John Carver on Board Leadership

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Overview

"John Carver has given board effectiveness a unifying vision, a logical and coherent base-an integrated theory of governance. This collection of his writings brings home the intellectual rigor of his thinking and the coherence of his Policy Governance model."
— Sir Adrian Cadbury, director of the Bank of England, chairman of Cadbury-Schweppes, Chancellor of Aston University, chairman of the Committee on Financial Aspects of Corporate Governance in the UK (The "Cadbury Report"), and author of The Company Chairman

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Overview

"John Carver has given board effectiveness a unifying vision, a logical and coherent base-an integrated theory of governance. This collection of his writings brings home the intellectual rigor of his thinking and the coherence of his Policy Governance model."
— Sir Adrian Cadbury, director of the Bank of England, chairman of Cadbury-Schweppes, Chancellor of Aston University, chairman of the Committee on Financial Aspects of Corporate Governance in the UK (The "Cadbury Report"), and author of The Company Chairman

"John Carver, like Robert K. Greenleaf before him, is a revolutionary of the very best kind. Carver's Policy Governance model has provided the means for trustees to live out Greenleaf's challenge to boards to act as both servant and leader. In so doing, John has proven himself to be one of our greatest servant-leaders."
— Larry Spears, CEO, The Greenleaf Center for Servant-Leadership, editor of Reflections on Leadership and Insights on Leadership

"The conceptual clarity of Dr. Carver's approach provided us an excellent basis for development of new governance arrangements in defence, helping us to sharpen our focus on results and the associated accountability framework."
— Dr. Allan Hawke, Secretary, Australian Department of Defence, Canberra

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Editorial Reviews

From the Publisher
.."packed with information and advice.."(Modern Management, February 2002)
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Product Details

  • ISBN-13: 9780787958442
  • Publisher: Wiley
  • Publication date: 10/31/2001
  • Series: J-B Carver Board Governance Series , #7
  • Edition number: 1
  • Pages: 720
  • Sales rank: 1,218,847
  • Product dimensions: 8.25 (w) x 11.00 (h) x 1.47 (d)

Meet the Author

John Carver is internationally known as creator of the breakthrough in board leadership called the Policy Governance model. He has worked with boards in the United States and Canada and on four other continents for over twenty years. His ideas have been featured by the Times of London, the National League of Cities, the Canadian Hospital Association, the American Society of Association Executives, Georgia Power Company, and many others.
Carver is the author of the bimonthly newsletter workshop Board Leadership (since 1992), the book Boards That Make a Difference, Second Edition (Jossey-Bass, 1997), the video John Carver on Board Governance (1993), the audiotape Empowering Boards for Leadership (1992), and coauthor of the books A New Vision of Board Leadership (1994), Reinventing Your Board (Jossey-Bass, 1997), and the CarverGuide Series on Effective Board Governance (Jossey-Bass, 1996-1997).

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Table of Contents

Frequently Asked Questions Guide.

Foreword (Sir Adrian Cadbury).

Introduction.

About the Author.

1. A Theory of Governance: The Search for Universal Principles.

A Theory of Governing the Public's Business: Redesigning the Jobs of Boards, Councils, and Commissions.

Is Policy Governance the One Best Way?

Rethinking Governance Research.

Watch Out for Misleading Interpretations of Governance Research.

Why Is Conceptual Wholeness So Difficult for Boards?

Are Boards Searching for the Holy Grail?

Can Things Go Horribly Wrong for Boards That Use Policy Governance?

2. The Moral Basis of Board Authority: Where the Chain of Command Begins.

Ownership.

Understanding the Special Board-Ownership Relationship.

Determining Who Your Owners Are.

Connecting with the Ownership.

What to Do If You Find a Consumer on Your Board.

Achieving Meaningful Diversity in the Boardroom.

Making Hierarchy Work: Exercising Appropriate Board Authority in the Service of Mission.

Elected Boards: Meeting Their Special Governance Challenge.

Your Board's Market Surrogate Obligation.

Leading, Following, and the Wisdom to Know the Difference.

Families of Boards, Part One: Federations.

Families of Boards, Part Two: Holding Companies.

When Owners Are Customers: The Confusion of Dual Board Hats.

3. Creating the Board's Single Voice: Appropriate Roles of Committees, Officers, and Individual Members.

Creating a Single Voice: The Prerequisite to Board Leadership.

Boards Should Have Their Own Voice.

Protecting Board Integrity from the Renegade Board Member.

When the Founding Parent Stays on the Board.

The Executive Committee: Turning a Governance Liability into an Asset.

A Team of Equals.

Policies Us.

Recruiting Leaders: What to Look for in New Board Members.

Should Your CEO Be a Board Member?

What If the Committee Chair Just Wants to Know?

Reining In a Runaway Chair.

Does Your Board Drive Away Its Most Promising Members?

A Few Tips for the Chairperson.

Sometimes You Have to Fire Your Chair.

What to Do with Your Board's Philosophy, Values, and Beliefs.

Crafting the Board Job Description.

Planning the Board's Conduct.

4. Linking Governance to Operations: The Board-Management Connection.

To Tell or Not to Tell: One CEO Learns the Right Way to Inform Her Board.

Governing in the Shadow of a Founder-CEO.

If You Want It Done Right, Delegate It!

What to Do When Staff Take Complaints Directly to Board Members.

When Board Members Are the Only Staff in Sight.

The CEO's Objectives Are Not Proper Board Business.

Why Only the CEO Can Interpret the Board's Ends and Executive Limitations Policies.

Getting It Right from the Start: The CEO's Job Description.

Do You Really Have a CEO?

Does Policy Governance Give Too Much Authority to the CEO?

5 Putting Purpose First: Deciding, Delegating, and Demanding Organizational "Ends".

Boards Lead Best When Services, Programs, and Curricula Are Transparent.

A Community Board Struggles with the Cost of Its Results.

Beware the "Quality" Fetish.

First Things First.

Evaluating the Mission Statement.

The Board of a Trade Association Establishes Ends Policies.

A Public School Board Establishes Ends Policies.

A City Council Creates Ends Policies.

A Hospital Board Creates Ends Policies.

6. Safely Avoiding Micromanagement: Staff Freedom Within Defined Limits.

Free Your Board and Staff Through Executive Limitations.

Making Informed Fiscal Policy.

Running Afoul of Governance.

Crafting Policy to Safeguard Your Organization's Actual Fiscal Condition.

Crafting Policy to Guide Your Organization's Budget.

Fiduciary Responsibility.

Redefining the Board's Role in Fiscal Planning.

7. What the Board's Words Mean: Harnessing Interpretation for Control and Empowerment.

The "Any Reasonable Interpretation" Rule: Leap of Faith or Sine Qua Non of Delegation?

Boards Should Be Not the Final Authority but the Initial Authority.

Abstracting Up: Discovering the Big Issues Among the Trivia.

Who's in Charge? Is Your Organization Too Staff-Driven?

Too Volunteer-Driven?

Never Cast in Stone: Flexible Policy Supports Management and Saves Board Time.

Policy Governance Is Not a "Hands Off" Model.

8. When the Board Meets: Products, Process, Discipline, and Costs.

Is Your Board in a Rut? Shake Up Your Routine!

Why Not Set Your Quorum Requirement at 100 Percent?

Owning Your Agenda: A Long-Term View Is the Key to Taking Charge.

Calculating the Real Costs of Governance.

The Consent Agenda and Responsible Rubber-Stamping.

9. Assuring Board and Management Performance: Measurement, Evaluation, and Discipline.

Painful Lessons: Learning from the United Way Misfortune.

One Board Fails to Follow Its Own Monitoring Policy-and Courts Fiscal Disaster.

The Misguided Focus on Administrative Cost.

A Simple Matter of Comparison: Monitoring Fiscal Management in Your Organization.

Board Approvals and Monitoring Are Very Different Actions.

Giving Measurement Its Due in Policy Governance.

Honey, I Shrunk the Policies.

The Mechanics of Direct Inspection Monitoring.

Redefining Board Self-Evaluation: The Key to Keeping on Track.

Living Up to Your Own Expectations: Implementing Self-Evaluation to Make a Difference in Your Organization.

The Importance of Trust in the Board-CEO Relationship.

Evaluating the CEO: An Effective Approach to Ensure Future Organizational Success.

Putting CEO Evaluation in Perspective.

Off Limits: What Not to Do in Your CEO Evaluation.

A CEO Self-Evaluation Checklist.

10. Safeguarding Governance Viability for the Long Term.

What to Do When All Your Policies Are in Place.

Nine Steps to Implementing Policy Governance.

Shaping Up Your Bylaws.

What Happens to Conventional Documents Under Policy Governance?

How You Can Tell When Your Board Is Not Using Policy Governance.

CEOs! Guiding Your Board Toward Better Governance.

Policy Governance Won't Work Because . . .

Protecting Governance from Law, Funders, and Accreditors.

11. When Governing Boards Perform Nongoverning Roles.

When Board Members Act as Staff Advisors.

Tips for Creating Advisory Boards and Committees.

Giving, Getting, and Governing: Finding a Place for Fundraising Among the Responsibilities of Leadership.

Girl Scout Council Learns What Kind of Help Counts the Most.

Board Members as Amateur CEOs.

12. Policy Governance for Specific Audiences.

Remaking Governance.

Toward Coherent Governance.

Partnership for Public Service.

Governing Parks and Recreation.

Education Accountability and Legislative Oversight.

New Means to an End.

Reinventing Governance.

To Focus on Shaping the Future, Many Hospital Boards Might Require a Radical Overhaul.

Corporate Governance Model from an Unexpected Source-Nonprofits.

A Theory of Corporate Governance: Finding a New Balance for Boards and Their CEOs.

The Opportunity for Reinventing Corporate Governance in Joint Venture Companies.

What Use Is Business Experience on a Nonprofit or Governmental Board?

Seizing the Governance Opportunity for Central European NGOs.

Building an Infrastructure of Governance in Eastern Europe.

References.

Index.

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First Chapter

Introduction

If we do not concern ourselves with how we can rule organizations, the organizations will rule us.

—J.K. Louden, The Effective Director in Action, p. 117

As you read this introduction and, indeed, as I write it, competence beyond my understanding is at work in the world's organizations. Thanks to the organizations I've served as consultant, I'm acquainted with a small part of that amazing spectrum of competence: A nuclear engineer hourly calculates the cooling requirements of an operating atomic power plant. A classroom teacher conveys an idea, steering skillfully around a student's learning disability. A technician repairs the electronics of a hospital's MRI. An analyst working in a pension fund assesses risks inherent in a stock purchase. A journalist creates a carefully crafted layout of educational content in a trade association magazine. A police officer risks her own life to balance enforcement and courtesy. A research scientist struggles to produce new knowledge in the cellular biology of cancer. A dedicated worker, using an obscure language, brings well-digging technology to an underdeveloped country. A psychotherapist exercises dazzling insight to free a troubled soul from social dysfunction and mental anguish. A physicist adjusts a cyclotron producing a radioactive medical product.

The list goes on as far as the human talent it represents—and I have been honored to observe some of it in action. The world is at work. And a substantial amount of this work is governed by boards.

Most of my experience, however, isn'treally with these impressive skills, for they are found inside the organizations whose missions embrace them. My experience is largely with the boards that govern these organizations. Boards of business corporations. Boards of nonprofit agencies and associations. Boards of cities and other political entities. A board ordinarily does not do the work of an organization, it governs what that work will be. Govern—the word bespeaks authority, the highest authority in an organization. When the world works as it should, the word also bespeaks accountability, the greatest measure of accountability in the organization to be commensurate with the greatest authority. Yet when I first became a student of governance, it became obvious that something was—and today still is—amiss with the accountability of boards.

Typically, all workers in an organization are clearer about their jobs than is the board that governs their work. The accountant, the nurse, the janitor, the airline pilot—they know the objectives, the appropriate conduct, the reporting relationships, the required skills, and the discipline attendant to their jobs. Boards are typically confused and deficient in all these areas. It is not that board members are less intelligent or less dedicated. In fact, sometimes boards are composed of just the kind of skilled, committed, experienced persons whose day jobs I've just extolled. The problem is that the governing role is "one of the least studied in the entire spectrum of industrial activities" (Juran and Louden, 1966, p. 7) and that boards are "often little more than high-powered, well-intentioned people engaged in low-level activities" (Chait, Holland, and Taylor, 1996, p. 1).

My personal experience confirms these assessments and often underscores the grievous human cost of traditional board processes. I have seen CEOs destroyed by the gut-wrenching dynamics that occur when boards judge on criteria they've never stated. Where CEOs have fought back after capricious dismissals, I have seen donors' hard-earned contributions wasted by boards defending resultant suits. I have seen boards that take no responsibility for the illegitimately intrusive behavior of renegade members, thus sacrificing the organization to a few board members' need to treat organizations as their personal toys. I have also seen boards manipulated and stage-managed by their CEOs, sometimes even frankly misled, while their boards default on their obligations to lead. I have seen organizations that are not compelled to find ever better ways to produce results for their consumers because their boards reward activity, not results. I have seen organizations whose stewardship of the donated wealth of contributors or the forced "donations" of taxpayers is next to nonexistent, even though all the accounting is in order. I have seen board members whose political or personal self-interest makes servant-leadership seem like a naive ideal. I have seen well-intended, intelligent board members whose potential contribution is thwarted by the mediocre activities they continue to be taught is the proper substance of governance. I have been amazed when board members say system improvement isn't warranted because "everything is going well now"—the same board members who in their market-tested business would never accept today's effectiveness to be sufficient for tomorrow's challenges. I have been amazed to hear a respected faculty member of a top university say that nonprofit boards are pretty good the way they are.

I am not alone in my unflattering observations about boards ("largely irrelevant," Gillies, 1992; "ornaments," Mace, 1971; and, most picturesquely, "ants on a log in turbulent water who think they are steering the log," quoted from an unnamed source by Leighton and Thain, 1997). Of course, the most famous damnation was Drucker's "they do not function" (1974). As my interest grew in boards in the mid-1970s, the attention of others was also turning to board roles, responsibilities, and effectiveness. Over the intervening years, discussion of boards has risen to a crescendo in business, nonprofit, and governmental arenas. Writers, such as myself, turned out exhortations at an increasing pace. Researchers took notice. If research can resolve the most effective cardiovascular training, treatment for schizophrenia, and auto emission control, can it not find the route to board effectiveness?

Board Effectiveness—The Muddled Debate

Let's get the stark truth out right away: No approach to governance by a governing board has been shown by credible, replicated research to be most effective.

In view of the extreme authority wielded by boards, their long history, and the two decades of steadily growing interest in them, the lack of research is incredible. Graduate schools, by and large, have not flocked to the issue. Business schools have ignored corporate boards. Schools of public administration, social work, health administration, and others have been slow to focus on anything higher than management. But negligible research does not mean no research. The number of published articles and books on the topic has grown. But we still have no definitive research on board effectiveness. Why?

I believe the reason is that we haven't figured out what we want governance to accomplish. That is, we don't agree on what boards are for. And it is impossible to research whether one or another method is more effective when we haven't gotten together on what they should be effective at! If a board is to raise funds, we can find what methods are more effective. If a board is to advise staff, we can find what produces the most useful advice. If a board is to find glitches in financial reports, we can find how that can best be done. But in each case, we must start with the purpose first or research on effectiveness is meaningless.

There appears to be little agreement on what boards are for, at least judging from actions people take. For some, the purpose of a board is to fulfill what the law or regulators require of boards. For others, the purpose of a board is to satisfy the managers; or to satisfy people who come to watch board meetings; or to satisfy a large contributor or major shareholder; or to satisfy board members with meaningful involvement; or to satisfy current clients, students, or patients, or other customers. These reference groups yield very different tests of board effectiveness.

So discovering what is "most effective" requires knowing what boards should produce. Deciding upon what boards should produce depends on our framing of the matter, our sense of why governance exists. In other words, what precedes effectiveness research is governance theory—said by some corporate governance writers (Mueller, 1996; Leighton and Thain, 1997, p. 29) not to exist! So it was that I determined some years ago, despite my own doctoral training in human behavior research, that the primary missing link in the governance quandary was not research but credible theory.

The Policy Governance model, which I developed beginning a quarter century ago, is often criticized for not being founded in research. Of course it isn't. It could not have been. Research is good at testing what is, but it is less inspiring at creating what isn't. The Policy Governance model was a leap of insight, a philosophical endeavor, not a research finding. The Policy Governance model was not discovered; it was invented.

Producing a Theory of Governance—Reaching for the Universal

The Policy Governance model became the first—and, arguably, still the only—theory of governance in the world. Theory it is, but not without a great deal of concrete experience behind its inception. I had been a chief executive working for boards for ten years, had created and chaired a national organization, and had served on numerous local boards. I had walked the walk, but was appalled at the conceptual fragmentation of what I was doing.

Why should the conduct of governance not be as impeccable as we expect school bus maintenance, surgery, accounting, and roof repair to be? Why should boards exhibit less responsibility than they require of the people who work for them? Why should the parts of an organization make more sense than the whole? Why must the most powerful organizational unit be the least studied, least developed, and least rational? Why should boards be excused from taking responsibility for their own jobs, a default viewed as acceptable by Herman and Heimovics (1991) and even by Drucker (1990)? Must mediocrity be acceptable just because it is the norm?

Holland chided prescriptive governance modeling as "idealized, even romanticized" (1991, p. 26). Herman (1989b) dismissed an appeal like mine for being a "heroic" board model. Admittedly, the competence and leadership I call for in the governance role, if compared to today's standards, may well seem idealized and romanticized. That is the burden of introducing a new order of things. But, given the massive accountabilities and powers of boards, why should we not expect heroic performance? Do we have any right to accept less?

Consider employees whose pension fund board controls billions of dollars of their retirement savings. Consider a school board whose actions affect the future of thousands of young people. Consider literally trillions of dollars of the world's wealth and millions of lives all to a considerable degree under the control of boards. How exactly are we to excuse anything less than heroic? Yet virtually without question we countenance far less competence in boards than we demand in pilots, surgeons, and cosmetologists. Must we really shoot so low?

Historically, however, we've not been short on using heroic words. Commonly accepted platitudes about boards being visionary leaders that deal with policy and delegate clearly have been unmasked as hollow rhetoric by recent writers. But why must that embarrassing revelation induce us to settle for a less heroic role, rather than to rally 'round the challenge to fulfill it. Having found that boards had feet of clay, governance writers were quick to adopt clay as a proper building material. If there is any chance that boards might fulfill the high hopes of servant-leadership (Greenleaf, 1991), is it not incumbent on us to try before throwing in the towel? Must we give up so easily when we haven't even tried the approach of better theory? And if there is no governance theory, I reasoned in the mid-1970s, why not create one?

Governance theory, of course, implies a degree of universality. A theory that fits only one board isn't very helpful. Can theory fit just mental health boards or trade associations? How about a theory that works for all nonprofits? But why stop there? Indeed, is it possible to find a universal theory that is truly universal—one that offers a paradigm for governing boards of any endeavor and in any land? A universal theory must cover all instances of board governance, yet have no more parts than necessary. Einstein's wisdom to "make everything as simple as possible, but not simpler" would certainly have to apply.

It is only right that justification is required of extraordinary claims. But when we start to examine the actual functioning of boards, the claims of Policy Governance begin to lose their air of radicalism, and might better be described as organized common sense. For example, all observers of boards would agree that a board should know its role as distinguished from other roles (such as the CEO's). They would undoubtedly agree that governing boards are accountable for the organizations they govern. They'd agree that the clearer a board is with delegatees about what it wants, the more likely it is that the board will actually get what it wants. They might even agree that employees function more creatively when the board gives them as much room to do things their own way as possible.

These statements and others upon which widespread agreement is possible constitute a body of characteristics that comprise a generic snapshot of good governance in any kind of organization at any stage of development. By itself, a list, however well constructed, is not sufficiently coherent and whole to be called a model, but it does establish that there are characteristics of good governance that are true across all cases. At this very low level of abstraction, it is not only possible that there be universally applicable truths about governance, it is almost impossible that there not be! Having reached that conclusion, the challenge was to construct a comprehensive, coherent framework of concepts and principles into an internally consistent paradigm. To the extent that internal congruity with external utility is accomplished, the higher-integrity meaning of the word model will have been achieved. It should not be surprising that the Policy Governance model is generically applicable, for it was intentionally constructed with only those elements that can claim universality.

The reaction to Policy Governance has been curiously mixed. Interest in it has spread to many countries and it is probably unrivaled in its influence on governance thinking, but the model has not come to be universally practiced. That in itself is not disturbing, for there is a great burden of tradition-blessed mediocrity to overcome and, for many boards, little incentive to make the effort. But the lack of informed criticism is disturbing. Whereas most book reviews have commented favorably on Policy Governance (usually while reviewing Boards That Make a Difference [Carver, 1990a, 1997]), some critics have spoken out against the model's stringency or practicality.

I would argue that these criticisms are based on fundamental misunderstandings. One critic has claimed, in effect, that the model is susceptible to human bungling—a charge so generic as to apply to anything: It is not valid criticism of improved auto safety devices to say that driver error can nullify their utility. A more common criticism is that Policy Governance is a "one size fits all" model—the erroneous suggestion here is that universal applicability is a dangerous fantasy: Because as individuals we are all unique does not prevent physicians from learning how the liver functions as though we are all the same. Some have charged that the model will fail if it is not applied in its entirety—as if it were possible for any coherent system to work when it is only partially applied: All the fine craft required to make my watch comes to naught by removing but one of the little wheels. Another criticism has made much of a limited study that suggests that board members were no more "satisfied" with Policy Governance than with any other model. The authors later conceded that they had been unable to discern whether, in fact, the boards had really been using Policy Governance when they made their study. I'd argue further that personal satisfaction of board members (particularly members chosen under existing expectations about board work) has no necessary connection to effective governance.

Many of the major organizations who would normally be expected to take the lead in governance improvement have largely been bystanders to Policy Governance—even as the model was spreading internationally and enjoying widespread esteem. The reasons that these organizations have practiced this disregard are almost certainly complicated; but in all cases, I believe that it is evidence of steadfast adherence to tradition-blessed wisdom. Ultimately, I believe this disregard is evidence of a reluctance to face new and innovative solutions to serious governance problems. If I am wrong about that—if, indeed, these organizations frankly think Policy Governance is ill-conceived or misguided—they have neglected to present a careful and scholarly criticism to their members and to the public. This is unfortunate, but the model has slowly been making inroads in these quarters; and it may simply be that change of the magnitude represented by Policy Governance will require even more time to take hold than I expected.

It should be no surprise that paradigm shifts encounter greater difficulty than, as Thomas Kuhn (1996) put it, "development-by-accumulation" (p. 2). Although we usually think of science as advancing smoothly and with unbiased commitment to new knowledge, Kuhn argues a compelling case for the resistance in science to enlightenment beyond the paradigms of the day. As to the social and psychological aspects of human existence, however, both Kuhn and Edward O. Wilson (1998) observe that impediments to paradigm shifts are far greater than in science. The process of a board as it goes about its business is, of course, more a matter of interpersonal interaction than physics. Overcoming tradition-blessed methods and mentality in governance should not be expected to move quickly.

The larger story of the Policy Governance model, however, has been its widespread success. It has been recognized by the Australian Institute Company Directors, and adopted by the Association of Community College Trustees, the Association of Junior Leagues International, British Petroleum, the United Nations Credit Union, and an international list that has grown far beyond any ability to enumerate. The list extends across a number of countries and is sufficient to give Policy Governance (or in some quarters, the "Carver model") arguably the greatest name identification of any approach to board work and to make Boards That Make a Difference (Carver, 1990a, 1997) a Jossey-Bass best-seller. Still, there is far to go. In bringing governance into the twenty-first century, the Policy Governance model may have been the spark that started the forest fire, but that fire still burns spottily, and in many strongholds of conventional wisdom the strong pronouncements of the model are easier to ignore than to confront.

The Policy Governance Model—An Instrument of Servant-Leadership in the Boardroom

The Policy Governance model is a carefully crafted framework, designed to enable intelligent, well-intended board members to govern as well as it is possible to do. That is, it channels the wisdom of board members, links them and their work to important constituencies, focuses them on the large long-term issues, and makes possible the optimal empowerment and fair judgment of management. These things require a powerful tool, indeed. But they also require that powerful tool to be precisely used. And although I have great feelings about the model, the model itself is a cold, even rigid instrument. The board chairperson of a well-known American nonprofit said that she welcomes a model that is itself passionless, because it provides a neutral receptacle into which she can confidently invest her own passion. My word processor is a passionless mechanism, indifferent to the ardor my words might hold for me; my automobile is only cold engineering, though it provides an emotional experience as well as transportation. For that matter, most games consist of a rigid set of rules, within which we are able to play, emote, and interpret excellence. In like manner, Policy Governance is an emotionless, rigid set of rules in the service of purpose, passion, and the emotional intensity that drives us to organize, to join our commitments and our efforts. My passion has been to press the conceptual integrity of this tool to the limit. But Policy Governance cannot make an uncommitted board committed, a sloppy board careful, or an unintelligent board intelligent. In the end, the personal virtues of board members as servant-leaders will determine whether the tool is used to their distinction or doomed to irrelevancy.

This Introduction is not the place to explain the specifics of the Policy Governance model, for the collection of publications to follow do just that, along with three books and fourteen monographs not represented here (Carver, 1990a, 1997; Carver and Mayhew, 1994; Carver and Carver, 1997; Carver and Carver, 1996-1997). But a brief summary may set the stage for the articles included in this collection, articles originally published in a variety of publications between 1990 and 2001.

First, it is important that Policy Governance is not a prescribed structure. It is a set of concepts and principles. Those principles often influence structure, but so do other factors peculiar to each organization.

Second, Policy Governance is not a management discipline but a governance discipline. That is, it is not a repackaging of management at a step higher than the real managers. It is, instead, a focusing of the owner-representative role one step below the real owners. In short, the board doesn't exist to determine so much what the organization does as what it is for. It views governance not as management one step up, but ownership one step down.

Third, the board is a locus of decision making in the owner-to-operator sequence of authority, not merely an overseer of management actions. The board is not an approver, but a generator, an active link in the chain of command.

Fourth, Policy Governance is not simply a compilation of all the old bromides about boards: Boards should make policy, boards should deal with vision and the long term, boards should avoid trivia, boards shouldn't meddle and micromanage, all board members should come prepared and participate, and so forth. These exhortations may be good ones, but they are elementary in the extreme—more fitting for Polonius than for a theorist. At any rate, it is embarrassing that they are the level addressed by many of the efforts to improve modern governance. Policy Governance goes much, much further.

Fifth, Policy Governance is not simply what happens when boards conscientiously conduct themselves up to the standards of the prevalent ideal, for it is the long-standing ideal itself that is flawed. Indeed, the model's precepts indict as obsolete the governance practices still promoted by many prominent organizations, and a host of other sources of tradition-blessed, business-as-usual governance instruction.

Sixth, the model is an operational description of Greenleaf's servant-leadership (Carver, 1999b) as it applies to a governing board. The board's primary relationship is with the legitimacy base or constituency that either legally or morally "owns" the organization; its secondary relationship is with the staff. I have described elsewhere the philosophical foundations of the model in servant-leadership and in Rousseau's social contract philosophy (Carver, 1999a, 1999b).

Let me explain what the model does not cover. The model does not dictate matters of structure, such as a specific set of committees, a certain board size, list of officers, or that there be a chief executive officer. Also, it doesn't deal directly with group dynamics, methods of needs assessment, basic problem solving, interpersonal relationships, fund raising, or the management of change. These are important topics but are well-addressed by other theorists and practitioners. None of them are exclusively governance topics, though they provide skills or insights that any decision maker can profitably use—including boards. What Policy Governance does provide is the framework in which the board views its job, therefore the framework within which these other skills can be applied. A Policy Governance board would be well-advised to make use of any skills that can enhance its performance—but what constitutes desired performance is itself a function of the governance model.

Policy Governance, then, was not born from notions of what a board should do, but an examination of what a board is for. When our idea about the purpose of governance shifts, many ramifications arise about what a board should do, what it should talk about, to whom it should relate and in what way, and other, even more concrete matters. Because the model begins by reconceptualizing the most fundamental aspects of boards, it operates at a level that applies to all boards. The reader of this book, for example, can be sure that the principles found here will apply to whatever governing board on which he or she sits. For example, even a board that has no staff at all—though it does not have as much need for advanced governance concepts—can find its work improved by conceiving of the two separate "hats" it wears when, first, it debates and decides purpose (as a board) then, second, goes out itself to get various aspects of the work done (as if it were its own staff).

I do not maintain that Policy Governance is the only generic, universal model of governance possible. Someday it will be seen as merely the earliest of a growing number of alternatives. But there is no doubt that Policy Governance is the most thoroughly thought-through, conceptually coherent and complete theory of governance in the world today. If it is still so in twenty years, however, I shall be flattered but profoundly disappointed.

The Personal Story—Successes and Failures

When my interest in governance began in the mid-1970s, my single motivation was to learn about a process that had thus far escaped my understanding. To put a finer point on it, I felt not only unenlightened, but ignorant. I had been by that time chief executive officer (CEO) in two mental health organizations and on several boards—one a national trade association—sometimes as chair. At a superficial level, boards were not a mystery to me, but I had the uncomfortable feeling of being part of a process that didn't fully make sense. Driven by my disquieting illiteracy, I read everything on boards I could find and went to countless conference seminars on board roles and responsibilities. The result of my fretting and studying was an even more troubling discovery that the state of the governance art was primitive, indeed. Governance practice was not (and is largely still not) built from the application of sound theory. It was and is a hodge-podge of bits and pieces that added up to trivia-beset agendas, inadequate forethought and planning, faulty delegation, inappropriate adaptation of management tools, unnecessary interpersonal struggle, default, role confusion, damaged people, and lost opportunity.

That so little discipline and design could characterize the most powerful position in organizations seemed inconceivable but was disappointingly true. So I set out to think the matter through, at least to make sense of the board role for myself. I could never have dreamed of what came to pass over the next quarter-century.

By the year 2000, twenty-five years later, I had done consulting work in Mexico, Canada, the United Kingdom (including Northern Ireland), Australia, Turkey, Ethiopia, Kenya, Tanzania, Switzerland, Austria, Germany, Belgium, The Netherlands, Denmark, Nepal, India, Argentina, and the United States. I'd worked with boards whose accountability was for up to $52 billion in assets and $50 billion annual revenues. My name had become associated with governance in many parts of the world, in some sectors more by far than any other name identified with the topic. Organizations in which I'd consulted included ones engaged in all manner of enterprise: nuclear power, telecommunications, petroleum, national defense, local and state public education, universities, colleges, private schools, hospitals, credit unions, fraternities, trade associations, lotteries, professional societies, voluntary health agencies, pension funds, social services, and more. But of all these experiences, let me cite a couple of examples out of the legion of instances of change induced by and enabled by the model—the first an international development agency, the second a national defense establishment.

The board of the development agency met quarterly to spend three days approving new development grants for recipients in Third World countries. The staff prepared briefing papers on scores of individual grants, complete with descriptions and even little inset maps of the affected sites. The board would listen to long explanations of a project, ask a few questions, then vote to approve. Failure to approve a project was a very rare event. The board, while happy to have such a competent staff, couldn't help feeling a bit like a rubber stamp. So to overcome that uncomfortable feeling, board members would ask even more questions than necessary and would occasionally resort to tinkering with project details in order to exert some influence. Policy Governance brought an entirely different view of governing the international development carried out by staff, one that resulted in entirely different board meeting agendas. The new board behavior was to spend time hearing from experts on needs in the Third World, debating the big-value choices, and deciding what outcomes would be sought in what populations and at what cost or priority. (An example of a big-value choice is whether the focus should be on the poorest of the poor or on the slightly more fortunate with whom larger life changes could be wrought for the same money.) The staff was free to devise projects without going through the charade that the board needed to help them do work for which they were hired. Board meetings became far more high-level, more philosophically satisfying to everyone, and the board's feelings of rubber stamping evaporated.

The national defense establishment, committed to using the Balanced Scorecard (Kaplan and Norton, 1996) (designed specifically for "mapping" management strategy), was also attracted to the delegation philosophy of Policy Governance, designed specifically for boards. It is interesting that this national organization has no governing boards at all but values ideas from any source in its commitment to improved defense management. Policy Governance is designed to optimize the balance of control and freedom. Control is necessary for accountability and for certainty that a system will perform as expected. Freedom is necessary to get the most out of human creativity, innovation, and sparks of ingenuity. The Policy Governance mantra of control all you must, not all you can, along with the model's differential control of means versus control of ends, enable maximum empowerment of subordinates without "giving away the shop." The defense establishment decided to use the ends-means differential in documents beginning as high as the minister of defense and extending down through the chiefs of army, air force, and navy, thence to their subordinates. The result of their integration of technologies from two separate domains was clearer jobs (therefore, clearer tracing of accountability and less ambiguity among jobs), but without the artificiality and rigidity of detailed prescription (therefore, freedom from procedure-strangulation).

In addition to direct work with thousands of boards, by the new century my wife (consulting colleague and author, Miriam Mayhew Carver) and I had trained 150 consultants and other leaders from five countries in an intensive five-day course of theory and application (called the Policy Governance Academy and ordinarily held in Atlanta). Some of these enthusiasts recently formed the International Policy Governance Association in order to begin to take over responsibility for further spread of the model worldwide. Although I had failed to reach the goal set twenty years earlier of transforming governance by the new millennium, the effects were gratifyingly far-reaching.

Back in the 1980s, efforts to find a publisher for my first book met with a number of rejections. Lynn Luckow, an editor at Jossey-Bass, was the first to find potential publishing merit in my work. As Lynn was promoted to CEO, Alan Shrader, at that time with Jossey-Bass, shepherded me gently through the production of Boards That Make a Difference (first published in 1990, then after ten printings, issued in a second edition in 1997). My wife, Miriam, and I wrote A New Vision of Board Leadership (Carver and Mayhew, 1994), The CarverGuide Series of monographs (Carver and Carver, 1996-1997), and then Reinventing Your Board (Carver and Carver, 1997). By the turn of the century, I had authored (or coauthored with Miriam) the three books, fourteen monographs, and over 160 separate articles, published in four countries. My publications had appeared widely, including in The Times (of London), Trustee, Solicitors' Journal, Economic Development Review, Practice of Ministry in Canada, Voices of Servant-Leadership Series, Association Management, Association, National Association of Corporate Directors Monograph Series, Chronicle of Philanthropy, The School Administrator, The National School Board Journal, The Corporate Board, Corporate Governance—An International Review, Gouvernance: Revue Internationale, Contributions, and Nonprofit World, as well as my Jossey-Bass bimonthly of over eight years running, Board Leadership.

How to Use This Book

The purpose of this book is to bring together in an easily accessible place many of the articles of this oeuvre otherwise scattered across many periodicals. Most of these articles have been unavailable to board members and their chief executives. A selection among the articles yielded the contents of this book. Nothing is included from the easily available books Boards That Make a Difference, Reinventing Your Board, and A New Vision of Board Leadership, or the twelve CarverGuide Series monographs.

This collection of articles is intended for a wide audience. Foremost, of course, it is for board members in any setting, along with the management staff who directly serve them. Boards and their staffs are in an important partnership, but the nature of that partnership can be more or less conducive to good governance and good management. Though boards must accept full responsibility for their own jobs, boards and their staffs would do well to study governance together. The book is also intended for consultants, researchers, funders, and other students of governance. The fact that Policy Governance did not grow out of research does not mean that research should not be used to test it. Raising governance dialogue to a new level may well generate new governance theory, perhaps theory that will displace Policy Governance from its current position in that arena. If so, my model will have made its greatest contribution.

This book is meant to be a reference work. There is no need to read it straight through, as with my (and our) previous books. We have done our best to organize it in a useful way, but the very nature of publishing in many organs, often covering more than one facet of the Policy Governance model, makes a cleanly distinct organization impossible. My hope is that the articles published here can be used for general reading of governance enthusiasts, can provide articles for board or academic discussion, and can be used as an occasional source for commentary on specific Policy Governance applications.

Acknowledgments

My foremost appreciation must be expressed to the publications that have graciously allowed the republication of these articles. I am greatly in their debt.

I owe enormous gratitude to Sir Adrian Cadbury for his support of my work and his gracious willingness to contribute the Foreword to this book. Long a respected leader in company boards, Sir Adrian became virtually an icon, his name known in corporate governance worldwide, following release in 1992 of Britain's famed "Cadbury Report"—still the best-known critique of corporate boards.

Ocean Howell and Dorothy Hearst of Jossey-Bass saw the value to readers in such a book and were supportive and most indulgent with my whims, schedules, and intentions. Ocean, as lead editor, mastered massive amounts of material and contributed insights that were consistently helpful.

I am indebted to the graduates of the Policy Governance Academy who helped in assembling the frequently asked questions (FAQs): Barbara Hanna, Carol Gabanna, Linda Stier, Margaret Keip, Jannice Moore, Judi Osborne, Anne Dalton, Catherine Raso, Michael Conduff, Linda Dawson, and Randy Quinn.

Ivan Benson, faithful and patient executive assistant, keeps all the logistics of my consulting practice ordered so I can think about ideas and how to present them. Without his stewardship of my work life, many of my words would not find their way to paper.

As always, Miriam Carver, has been my most model-knowledgeable supporter, knowing at times more than I do myself what I intend for the intellectual soundness of Policy Governance. As to Policy Governance integrity, Miriam fulfills this astute definition of a friend: someone who knows the words of your song and sings them back when you forget. No one knows Policy Governance better than she.

Thanks to everyone who has given me the opportunity, however inadequately I may have performed, to change the world just a little bit.

John Carver
Atlanta, Georgia
August 2001
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Introduction

Introduction

If we do not concern ourselves with how we can rule organizations, the organizations will rule us.

--J.K. Louden, The Effective Director in Action, p. 117

As you read this introduction and, indeed, as I write it, competence beyond my understanding is at work in the world's organizations. Thanks to the organizations I've served as consultant, I'm acquainted with a small part of that amazing spectrum of competence: A nuclear engineer hourly calculates the cooling requirements of an operating atomic power plant. A classroom teacher conveys an idea, steering skillfully around a student's learning disability. A technician repairs the electronics of a hospital's MRI. An analyst working in a pension fund assesses risks inherent in a stock purchase. A journalist creates a carefully crafted layout of educational content in a trade association magazine. A police officer risks her own life to balance enforcement and courtesy. A research scientist struggles to produce new knowledge in the cellular biology of cancer. A dedicated worker, using an obscure language, brings well-digging technology to an underdeveloped country. A psychotherapist exercises dazzling insight to free a troubled soul from social dysfunction and mental anguish. A physicist adjusts a cyclotron producing a radioactive medical product.

The list goes on as far as the human talent it represents--and I have been honored to observe some of it in action. The world is at work. And a substantial amount of this work is governed by boards.

Most of my experience, however, isn't really with these impressive skills, for they are found inside the organizations whose missions embrace them. My experience is largely with the boards that govern these organizations. Boards of business corporations. Boards of nonprofit agencies and associations. Boards of cities and other political entities. A board ordinarily does not do the work of an organization, it governs what that work will be. Govern--the word bespeaks authority, the highest authority in an organization. When the world works as it should, the word also bespeaks accountability, the greatest measure of accountability in the organization to be commensurate with the greatest authority. Yet when I first became a student of governance, it became obvious that something was--and today still is--amiss with the accountability of boards.

Typically, all workers in an organization are clearer about their jobs than is the board that governs their work. The accountant, the nurse, the janitor, the airline pilot--they know the objectives, the appropriate conduct, the reporting relationships, the required skills, and the discipline attendant to their jobs. Boards are typically confused and deficient in all these areas. It is not that board members are less intelligent or less dedicated. In fact, sometimes boards are composed of just the kind of skilled, committed, experienced persons whose day jobs I've just extolled. The problem is that the governing role is "one of the least studied in the entire spectrum of industrial activities" (Juran and Louden, 1966, p. 7) and that boards are "often little more than high-powered, well-intentioned people engaged in low-level activities" (Chait, Holland, and Taylor, 1996, p. 1).

My personal experience confirms these assessments and often underscores the grievous human cost of traditional board processes. I have seen CEOs destroyed by the gut-wrenching dynamics that occur when boards judge on criteria they've never stated. Where CEOs have fought back after capricious dismissals, I have seen donors' hard-earned contributions wasted by boards defending resultant suits. I have seen boards that take no responsibility for the illegitimately intrusive behavior of renegade members, thus sacrificing the organization to a few board members' need to treat organizations as their personal toys. I have also seen boards manipulated and stage-managed by their CEOs, sometimes even frankly misled, while their boards default on their obligations to lead. I have seen organizations that are not compelled to find ever better ways to produce results for their consumers because their boards reward activity, not results. I have seen organizations whose stewardship of the donated wealth of contributors or the forced "donations" of taxpayers is next to nonexistent, even though all the accounting is in order. I have seen board members whose political or personal self-interest makes servant-leadership seem like a naive ideal. I have seen well-intended, intelligent board members whose potential contribution is thwarted by the mediocre activities they continue to be taught is the proper substance of governance. I have been amazed when board members say system improvement isn't warranted because "everything is going well now"--the same board members who in their market-tested business would never accept today's effectiveness to be sufficient for tomorrow's challenges. I have been amazed to hear a respected faculty member of a top university say that nonprofit boards are pretty good the way they are.

I am not alone in my unflattering observations about boards ("largely irrelevant," Gillies, 1992; "ornaments," Mace, 1971; and, most picturesquely, "ants on a log in turbulent water who think they are steering the log," quoted from an unnamed source by Leighton and Thain, 1997). Of course, the most famous damnation was Drucker's "they do not function" (1974). As my interest grew in boards in the mid-1970s, the attention of others was also turning to board roles, responsibilities, and effectiveness. Over the intervening years, discussion of boards has risen to a crescendo in business, nonprofit, and governmental arenas. Writers, such as myself, turned out exhortations at an increasing pace. Researchers took notice. If research can resolve the most effective cardiovascular training, treatment for schizophrenia, and auto emission control, can it not find the route to board effectiveness?

Board Effectiveness--The Muddled Debate

Let's get the stark truth out right away: No approach to governance by a governing board has been shown by credible, replicated research to be most effective.

In view of the extreme authority wielded by boards, their long history, and the two decades of steadily growing interest in them, the lack of research is incredible. Graduate schools, by and large, have not flocked to the issue. Business schools have ignored corporate boards. Schools of public administration, social work, health administration, and others have been slow to focus on anything higher than management. But negligible research does not mean no research. The number of published articles and books on the topic has grown. But we still have no definitive research on board effectiveness. Why?

I believe the reason is that we haven't figured out what we want governance to accomplish. That is, we don't agree on what boards are for. And it is impossible to research whether one or another method is more effective when we haven't gotten together on what they should be effective at! If a board is to raise funds, we can find what methods are more effective. If a board is to advise staff, we can find what produces the most useful advice. If a board is to find glitches in financial reports, we can find how that can best be done. But in each case, we must start with the purpose first or research on effectiveness is meaningless.

There appears to be little agreement on what boards are for, at least judging from actions people take. For some, the purpose of a board is to fulfill what the law or regulators require of boards. For others, the purpose of a board is to satisfy the managers; or to satisfy people who come to watch board meetings; or to satisfy a large contributor or major shareholder; or to satisfy board members with meaningful involvement; or to satisfy current clients, students, or patients, or other customers. These reference groups yield very different tests of board effectiveness.

So discovering what is "most effective" requires knowing what boards should produce. Deciding upon what boards should produce depends on our framing of the matter, our sense of why governance exists. In other words, what precedes effectiveness research is governance theory--said by some corporate governance writers (Mueller, 1996; Leighton and Thain, 1997, p. 29) not to exist! So it was that I determined some years ago, despite my own doctoral training in human behavior research, that the primary missing link in the governance quandary was not research but credible theory.

The Policy Governance model, which I developed beginning a quarter century ago, is often criticized for not being founded in research. Of course it isn't. It could not have been. Research is good at testing what is, but it is less inspiring at creating what isn't. The Policy Governance model was a leap of insight, a philosophical endeavor, not a research finding. The Policy Governance model was not discovered; it was invented.

Producing a Theory of Governance--Reaching for the Universal

The Policy Governance model became the first--and, arguably, still the only--theory of governance in the world. Theory it is, but not without a great deal of concrete experience behind its inception. I had been a chief executive working for boards for ten years, had created and chaired a national organization, and had served on numerous local boards. I had walked the walk, but was appalled at the conceptual fragmentation of what I was doing.

Why should the conduct of governance not be as impeccable as we expect school bus maintenance, surgery, accounting, and roof repair to be? Why should boards exhibit less responsibility than they require of the people who work for them? Why should the parts of an organization make more sense than the whole? Why must the most powerful organizational unit be the least studied, least developed, and least rational? Why should boards be excused from taking responsibility for their own jobs, a default viewed as acceptable by Herman and Heimovics (1991) and even by Drucker (1990)? Must mediocrity be acceptable just because it is the norm?

Holland chided prescriptive governance modeling as "idealized, even romanticized" (1991, p. 26). Herman (1989b) dismissed an appeal like mine for being a "heroic" board model. Admittedly, the competence and leadership I call for in the governance role, if compared to today's standards, may well seem idealized and romanticized. That is the burden of introducing a new order of things. But, given the massive accountabilities and powers of boards, why should we not expect heroic performance? Do we have any right to accept less?

Consider employees whose pension fund board controls billions of dollars of their retirement savings. Consider a school board whose actions affect the future of thousands of young people. Consider literally trillions of dollars of the world's wealth and millions of lives all to a considerable degree under the control of boards. How exactly are we to excuse anything less than heroic? Yet virtually without question we countenance far less competence in boards than we demand in pilots, surgeons, and cosmetologists. Must we really shoot so low?

Historically, however, we've not been short on using heroic words. Commonly accepted platitudes about boards being visionary leaders that deal with policy and delegate clearly have been unmasked as hollow rhetoric by recent writers. But why must that embarrassing revelation induce us to settle for a less heroic role, rather than to rally 'round the challenge to fulfill it. Having found that boards had feet of clay, governance writers were quick to adopt clay as a proper building material. If there is any chance that boards might fulfill the high hopes of servant-leadership (Greenleaf, 1991), is it not incumbent on us to try before throwing in the towel? Must we give up so easily when we haven't even tried the approach of better theory? And if there is no governance theory, I reasoned in the mid-1970s, why not create one?

Governance theory, of course, implies a degree of universality. A theory that fits only one board isn't very helpful. Can theory fit just mental health boards or trade associations? How about a theory that works for all nonprofits? But why stop there? Indeed, is it possible to find a universal theory that is truly universal--one that offers a paradigm for governing boards of any endeavor and in any land? A universal theory must cover all instances of board governance, yet have no more parts than necessary. Einstein's wisdom to "make everything as simple as possible, but not simpler" would certainly have to apply.

It is only right that justification is required of extraordinary claims. But when we start to examine the actual functioning of boards, the claims of Policy Governance begin to lose their air of radicalism, and might better be described as organized common sense. For example, all observers of boards would agree that a board should know its role as distinguished from other roles (such as the CEO's). They would undoubtedly agree that governing boards are accountable for the organizations they govern. They'd agree that the clearer a board is with delegatees about what it wants, the more likely it is that the board will actually get what it wants. They might even agree that employees function more creatively when the board gives them as much room to do things their own way as possible.

These statements and others upon which widespread agreement is possible constitute a body of characteristics that comprise a generic snapshot of good governance in any kind of organization at any stage of development. By itself, a list, however well constructed, is not sufficiently coherent and whole to be called a model, but it does establish that there are characteristics of good governance that are true across all cases. At this very low level of abstraction, it is not only possible that there be universally applicable truths about governance, it is almost impossible that there not be! Having reached that conclusion, the challenge was to construct a comprehensive, coherent framework of concepts and principles into an internally consistent paradigm. To the extent that internal congruity with external utility is accomplished, the higher-integrity meaning of the word model will have been achieved. It should not be surprising that the Policy Governance model is generically applicable, for it was intentionally constructed with only those elements that can claim universality.

The reaction to Policy Governance has been curiously mixed. Interest in it has spread to many countries and it is probably unrivaled in its influence on governance thinking, but the model has not come to be universally practiced. That in itself is not disturbing, for there is a great burden of tradition-blessed mediocrity to overcome and, for many boards, little incentive to make the effort. But the lack of informed criticism is disturbing. Whereas most book reviews have commented favorably on Policy Governance (usually while reviewing Boards That Make a Difference [Carver, 1990a, 1997]), some critics have spoken out against the model's stringency or practicality.

I would argue that these criticisms are based on fundamental misunderstandings. One critic has claimed, in effect, that the model is susceptible to human bungling--a charge so generic as to apply to anything: It is not valid criticism of improved auto safety devices to say that driver error can nullify their utility. A more common criticism is that Policy Governance is a "one size fits all" model--the erroneous suggestion here is that universal applicability is a dangerous fantasy: Because as individuals we are all unique does not prevent physicians from learning how the liver functions as though we are all the same. Some have charged that the model will fail if it is not applied in its entirety--as if it were possible for any coherent system to work when it is only partially applied: All the fine craft required to make my watch comes to naught by removing but one of the little wheels. Another criticism has made much of a limited study that suggests that board members were no more "satisfied" with Policy Governance than with any other model. The authors later conceded that they had been unable to discern whether, in fact, the boards had really been using Policy Governance when they made their study. I'd argue further that personal satisfaction of board members (particularly members chosen under existing expectations about board work) has no necessary connection to effective governance.

Many of the major organizations who would normally be expected to take the lead in governance improvement have largely been bystanders to Policy Governance--even as the model was spreading internationally and enjoying widespread esteem. The reasons that these organizations have practiced this disregard are almost certainly complicated; but in all cases, I believe that it is evidence of steadfast adherence to tradition-blessed wisdom. Ultimately, I believe this disregard is evidence of a reluctance to face new and innovative solutions to serious governance problems. If I am wrong about that--if, indeed, these organizations frankly think Policy Governance is ill-conceived or misguided--they have neglected to present a careful and scholarly criticism to their members and to the public. This is unfortunate, but the model has slowly been making inroads in these quarters; and it may simply be that change of the magnitude represented by Policy Governance will require even more time to take hold than I expected.

It should be no surprise that paradigm shifts encounter greater difficulty than, as Thomas Kuhn (1996) put it, "development-by-accumulation" (p. 2). Although we usually think of science as advancing smoothly and with unbiased commitment to new knowledge, Kuhn argues a compelling case for the resistance in science to enlightenment beyond the paradigms of the day. As to the social and psychological aspects of human existence, however, both Kuhn and Edward O. Wilson (1998) observe that impediments to paradigm shifts are far greater than in science. The process of a board as it goes about its business is, of course, more a matter of interpersonal interaction than physics. Overcoming tradition-blessed methods and mentality in governance should not be expected to move quickly.

The larger story of the Policy Governance model, however, has been its widespread success. It has been recognized by the Australian Institute Company Directors, and adopted by the Association of Community College Trustees, the Association of Junior Leagues International, British Petroleum, the United Nations Credit Union, and an international list that has grown far beyond any ability to enumerate. The list extends across a number of countries and is sufficient to give Policy Governance (or in some quarters, the "Carver model") arguably the greatest name identification of any approach to board work and to make Boards That Make a Difference (Carver, 1990a, 1997) a Jossey-Bass best-seller. Still, there is far to go. In bringing governance into the twenty-first century, the Policy Governance model may have been the spark that started the forest fire, but that fire still burns spottily, and in many strongholds of conventional wisdom the strong pronouncements of the model are easier to ignore than to confront.

The Policy Governance Model--An Instrument of Servant-Leadership in the Boardroom

The Policy Governance model is a carefully crafted framework, designed to enable intelligent, well-intended board members to govern as well as it is possible to do. That is, it channels the wisdom of board members, links them and their work to important constituencies, focuses them on the large long-term issues, and makes possible the optimal empowerment and fair judgment of management. These things require a powerful tool, indeed. But they also require that powerful tool to be precisely used. And although I have great feelings about the model, the model itself is a cold, even rigid instrument. The board chairperson of a well-known American nonprofit said that she welcomes a model that is itself passionless, because it provides a neutral receptacle into which she can confidently invest her own passion. My word processor is a passionless mechanism, indifferent to the ardor my words might hold for me; my automobile is only cold engineering, though it provides an emotional experience as well as transportation. For that matter, most games consist of a rigid set of rules, within which we are able to play, emote, and interpret excellence. In like manner, Policy Governance is an emotionless, rigid set of rules in the service of purpose, passion, and the emotional intensity that drives us to organize, to join our commitments and our efforts. My passion has been to press the conceptual integrity of this tool to the limit. But Policy Governance cannot make an uncommitted board committed, a sloppy board careful, or an unintelligent board intelligent. In the end, the personal virtues of board members as servant-leaders will determine whether the tool is used to their distinction or doomed to irrelevancy.

This Introduction is not the place to explain the specifics of the Policy Governance model, for the collection of publications to follow do just that, along with three books and fourteen monographs not represented here (Carver, 1990a, 1997; Carver and Mayhew, 1994; Carver and Carver, 1997; Carver and Carver, 1996-1997). But a brief summary may set the stage for the articles included in this collection, articles originally published in a variety of publications between 1990 and 2001.

First, it is important that Policy Governance is not a prescribed structure. It is a set of concepts and principles. Those principles often influence structure, but so do other factors peculiar to each organization.

Second, Policy Governance is not a management discipline but a governance discipline. That is, it is not a repackaging of management at a step higher than the real managers. It is, instead, a focusing of the owner-representative role one step below the real owners. In short, the board doesn't exist to determine so much what the organization does as what it is for. It views governance not as management one step up, but ownership one step down.

Third, the board is a locus of decision making in the owner-to-operator sequence of authority, not merely an overseer of management actions. The board is not an approver, but a generator, an active link in the chain of command.

Fourth, Policy Governance is not simply a compilation of all the old bromides about boards: Boards should make policy, boards should deal with vision and the long term, boards should avoid trivia, boards shouldn't meddle and micromanage, all board members should come prepared and participate, and so forth. These exhortations may be good ones, but they are elementary in the extreme--more fitting for Polonius than for a theorist. At any rate, it is embarrassing that they are the level addressed by many of the efforts to improve modern governance. Policy Governance goes much, much further.

Fifth, Policy Governance is not simply what happens when boards conscientiously conduct themselves up to the standards of the prevalent ideal, for it is the long-standing ideal itself that is flawed. Indeed, the model's precepts indict as obsolete the governance practices still promoted by many prominent organizations, and a host of other sources of tradition-blessed, business-as-usual governance instruction.

Sixth, the model is an operational description of Greenleaf's servant-leadership (Carver, 1999b) as it applies to a governing board. The board's primary relationship is with the legitimacy base or constituency that either legally or morally "owns" the organization; its secondary relationship is with the staff. I have described elsewhere the philosophical foundations of the model in servant-leadership and in Rousseau's social contract philosophy (Carver, 1999a, 1999b).

Let me explain what the model does not cover. The model does not dictate matters of structure, such as a specific set of committees, a certain board size, list of officers, or that there be a chief executive officer. Also, it doesn't deal directly with group dynamics, methods of needs assessment, basic problem solving, interpersonal relationships, fund raising, or the management of change. These are important topics but are well-addressed by other theorists and practitioners. None of them are exclusively governance topics, though they provide skills or insights that any decision maker can profitably use--including boards. What Policy Governance does provide is the framework in which the board views its job, therefore the framework within which these other skills can be applied. A Policy Governance board would be well-advised to make use of any skills that can enhance its performance--but what constitutes desired performance is itself a function of the governance model.

Policy Governance, then, was not born from notions of what a board should do, but an examination of what a board is for. When our idea about the purpose of governance shifts, many ramifications arise about what a board should do, what it should talk about, to whom it should relate and in what way, and other, even more concrete matters. Because the model begins by reconceptualizing the most fundamental aspects of boards, it operates at a level that applies to all boards. The reader of this book, for example, can be sure that the principles found here will apply to whatever governing board on which he or she sits. For example, even a board that has no staff at all--though it does not have as much need for advanced governance concepts--can find its work improved by conceiving of the two separate "hats" it wears when, first, it debates and decides purpose (as a board) then, second, goes out itself to get various aspects of the work done (as if it were its own staff).

I do not maintain that Policy Governance is the only generic, universal model of governance possible. Someday it will be seen as merely the earliest of a growing number of alternatives. But there is no doubt that Policy Governance is the most thoroughly thought-through, conceptually coherent and complete theory of governance in the world today. If it is still so in twenty years, however, I shall be flattered but profoundly disappointed.

The Personal Story--Successes and Failures

When my interest in governance began in the mid-1970s, my single motivation was to learn about a process that had thus far escaped my understanding. To put a finer point on it, I felt not only unenlightened, but ignorant. I had been by that time chief executive officer (CEO) in two mental health organizations and on several boards--one a national trade association--sometimes as chair. At a superficial level, boards were not a mystery to me, but I had the uncomfortable feeling of being part of a process that didn't fully make sense. Driven by my disquieting illiteracy, I read everything on boards I could find and went to countless conference seminars on board roles and responsibilities. The result of my fretting and studying was an even more troubling discovery that the state of the governance art was primitive, indeed. Governance practice was not (and is largely still not) built from the application of sound theory. It was and is a hodge-podge of bits and pieces that added up to trivia-beset agendas, inadequate forethought and planning, faulty delegation, inappropriate adaptation of management tools, unnecessary interpersonal struggle, default, role confusion, damaged people, and lost opportunity.

That so little discipline and design could characterize the most powerful position in organizations seemed inconceivable but was disappointingly true. So I set out to think the matter through, at least to make sense of the board role for myself. I could never have dreamed of what came to pass over the next quarter-century.

By the year 2000, twenty-five years later, I had done consulting work in Mexico, Canada, the United Kingdom (including Northern Ireland), Australia, Turkey, Ethiopia, Kenya, Tanzania, Switzerland, Austria, Germany, Belgium, The Netherlands, Denmark, Nepal, India, Argentina, and the United States. I'd worked with boards whose accountability was for up to $52 billion in assets and $50 billion annual revenues. My name had become associated with governance in many parts of the world, in some sectors more by far than any other name identified with the topic. Organizations in which I'd consulted included ones engaged in all manner of enterprise: nuclear power, telecommunications, petroleum, national defense, local and state public education, universities, colleges, private schools, hospitals, credit unions, fraternities, trade associations, lotteries, professional societies, voluntary health agencies, pension funds, social services, and more. But of all these experiences, let me cite a couple of examples out of the legion of instances of change induced by and enabled by the model--the first an international development agency, the second a national defense establishment.

The board of the development agency met quarterly to spend three days approving new development grants for recipients in Third World countries. The staff prepared briefing papers on scores of individual grants, complete with descriptions and even little inset maps of the affected sites. The board would listen to long explanations of a project, ask a few questions, then vote to approve. Failure to approve a project was a very rare event. The board, while happy to have such a competent staff, couldn't help feeling a bit like a rubber stamp. So to overcome that uncomfortable feeling, board members would ask even more questions than necessary and would occasionally resort to tinkering with project details in order to exert some influence. Policy Governance brought an entirely different view of governing the international development carried out by staff, one that resulted in entirely different board meeting agendas. The new board behavior was to spend time hearing from experts on needs in the Third World, debating the big-value choices, and deciding what outcomes would be sought in what populations and at what cost or priority. (An example of a big-value choice is whether the focus should be on the poorest of the poor or on the slightly more fortunate with whom larger life changes could be wrought for the same money.) The staff was free to devise projects without going through the charade that the board needed to help them do work for which they were hired. Board meetings became far more high-level, more philosophically satisfying to everyone, and the board's feelings of rubber stamping evaporated.

The national defense establishment, committed to using the Balanced Scorecard (Kaplan and Norton, 1996) (designed specifically for "mapping" management strategy), was also attracted to the delegation philosophy of Policy Governance, designed specifically for boards. It is interesting that this national organization has no governing boards at all but values ideas from any source in its commitment to improved defense management. Policy Governance is designed to optimize the balance of control and freedom. Control is necessary for accountability and for certainty that a system will perform as expected. Freedom is necessary to get the most out of human creativity, innovation, and sparks of ingenuity. The Policy Governance mantra of control all you must, not all you can, along with the model's differential control of means versus control of ends, enable maximum empowerment of subordinates without "giving away the shop." The defense establishment decided to use the ends-means differential in documents beginning as high as the minister of defense and extending down through the chiefs of army, air force, and navy, thence to their subordinates. The result of their integration of technologies from two separate domains was clearer jobs (therefore, clearer tracing of accountability and less ambiguity among jobs), but without the artificiality and rigidity of detailed prescription (therefore, freedom from procedure-strangulation).

In addition to direct work with thousands of boards, by the new century my wife (consulting colleague and author, Miriam Mayhew Carver) and I had trained 150 consultants and other leaders from five countries in an intensive five-day course of theory and application (called the Policy Governance Academy and ordinarily held in Atlanta). Some of these enthusiasts recently formed the International Policy Governance Association in order to begin to take over responsibility for further spread of the model worldwide. Although I had failed to reach the goal set twenty years earlier of transforming governance by the new millennium, the effects were gratifyingly far-reaching.

Back in the 1980s, efforts to find a publisher for my first book met with a number of rejections. Lynn Luckow, an editor at Jossey-Bass, was the first to find potential publishing merit in my work. As Lynn was promoted to CEO, Alan Shrader, at that time with Jossey-Bass, shepherded me gently through the production of Boards That Make a Difference (first published in 1990, then after ten printings, issued in a second edition in 1997). My wife, Miriam, and I wrote A New Vision of Board Leadership (Carver and Mayhew, 1994), The CarverGuide Series of monographs (Carver and Carver, 1996-1997), and then Reinventing Your Board (Carver and Carver, 1997). By the turn of the century, I had authored (or coauthored with Miriam) the three books, fourteen monographs, and over 160 separate articles, published in four countries. My publications had appeared widely, including in The Times (of London), Trustee, Solicitors' Journal, Economic Development Review, Practice of Ministry in Canada, Voices of Servant-Leadership Series, Association Management, Association, National Association of Corporate Directors Monograph Series, Chronicle of Philanthropy, The School Administrator, The National School Board Journal, The Corporate Board, Corporate Governance--An International Review, Gouvernance: Revue Internationale, Contributions, and Nonprofit World, as well as my Jossey-Bass bimonthly of over eight years running, Board Leadership.

How to Use This Book

The purpose of this book is to bring together in an easily accessible place many of the articles of this oeuvre otherwise scattered across many periodicals. Most of these articles have been unavailable to board members and their chief executives. A selection among the articles yielded the contents of this book. Nothing is included from the easily available books Boards That Make a Difference, Reinventing Your Board, and A New Vision of Board Leadership, or the twelve CarverGuide Series monographs.

This collection of articles is intended for a wide audience. Foremost, of course, it is for board members in any setting, along with the management staff who directly serve them. Boards and their staffs are in an important partnership, but the nature of that partnership can be more or less conducive to good governance and good management. Though boards must accept full responsibility for their own jobs, boards and their staffs would do well to study governance together. The book is also intended for consultants, researchers, funders, and other students of governance. The fact that Policy Governance did not grow out of research does not mean that research should not be used to test it. Raising governance dialogue to a new level may well generate new governance theory, perhaps theory that will displace Policy Governance from its current position in that arena. If so, my model will have made its greatest contribution.

This book is meant to be a reference work. There is no need to read it straight through, as with my (and our) previous books. We have done our best to organize it in a useful way, but the very nature of publishing in many organs, often covering more than one facet of the Policy Governance model, makes a cleanly distinct organization impossible. My hope is that the articles published here can be used for general reading of governance enthusiasts, can provide articles for board or academic discussion, and can be used as an occasional source for commentary on specific Policy Governance applications.

Acknowledgments

My foremost appreciation must be expressed to the publications that have graciously allowed the republication of these articles. I am greatly in their debt.

I owe enormous gratitude to Sir Adrian Cadbury for his support of my work and his gracious willingness to contribute the Foreword to this book. Long a respected leader in company boards, Sir Adrian became virtually an icon, his name known in corporate governance worldwide, following release in 1992 of Britain's famed "Cadbury Report"--still the best-known critique of corporate boards.

Ocean Howell and Dorothy Hearst of Jossey-Bass saw the value to readers in such a book and were supportive and most indulgent with my whims, schedules, and intentions. Ocean, as lead editor, mastered massive amounts of material and contributed insights that were consistently helpful.

I am indebted to the graduates of the Policy Governance Academy who helped in assembling the frequently asked questions (FAQs): Barbara Hanna, Carol Gabanna, Linda Stier, Margaret Keip, Jannice Moore, Judi Osborne, Anne Dalton, Catherine Raso, Michael Conduff, Linda Dawson, and Randy Quinn.

Ivan Benson, faithful and patient executive assistant, keeps all the logistics of my consulting practice ordered so I can think about ideas and how to present them. Without his stewardship of my work life, many of my words would not find their way to paper.

As always, Miriam Carver, has been my most model-knowledgeable supporter, knowing at times more than I do myself what I intend for the intellectual soundness of Policy Governance. As to Policy Governance integrity, Miriam fulfills this astute definition of a friend: someone who knows the words of your song and sings them back when you forget. No one knows Policy Governance better than she.

Thanks to everyone who has given me the opportunity, however inadequately I may have performed, to change the world just a little bit.

John Carver
Atlanta, Georgia
August 2001
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  • Anonymous

    Posted November 19, 2001

    Practical Advice on Governance

    This book is a gold-mine of practical information about the application of Policy Governance®. Boards will find a wealth of wisdom from former issues of Board Leadership, as well as a number of articles published in industry-specific journals that were not previously easy to find, now all in one convenient, easy-to-use package. Articles are short, easy-to-read, and of practical ¿hands-on¿ value. The FAQ section permits the reader to zoom in on particular areas of interest. As a consultant in Policy Governance , I find the book to be a very user-friendly reference. For boards using the model, it is an invaluable resource. This is a book that can be read cover to cover, or can be ¿dipped into¿ to address specific issues facing a board at any given point in time. A must for your board¿s reference and on-going development.

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