You wouldn’t try and make informed judgements in relation to your organisation’s NPS score, employee engagement, cost ratios, growth rates or the like without benchmarking your results against the results of comparable organisations. To do so would almost certainly lead to misinformed judgements and inappropriate conclusions.
So why do most boards think they can make informed judgements in relation to their own internal board performance and effectiveness surveys without access to relevant benchmarking?
Board survey items without benchmarking
To help demonstrate the challenges of interpreting survey item responses without benchmarking, we put the exact same responses to every survey item in our database.
Our surveys are responded to on a 7 point scale where 1 = strongly disagree, 2 = disagree, 3 = slightly disagree, 4 = neither agree or disagree, 5 = slightly agree, 6 = agree and 7 = strongly agree.
We assumed an eight person board with one director responding with a 7 = strongly agree, four responding with a 6 = agree and three directors responding with a 5 = slightly agree.
Here are some examples of the survey items, all of which had the same survey response.
The Percentage Favourable (% Fav) is the percentage of respondents that responded to the survey item with either a 6 = agree or a 7 = strongly agree.
The average score for each is the same at 5.75 which seems quite high, so the big questions are:
- Is the board effective overall and is it effective in all these areas?
- Is the board equally effective in all areas?
- If the board is more effective in one or more areas in which area(s) is it most effective?
- If the board is less effective in one or more areas in which area(s) is it least effective?
Because every response to the relevant survey items is the same, it is easy to assume that the board is equally effective in all these areas. The average score for each is 5.75 which seems quite high. It is difficult, if not impossible, to make a different conclusion with any conviction.
Benchmarking makes all the difference
But what if your survey was benchmarked against the responses of the boards of similar organisations? What if your survey provider was able to advise you whether your organisation was benchmarked in the top quartile, middle 50th percentile or the bottom quartile in relation to each of the survey items? It would then be very easy to answer each of the questions set out above and identify the relevant hot spots for further discussion and review.
Here’s how the survey item responses are benchmarked. The survey ratings are all exactly the same as per the first example, but this time each of the survey items is benchmarked against the responses of other boards.
Boards are starting to find that simple and clear reporting that shows whether the responses of their board are in the top quartile, bottom quartile or middle 50 percentile of comparable responses makes all the difference. Directors can very quickly and easily identify the hot spots where further discussion and investigation may be required.
It’s even better if the relevant survey items are grouped, based on psychometric and statistical analysis, into the most appropriate dimensions that reliably measure a board’s overall effectiveness and its effectiveness on each dimension, as is the case with Board Benchmarking’s Board Effectiveness Report.
Also, you probably don’t just want your survey results benchmarked against the overall database. Not-for-profits want to be compared with other not-for-profits, financial services organisations want to be compared with other similar organisations and so on. This is where Board Benchmarking assists as it has such extensive benchmarking of boards of organisations in every industry and sub-sector.
Case study
A stock exchange-listed company carried out its own internal survey early in 2021 and had concluded that its board was performing quite well in all the main areas with no areas of concern for the board.
That company’s board decided to complete Board Benchmarking’s survey in May 2021 and discovered that it was not as good as its previous internal survey had indicated. It was benchmarked against other listed companies as being in the top quartile on one of the 20 factors that are critical to a board’s performance and effectiveness, but it was also benchmarked in the bottom quartile in seven of those 20 factors. The company now knows precisely what those seven areas are and what it needs to do to improve in each.
As one of the directors of that listed company said, “The benchmarking of our results against other listed companies has provided new insights and has made all the difference. My fellow directors and I agree that the areas identified in the benchmarked report as being areas for improvement are spot on”.