LINKING BOARD PERFORMANCE TO ORGANIZATIONAL EFFECTIVENESS

Abstract

This paper examines difficulties in linking the performance of governing boards to organizational effectiveness. It discusses the complexities inherent to defining and measuring effective performance of either organizations or boards independently of each other, let alone drawing causal links between the two. It reviews research that has attempted to establish correlations between board and organizational performance, describes typical methodology and summarizes findings. The paper raises the concern that CEO and staff performance, perhaps the major intervening variables between board performance and organizational effectiveness, are too often ignored in such research. It also raises questions about some of the commonly used proxy measures of organizational effectiveness. It argues that boards have not commonly assessed their own performance or that of their organizations, because of a lack of time, resources, expertise and a readily applied evaluation framework. As a means to maximize the return on investment of scarce research resources, the paper offers an evaluation framework that might be more readily applied by boards and proposes that near-term research efforts focus on organizations that already conduct some form of performance evaluation.

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