We all know that Y=f(X), where Y is the “effect” and X is the “cause.” Together, let’s employ this line of reasoning to the evaluation of a CEO’s performance.
In this case, it’s easy to see that the performance criteria of any given CEO must first be identified, defined, quantified and validated. If such criterion are not present, then any performance assessment is merely a subjective evaluation (often called the “rubber-ruler” of success). Obviously, when such a subjective form of evaluation is at play, there is little or no accountability.
Continuing with this way of reasoning, we naturally understand that each performance measure (Y) must be connected or otherwise correlated to the “vital few” determinants (X’s). They too must also be identified, defined, quantified and validated.
Assuming there is a high degree of association between the selected Y’s and X’s, only then should the cycle of “cause-and-effect” be connected to the CEO’s incentive plan (reward system). At this point, the “CEO Dashboard” is complete and ready for implementation.
Of course, the aforementioned process can be applied to any job role, not just the CEO position.
The real key here is not so much the process (as it’s been demonstrated to work), but why so many governing Boards fail to insist on the use of such performance dashboards. Just imagine the hours of debate, emotionalism, finger-pointing, political drama and leadership strife that could be reduced or eliminated by applying a CEO dashboard.