Reinventing Your Board: A Step-by-Step Guide to Implementing Policy Governanceby John Carver, Miriam Carver
Carver’s groundbreaking Policy Governance model is the
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In the second edition of this best-selling Policy Governance operating manual, John Carver and Miriam Carver make this exciting approach to effective governance even more accessible and user-friendly, gleaning lessons learned in years of practice to help readers understand and use this invaluable model.
Carver’s groundbreaking Policy Governance model is the best-known, respected, and talked about governance model in the world and has fundamentally influenced the way organizations are governed. Reinventing Your Board, second edition, is a hands-on, step-by-step guide that puts the model to work in the meeting-to-meeting lives of board members. It includes new policy samples and a new chapter on monitoring performance, as well as other practical “put-the-model-in-motion” advice. This popular and highly successful companion to Boards That Make a Difference contains the nuts-and-bolts materials needed for implementing Policy Governance. The authors illustrate effective board decision making, show how to craft useful policies, and offer practical advice on such matters as setting the agenda, monitoring CEO performance, defining the board role, and more. Step-by-step instructions and sample policies make this a must-have resource for boards in the public and nonprofit sectors aiming to govern their organizations with excellence.
"This clear, chair-friendly book is the ultimate how-to manual for a board determined to ensure the future as they would envision it. No chairman should be without it." (George Dessart, chair, board of directors, American Cancer Society)
"This 'how-to' navigational tool will help boards get policy governance right the first time. It is a must for anyone looking to make their board effective into the next century." (Susan Elliott, president, The Law Society of Upper Canada)
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Reinventing Your BoardA Step-by-Step Guide to Implementing Policy Governance
By John Carver Miriam Mayhew Carver
John Wiley & Sons, Inc.Copyright © 1997 Jossey-Bass Inc.
All right reserved.
Chapter OneSetting the Stage
This is great in theory, but how do you actually do it?
In teaching the principles of the Policy Governance model to boards all over North America (and beyond), we have become accustomed to hearing some typical questions. The one that opens this chapter is among the most common. People are generally drawn to the simple logic of Policy Governance, but they recognize that it differs radically from their experience of boards and the board-staff relationship. Indeed, how do you actually do it?
It's a good question. Policy Governance, like any important job, is a process that has to be done right. The board is at the top of any organization, with authority over and accountability for that organization. With that kind of leverage, getting governance wrong is costly.
Implementing the Policy Governance model means developing your governing policies according to the principles of the model, then consistently using these unique documents according to those same principles. The largest part of this book (Part Two) will guide you through a process of developing those policies. But first, how can your board get ready to embark on the process of creating policies?
In order to implement Policy Governance, your board members must understand its theoretical principles. We hope that all board members are already familiar with the model. Still, it will be helpful to refer frequently to Boards That Make a Difference or to our theoretical review in Chapter Two of this book.
This chapter helps you set the stage for a successful change process. What follows are some frequently asked questions about the process of developing policies. They give us the opportunity to suggest methods and procedures that you may find useful in planning your work.
Are there situations or organizations in which Policy Governance is not appropriate?
Policy Governance was designed to be generic, so it should be applicable whenever a board faces the task of governing. The fundamental model does not require that an organization have a CEO, or even a staff, in order for the model to work (though these extensions of board authority make Policy Governance work better). The model does not depend on the organization's being a start-up operation or a mature one. And it is not related to whether an organization is for-profit, nonprofit, or governmental. We have certainly found situations in which Policy Governance is more difficult to implement. We have found that varying types of organizations and circumstances impose idiosyncrasies on the way the model is applied. But our interactions with board members and executives in widely different cultures from several continents support our confident assertion that the model works well in any situation.
Since Policy Governance creates a powerful board, why would it be attractive to CEOs?
Policy Governance does, indeed, strengthen the governing role, but it does not undercut legitimate CEO prerogatives. For most CEOs in public and nonprofit organizations, executive authority will be greater under Policy Governance than under traditional governance. To be more accurate, however, whether the CEO is more powerful or not is a function of how the board has been operating prior to Policy Governance. If the board has been rubber stamping everything the CEO wants done, then perhaps the CEO loses some power. If the board has been intruding into management, then the CEO gains some power. But Policy Governance is not about the board controlling more or less. It is about the board controlling the right things appropriately. So what can always be counted on under Policy Governance is that board and CEO prerogatives are far clearer and more rationally derived. Since the greatest source of stress for most CEOs is board behavior (as distinct from the straightforward pressure to perform), Policy Governance offers a more sane, even if more demanding, work environment.
How do we run two concurrent governance systems while moving toward Policy Governance?
You don't. You continue to govern as you always did until you are ready to use Policy Governance. Your board will be aware as it develops its policies that its new governance will result in the abandonment of much of the old system, and the sense of living in two worlds may well be bewildering. So rapid development of the new governance will minimize the confusion of having two approaches side by side. We caution you however not to change what you are doing until you are ready to change it all. Incremental governance change does not require this all-or-nothing care, but paradigm shifts-like the move to Policy Governance-are best made in this way. So once you have started the process of policy development, try to complete it as soon as you can.
Where do we begin, with policies about where we want to go (ends) or with policies about who does what to get there (means)?
We strongly recommend that your board develop all its policies restricting the means choices of the CEO (Executive Limitations) and those describing its own means (Governance Process and Board-CEO Linkage) before proceeding to Ends policies. You may find it odd to develop policies about means before determining Ends. We recommend this sequence because it enables the board to be clear about its own job and the jobs of its officers and committees, as well as to clarify the authority of the CEO early in the process. We have observed that boards traditionally fail to attend to Ends issues largely because they are so distracted by immediate means concerns. Further, completing means policies first allows the model to be adopted and put into use even before the board gives its full (and invariably more time-consuming) attention to Ends issues. When the board gets to Ends, it begins a job that remains its ongoing focus in perpetuity.
If it still seems illogical to make policy about staff means before having made policy about Ends, remember that in Policy Governance the board does not enact staff means policies that instruct the CEO how to do his or her job. Instead it enacts policies that prohibit some board-determined unacceptable means.
Just so we don't confuse you, we occasionally refer to Governance Process and Board-CEO Linkage categories, taken together, as board means-as distinguished from staff means. Staff means, of course, are board-controlled by the use of Executive Limitations policies. We employ another convention as well: we use lowercase when we speak of "ends" as a concept or idea, but we capitalize the word when referring to the policy category, Ends.
Which means policies should be developed first?
Part Two of this book includes a chapter for each of the policy categories used in Policy Governance. As to policies that deal with staff means and board means (omitting Ends for a moment), we have arranged them with the chapter on Executive Limitations policies first, then the chapter on Governance Process policies, followed by Board-CEO Linkage policies. There would be no problem with following exactly this order as your board proceeds through its policy development work. On the other hand, your board may wish to use a different sequence. Since none of the policies will come into effect until all three categories are completed, it really does not matter which of these three categories is completed first. Your board may have its own preference.
Many boards prefer to start with Executive Limitations, since these cover the issues that boards are ordinarily most worried about. There is some logic to this. When things go embarrassingly wrong in organizations, staff means issues are usually involved. Your board may wish to establish these controls on the CEO early. But some boards elect not to work first on Executive Limitations-the only negatively worded policies-for they prefer not to start on a negative note.
A number of boards we've worked with prefer to deal with Governance Process policies first, since they clarify the job of the board. Like them, your board may wish to start by establishing the expectations that it will have of itself before moving on to instructions to the CEO.
Still other boards begin by examining carefully the concept of CEO as it is used in Policy Governance. These boards start their policy development in the Board-CEO Linkage section. If this is your board's choice, remember that it will have to leave one of the Board-CEO Linkage policies incomplete (the Monitoring Policy) until Executive Limitations policies have been completed. That is because the Monitoring Policy sets forth the frequency and method of monitoring Executive Limitations and Ends policies, neither of which would have been created at this time.
Should we start from a blank sheet of paper?
Except for your work with Ends (which must begin from scratch), we wouldn't recommend it. You will find yourselves engaged in the deadly art of group writing before you know it! In fact, a major use of this book is to provide model policies that can be points of departure in developing your own policies. The policies that you will find in this book may not say what you need to say. They may exclude values that you strongly need to include in your policies. But they are a model-consistent starting point. We suggest that when your board works on the policies that make the Policy Governance model a reality for your board, you work systematically through the examples we have offered, changing them to reflect the values that your board wants to express. You must follow the principles about policy format, which we discuss in the next chapter, but the content of the policies is for you to make value judgments about.
Should we hire a consultant to help?
Arguments can be made in support of either using or not using such help. First, a consultant is not a help if he or she does not know the Policy Governance model thoroughly. Since Policy Governance has achieved a measure of popularity, many consultants have begun professing expertise that they do not have. We recommend that you inquire carefully into where they received their training in the model's theory and implementation. Second, a trained consultant is going to add to the up-front cost of the change process your board will go through. If the consultant is fully qualified, this help will almost certainly be worth the cost. However, a board that can take itself quickly through policy development may not need additional help. If there is a risk that your board will take months to develop its policies, it will be worth the cost to hire a consultant, for a properly trained person can guide most boards through most policies in one or two long days of hard work. The larger the organization, the more the cost of consulting help is cheap insurance against faltering in the process of implementation. In any event, this book is designed for use with and without consulting help.
If we don't use a consultant, should the chair lead the process?
Anyone on the board who knows the model well can lead the process. Sometimes the chair is the person most familiar and comfortable with the model, but if this is not true for your board, don't use the chair as the leader of the process. It is useful to have a designated leader in the work of developing governing policies, but who that person is may not be important. Choose someone who knows the model well, who can help the board stay on track, and who can include everyone in value discussions. Then, having chosen your workshop leader, let that person lead.
Can the CEO be the leader?
Great care should be taken to keep the CEO's role separate from the role of the board. The board can delegate a great deal to the CEO, but to avoid role confusion, it should not give the CEO responsibility for any part of the board's governance. Still, if the person with the best knowledge of the Policy Governance model is the CEO, it may seem wasteful not to use the CEO's expertise. If you decide to use the CEO as your leader, arrive with him or her at an understanding that the role to be performed is one of facilitation only. The CEO should not influence governance decisions beyond making relevant information available.
Should the CEO be present during the board's policy development work?
Yes. The CEO is a valuable resource. He or she has a great deal of information that the board may need in developing its policies. Not to use one of the board's most valuable resources would be a shame. The CEO, however, should not be making, but simply informing, board decisions.
Should other staff be present during the board's policy development work?
The other staff work for the CEO. Let the CEO decide. He or she will probably need the voices of other staff from time to time to contribute information that is relevant to the board's discussion. As you will see shortly, there will also be a need for someone to take careful notes.
Shouldn't a staff member keep a record of the board's policy development?
As your board makes its decisions about policy content, make sure someone writes them down. After the work, a copy of the board's own version of policies can be prepared from the discussion. The person who writes down the board's decisions can be anyone on the board or the CEO. If the board chooses the CEO, the CEO can bring in a staff member to carry out his or her responsibility.
What happens to our current distinction between policy and procedure?
You no longer need it. It is a distinction left over from having no technology of governance and, in light of that, doing whatever we could to find some way to differentiate board work and staff work. A framework designed specifically for the board's job changes all that. With Policy Governance, the distinctions are only (1) type of decision or policy-the four categories we discuss in detail in Chapter Three-and (2) size of decision or policy. These are the only distinctions, and they make unnecessary any further worry about policy versus procedure, strategy versus tactics, policy versus administration, or goals versus objectives. To drag these old distinctions over into your Policy Governance practice will reduce your effectiveness.
We already have a number of policies. Will that give us a head start?
Unfortunately, in all likelihood it will not, except perhaps in a minor way. Develop your new Policy Governance policies as if you have never had policies or made decisions at all. We know that advice will sound wasteful of your time, but we can assure you that it, in fact, saves a great deal of time.
Excerpted from Reinventing Your Board by John Carver Miriam Mayhew Carver Copyright © 1997 by Jossey-Bass Inc.
Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
What People are saying about this
Mike Whitlam, adviser, UK Office of Communications (Ofcom) and former director general, British Red Cross Society, London
"This book has been an invaluable resource for our board members as we have adopted the Policy Governance model. It is an excellent road map for the implementation of the model, answering many practical questions and providing numerous examples of applications in a variety of settings. I strongly recommend it for any board wishing to improve its effectiveness."
Sister Patricia Lorenz, CSJ, board chair, Carondelet Heatth, Kansas City, Missouri
"This clear and chair-friendly book is the ultimate how-to manual for a board determined to ensure the future as they would envision it. No chairman should be without it."
George Dessart, former chair, board of directors, American Cancer Society, Atlanta
"John Carver 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."
Larry C. Spears, CEO, The Greenleaf Center for Servant-Leadership; editor, Reflections on Leadership, Insights on Leadership, Servant Leadership, and The Power of Servant Leadership; co-editor, Practicing Servant Leadership and Focus on Leadership
"What I value about John Carver’s thinking is that it provides a logical and coherent base, a unifying theory of governance that covers both the corporate and voluntary sectors, a universal definition of the difference between governance and management rather than the more usual approach of attempting to allocate functions between them."
Sir Adrian Cadbury, former chancellor, Aston University; former director, Bank of England; chairman, UK Committee on Financial Aspects of Corporate Governance (source of the "Cadbury Report"); recipient of the 2001 International Corporate Governance Network award; author of The Company Chairman and Corporate Governance and Chairmanship
Meet the Author
Miriam Carver has worked with boards in both public and nonprofit sectors in North America, Europe, and Southeast Asia. She is coeditor of the bimonthly Board Leadership and coauthor of the books A New Vision of Board Leadership, The Board Member's Playbook, and the CarverGuide Series on Effective Board Governance.
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