a bigger, a bigger set of issues, and the CEO’s leadership of their direct team is really focused on execution, on achieving the strategy through operational execution. And these are very different environments. Both require a type of followership to be developed. The board, in a way, has followership of the CEO. They want to be led by a CEO that knows where they’re going, that has their hand firmly on the tiller is taking the ship in the right direction all the time. The followership among an executive team is very different than that. Some aspect of it is development. CEO is trying to develop people, not typically trying to develop board members, right? Some aspects of it are pure performance and operational execution, and some of them are a different kind of relational build than they have with board members. There’s a relational build on both sides of that, both individual and with the collective team. And they’re very, very different perspectives. Though, when they look at a CEO and they say, How is this person leading, how are they leading the organization as a board member? How are they leading me as an executive? And so having those different perspectives is essential, we
Kim Bohr 14:11
believe. So when boards try to handle CEO valuations internally, you know either or through. HR, whether they’re doing themselves or they try to engage. HR, what are some of those fundamental limitations they’re running into
Mike Humphries 14:24
when they’re trying to engage? Actually, restate that question.
Kim Bohr 14:29
Many boards try to do this work internally. They use existing templates that are offered by other associations out there that are just more off the shelf, and there’s a lot of challenges in that, and we’ve started to pinpoint some of them, if a board’s trying to do this internally, and just take one of these off the shelf, type of tools, what are some of the things that they’re likely to run into, versus this more 360 view that we’re describing?
Mike Humphries 14:58
I think that’s a great. Great question. The first thing they’re going to run into is, anytime you use a template, you are forced to take a look at how it fits your particular situation, what timing we are living in and in the world and in the operating environment, and who’s involved. By nature, a template is just a copy of something somebody else did, and we believe that there’s a certain amount of customization, or essentially bespoke construction, that is required to really do a thorough, nuanced, rigorous CEO evaluation for any organization, cultures are different. Businesses and nonprofits are different in terms of what their missions are. Industries are different. There are a lot of differences among organizations in general that really only tailoring something for the times and for the particular situation and culture fit. One example is thinking about another client. Had done a lot of work internally with their executive team around mission, vision and execution, and therefore they had their own language around that. When we constructed their evaluation for the CEO. We married the language so that people would recognize that the CEO is being measured on very similar things, but at a different level for their unique role as the things I’m being measured on. He essentially used the language of their own internal competency structure that they were using with their executive team, and that would be much more both in terms of taking a survey about the executive’s performance as well as in hearing the feedback, they would be able to put it in the context that they were being asked to raise their performance in as well, linking the language was very important in that case.
Kim Bohr 17:04
I know we’re not going to go deep into some of the ways that we approach this further, but I do think you sharing a few words around the sense of competencies that we feel are so unique for this role, are really underlying what you’re describing there. And I think speaking to that a little would be really helpful for the audience, too. Yeah, thank you.
Mike Humphries 17:26
As we’ve said, the most common thing is for people to really focus on operating KPIs and on operating execution and effectiveness, performance effectiveness, and that’s probably about 15 to 20% of the nuance that a CEO can benefit from and a board can benefit from in terms of visibility about their CEO. If you think about things like character, integrity, leadership of stakeholders, leadership of culture, you think about the board relationship, and does this CEO leverage the talents that they recruited to the board as effectively as they should? You think about stewardship, stewardship of the enterprise, stewardship of its financial position, stewardship of its assets, those kinds of things. One thing that comes up time and again is probably among the top three things that people who do this feel should be an important part of the evaluation is adaptability, adaptability to change, adaptability to change strategy based on what’s going on in the operating environment, in the broader economic environment. Just look at the changes that a lot of organizations are going through right now with the federal government’s changes in priorities around funding or defunding, that requires an immense amount of adaptability to change, to stay with and ahead of The operating environment.
Kim Bohr 19:00
You’re really talking about all those disruptions that we’re facing, right? And one of the most notably we’ve seen, even in our own organization, is that adoption of AI and what’s the right place, and I think that’s any organization is grappling with that at some level.
Mike Humphries 19:16
Yeah, and time and again, when we assess what’s important to organizations out there and survey them, adaptability to change and the ability to keep strategy aligned with the realities of the future environment as they expect them. Another area critical thinking and decision making, yes, another area is outside stakeholder performance. How are you doing with our partners? All of these things can be built in to an evaluation so that the nuances can come back around this complete and holistic set of CEO competency that are really required for any CEO, no matter. How large or how small the organization, no matter what industry, there’s a structure of competencies way beyond just execution of the operating strategy that both the board and the CEO benefit from D being insights into yes
Kim Bohr 20:22
during times of disruption, what I love about what you were just speaking to in some of these competency areas is that during times of disruption, you really want to feel confident that your CEO has those skills needed to navigate something that is very atypical. And what we know to be true is that not every CEO has that and especially if they’re
Mike Humphries 20:46
not being measured properly, you would never know if you didn’t measure it. Mike, you and I
Kim Bohr 20:51
have both encountered boards that are really hesitant to invest in more comprehensive CEO valuation. Some find themselves still wanting to do things more internally. Others are just trying to feel like maybe there’s time constraints. How do we fit it in, or we have this existing process? How do we make a shift? Let’s talk a little bit about how we typically approach those types of conversations, and what have you found to be most effective in helping boards really understand that kind of cost benefit equation that comes from this type of work.
Mike Humphries 21:24
Yeah, thanks. I think going back to one of the things we said at the very beginning, this is a unique role performed for a unique leadership skill set and a unique impact. So first of all, why would you not for this most important executive role that you have. Why would you not invest the time and effort in thoroughly evaluating it and being able to and never forget this is helpful to the CEO, so why would you not want to give them the most nuanced and helpful feedback that they can get. Doesn’t take a heck of a lot more time to do it on the feedback side. It takes a little bit more time to do it on the data gathering side. But why would you not want to invest that time, given how important this conversation
Kim Bohr 22:20
is, what about those who are maybe hesitant to bring in a third party? How do you speak to that?
Mike Humphries 22:29
Well, there are a number of reasons to have an independent third party. The Independent aspect of it being a very critical part of that statement. You don’t have anybody who’s coming into the process with an agenda. You don’t have anybody coming into the process that has an ax grind, has a relationship that they’re trying to nurture. You’re really bringing an independent party in to provide a fair and independent perspective on the performance based on a set of deeply evaluated and agreed upon criteria of what’s being evaluated and how are we doing it? What are we asking it also is an opportunity to make a statement to the operating team in the organization that you’re really serious about evaluating this CEO and that it’s going to be fair and measured and there’s not going to be a bias in it that misses some of the ways that executive team members may feel. We run into a lot of situations where there’s some disruption in the system, either board relationships are not perfect, or leadership team relationships are not perfect. Leadership style, maybe could use a little brush up or more. And those situations essentially by doing an evaluation that is perceived to be just going through the motions, you end up really locking in that sort of potential resentment or that potential sense of unfairness that could be there. No, it’s not there in all cases. I think most, in most situations, people are well meaning. They’re trying to do the best job they can. But in fact, having an independent party takes all that concern right away, and you get a bit more rigor, and it costs you a bit more time. But 100% of our clients that go through it come back time and again, because it is the best feedback that a CEO can get. It is the most transparent with the board. They come away with it going, Wow, that was really productive. And we had the right conversations, which is always what you’re trying to get to, right, the right. Conversations, and now we can move forward with greater confidence, or at least as much confidence as we had before, that we’re on the right track with the right person who’s leading in the right way, who’s developing the followership among the board and among the executive team that they need to develop.
Kim Bohr 25:18
I would add what comes to mind when you say that too, is the fact that the longitudinal analysis that can be done year over year, really through the work, and at least the way we approach this really creates a rich data set of observing growth or change or where there’s challenges in the system in a way that is really deeply valuable to all the parties that are involved, even when there’s change over from a board perspective, or something like that. I think that’s another as you say, that that really also jumps out to me as something that brings a tremendous amount of value into something like this work as well.
Mike Humphries 25:59
Definitely, we are able to look at the CEO’s performance across the same set of data gathering each year and see where the changes are happening, plus or minus. You can see it in the data. You can also compare the written comments that we take, and compare the sort of verbatim perspectives that people express in these things. And you can give a CEO a really good sense of, are they working on the things that they agreed with the board that they were going to work on? Are they making progress on them? Are they not making progress on them, if they are or if they are not, what aspects of those areas of competency are impacting them. Is it a leadership style thing? Is it something else? And we’ll pick that up in the nuance because of the questions that we do ask aligned with these areas of competency.
Kim Bohr 26:58
And we can really hone in. I think one of the things that is, you and I both have found so valuable as we’ve worked with different CEOs, is that we can get into the specific areas that maybe where the adjustment needs to happen, instead of it feeling like it’s a broad swath of maybe something that feels concerning. There often is a nuance in the type of statements we’ve asked or things that somebody can get in say it’s really this particular item that really is carrying a lot more weight than perhaps anyone realized, and could be targeted as an area of growth opportunity. Absolutely So as we begin to wrap up this conversation, Mike, what would you say to a board chair or a CEO who’s listening to this and thinking about their current evaluation process, what should they really be asking themselves?
Mike Humphries 27:48
Well, if I’m a director, how do we know that we have the right CEO in the role and one who’s up to today’s and the futures changes and needs that the enterprise is going to have if I’m a CEO, how do I in this loneliest of executive jobs, a one of a kind role and position? You know? How do I actually get nuanced insights that are honest and feedback that’s honest on both my talents and my actual performance? And how do I know how I’m actually experienced by the people that I lead that’s so important, they’re not typically going to tell me just outright, like we would in a normal relationship. There’s a power dynamic here that plays out both with the board and with the executive team, and these are the questions I would be asked, or I would be asking, if I were the CEO, and that is, how am I going to get honest feedback as to how I’m doing from
Kim Bohr 28:48
all directions, especially when we know it’s always so lonely at the top.
Mike Humphries 28:53
Yeah, it’s a role in which you have limited ability to express your own insecurities. Everybody has them limited ability to have the most frank and direct conversations, because everything has to be packaged for impact and for effect. Yeah, the independence allows a relationship to occur that is both pure feedback and honest feedback, but it also has an element of coaching in it. Typically, we get into conversations with CEOs where they want to explore a little more deeply, not only what’s going on and what might be causing it, but they have the ability to work with somebody who’s an experienced board member, an experienced executive been in an operating role as to what their ideas are about development opportunities, and I say development at that appropriate. At CEO level, yeah, you got to learn to lead. That is very, very rare that somebody doesn’t know right in the CEO role, but nuances absolutely well.
Kim Bohr 30:10
Thank you so much for this conversation and for being a part of it. On the courage to advance podcast, I think it’s been really insightful.
Mike Humphries 30:19
I’m happy to do it. It’s really wonderful work, and we enjoy doing it, both of us, indeed. Thanks, Kim, thank you, and thank you
Kim Bohr 30:28
to the empathy edge for hosting our podcast sub series and to the listeners for tuning into this episode of courage to advance where Transformative Leadership isn’t about having all the answers, it’s about having the courage to find them
Maria Ross 30:41
for more on how to achieve radical success through empathy, visit the empathy edge.com there you can listen to past episodes, access show notes and free resources. Book me for a Keynote or workshop, and sign up for our email list to get new episodes, insights, news and events. Please follow me on Instagram at Red slicemaria, never forget empathy is your superpower. Use it to make your work and the world a better place.
