Boards That Make a Difference E-Book

John Carver

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: J-B Carver Board Governance Series
• Sprache: Englisch

Seitenzahl: 640

Veröffentlichungsjahr: 2011

Beschreibung

In this revised and updated third edition, Carver continues to debunk the entrenched beliefs and habits that hobble boards and to replace them with his innovative approach to effective governance. This proven model offers an empowering and fundamental redesign of the board role and emphasizes values, vision, empowerment of both the board and staff, and strategic ability to lead leaders. Policy Governance gives board members and staff a new approach to board job design, board-staff relationships, the role of the chief executive, performance monitoring, and virtually every aspect of the board-management relationship. This latest edition has been updated and expanded to include explanatory diagrams that have been used by thousands of Carver's seminar participants. It also contains illustrative examples of Policy Governance model policies that have been created by real-world organizations. In addition, this third edition of Boards That Make a Difference includes a new chapter on model criticisms and the challenges of governance research.

Leseprobe

Table of Contents

Other Carver Resources

Title Page

Copyright Page

Preface to the Third Edition

Preface

Organization of the Book

Acknowledgments

The Author

Dedication

Prologue

Introduction

Chapter 1 - Leadership by Governing Boards

The Vision

Varieties of Boards

Life in the Muted Market

Producing What Owners Want

The Flaws of Governance

Inadequate Prescriptions

Governance as Unique Management

Effects of Recent Corporate Governance Reforms

Toward a New Governance

Next Chapter

Chapter 2 - Policy as a Leadership Tool

Policies as Values and Perspectives

Leadership Through Policies

Reinventing the Meaning of Board Policy

Categories of Board Policy

Next Chapter

Chapter 3 - Designing Policies That Make a Difference

Getting Serious About Policy

Policies Come in Sizes

The Approval Syndrome

Policy Development

Next Chapter

Chapter 4 - Focusing on Results

Transcending the Organization

Confusing Ends and Means

Expressing the Global Ends

Expanding on the Global Ends

Long-Range Planning

Evaluating Ends

No Pain, No Gain

Ends Policies on the Policy Circle

Next Chapter

Chapter 5 - Controlling Ethics and Prudence

The Enticing Complexity of Operations

The Board’s Stake in Staff Practices

Control Through Proactive Constraint

Policies to Limit Staff Action

Typical Executive Limitations Topics

Summary of Delegation with Ends and Executive Limitations

Executive Limitations Policies on the Policy Circle

Next Chapter

Chapter 6 - Strong Boards Need Strong Executives

Defining a CEO

Monitoring Executive Performance

Keeping the Roles Separate

The Management Sequence

Board-Management Delegation Policies on the Policy Circle

Next Chapter

Chapter 7 - The Board’s Responsibility for Itself

The Moral Ownership

The Board’s Responsibility for Board Performance

Diversity and Dynamics

Board Products: A Job Description

The Basic Board Job Description

The Board’s Hands-On Work

Governance Process Policies on the Policy Circle

Next Chapter

Chapter 8 - Officers and Committees

Officers

Committees

Comments on Traditional Committees

Next Chapter

Chapter 9 - Policy Development by Levels

The Crucial Difference Between Levels and Lists

Form and Function

Examples of Policy Expansion

The Importance of Format

The Continuing State of Policies on the Policy Circle

Next Chapter

Chapter 10 - Making Meetings Meaningful

Managing a Talking Job

Planning the Agenda

Getting Started

Collecting Board Wisdom

The Character of Meetings

Next Chapter

Chapter 11 - Maintaining Board Leadership

Be Obsessed with Effects for People

Dare to Be Bigger Than Yourself

Respect Your Words

Invest in Selection and Training

Surmount the Conventional Wisdom

Make Self-Evaluation a Regular Event

Perpetually Redefine Quality

Next Chapter

Chapter 12 - But Does It Work?

Criticisms of Policy Governance

How Much Policy Governance Is Required to Be Policy Governance?

Research on the Effectiveness of Governance

Policy Governance and Excellence in Board Leadership

Resource A: Varieties of Policy Governance Applications

Resource B: Bylaws

Resource C: Glossary

References

Index

“Dr. Carver is the best-known and most highly regarded scholar and practitioner in the field of not-for-profit corporate governance and the leading exponent, throughout the world, of the value and necessity of improving the governance of these organizations. Indeed, he is the father of contemporary governance practices in the extremely large not-for-profit sector.”

—Dr. James M. Gillies, professor emeritus, York University Schulich School of Business, Toronto; former Member of Parliament and senior policy adviser to the Prime Minister; coauthor, Inside the Boardroom; author of Boardroom Renaissance, Facing Reality, and Where Business Fails

“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. We have waited long for a book which analyzes the roles of boards from first principles. The Policy Governance model fills that bill and thereby makes a fundamental contribution. For the first time, we are offered a fully integrated and coherent system of governance, a significant advance in management thinking, as near a universal theory of governance as we at present have.”

—Sir Adrian Cadbury, former director, Bank of England; former chairman, Cadbury Schweppes; former chancellor, Aston University; 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

“Dr. John Carver is internationally recognized as the leader in improving the governance of nonprofit organizations. His Policy Governance model has been adopted by numerous organizations on five continents. Widely considered the leading pioneer in reconceptualization of the board-executive partnership, Dr. Carver offers a visionary yet practical approach to governance design that is truly transforming, powerful, and attainable.”

—Drs. Jeffrey L. Brudney and Thomas P. Holland, codirectors, The University of Georgia Institute for Nonprofit Organizations, Athens

“John Carver is the new guru of nonprofits.”

—Books for Business, Toronto

“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, former Secretary of Defence, Australian Department of Defence, Canberra

“In the Company Secretary’s Office of BP, we owe a great deal of debt to Dr. Carver, and, in our opinion, his ideas on how boards should work are without equal.”

—Rodney L. Insall, former vice president, corporate governance, British Petroleum, London

“John is not only refreshingly revolutionary in his thinking but he matches his bold thinking with the ability to communicate with both passion and precision. Add to these qualities his thorough professionalism and you have an individual who towers over others in the field.”

—Jerry Cianciolo, editor, Contributions

“John Carver’s Boards That Make a Difference was required reading for board members of the Calgary Philharmonic Society. It provided a clear and concise road map with which we carried out significant governance restructuring of the society.”

—James M. Stanford, past chairman, Calgary Philharmonic Society; former president and CEO, Petro-Canada, Alberta, Canada

“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 C. Spears, CEO, The Greenleaf Center for Servant-Leadership; editor, Reflections on Leadership, Insights on Leadership, Servant Leadership, The Power of Servant Leadership; coeditor, Practicing Servant Leadership and Focus on Leadership

“Boards That Make a Difference is a unique contribution to the field of governance. Its insights into the use of policy and the need to separate governance from management are carried throughout the analysis to produce a governance model that is conceptually complete and internally consistent. Dr. Carver’s ideas—his Policy Governance model—on how boards should work makes an unparalleled contribution to this essential subject.”

—Judith C. Hanratty, former company secretary, British Petroleum, London

“Carver’s Policy Governance model focuses our directors on developing the ends for which our organization exists, while holding the CEO accountable through written policies for their accomplishment.”

—T. Wayne Whipple, CFA, former executive director, New York Society of Security Analysts, New York

“John Carver’s Policy Governance model has taught me the board is not supposed to be the better alternative to management, but has to set ends and limit means for management. Many boards do not understand their own role and try to duplicate management.”

—Folkert Schukken, chairman, Council on Corporate Governance and Board Effectiveness of the Conference Board Europe, The Netherlands

Other Carver Resources

Reinventing Your Board: A Step-by-Step Guide to ImplementingPolicy Governance, Revised Edition, by John Carver and Miriam Carver

John Carver on Board Leadership: Selected Writings from the Creator of the World’s Most Provocative and Systematic Governance Model, by John Carver

Board Leadership: Policy Governance in Action, co-executive editors John Carver and Miriam Carver

The Board Member’s Playbook: Using Policy Governance to Solve Problems, Make Decisions, and Build a Stronger Board, by Miriam Carver and Bill Charney

Corporate Boards That Create Value: Governing Company Performance from the Boardroom, by John Carver and Caroline Oliver

The CarverGuide Series on Effective Board Governance (12 guides), by John Carver and Miriam Carver

John Carver on Board Governance (video)

Empowering Boards for Leadership: Redefining Excellence in Governance, by John Carver (audio)

The Policy Governance Fieldbook: Practical Lessons, Tips, and Tools from the Experiences of Real-World Boards, editor Caroline Oliver

Copyright © 2006 by John Wiley & Sons, Inc. All rights reserved.

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Library of Congress Cataloging-in-Publication Data

Carver, John.

p. cm.

Includes bibliographical references and index.

1. Directors of corporations. 2. Associations, institutions, etc.—Management. 3. Nonprofit organizations—Management. I. Title.

HD2745.C37 2006

658.4’22—dc22

2005033970

ISBN-13: 978-0-7879-7616-3 (cloth) ISBN-10: 0-7879-7616-4 (cloth)

HB Printing

Preface to the Third Edition

The Policy Governance conceptual model that I created in the mid-1970s has now spread internationally, arguably becoming the approach to board leadership that is most frequently identified by name worldwide. Indeed, becoming “Carverized” is a frequently used eponym. My wife, Miriam Carver—who has joined me as the authoritative source on model theory due to her extensive knowledge of Policy Governance—and I have trained over 250 consultants and board leaders from eight countries, providing them with intensive advanced instruction in the model’s theory and practice. Some of those persons have gone on to establish the International Policy Governance Association.

Since the first edition of this book was published in 1990, at least eight other books consistent with the Policy Governance model have been published, as well as over two hundred articles. The bimonthly newsletter Board Leadership, which I co-edit with Miriam Carver and which is entirely devoted to Policy Governance theory and implementation, passed its eightieth issue in mid-2005. Policy Governance materials have been published in Spanish, Portuguese, French, Russian, and Dutch. Direct personal consulting and presentations have taken Miriam and me to nineteen countries.

My interest in governance began in the mid-1970s, a story I retold in detail in the Foreword to The Policy Governance Fieldbook (Oliver and others, 1999). That interest, and my frustration at the patchwork of practices that governance had become (and largely still is), impelled me toward as conceptually coherent a set of universal governance principles as I could devise. My scientific and research background undoubtedly had much to do with my pushing as far as I could toward an integrated system of thought. I was suspicious of what Thomas Kuhn (1996) called “development by accumulation” (p. 2) and was by nature in agreement with E. R. Dodds’s sentiment: “Where men can build their systems only out of used pieces the notion of progress can have no meaning—the future is devalued in advance” (Dodds, 1973, iii, 633).

Unfortunately, however, it was that same scientific mentality that led me to describe the Policy Governance system as a “model,” meaning the scientific sense of conceptual coherence rather than the more mechanical sense of organizational structure. I could as easily have spoken of a governance “technology,” “theory,” “operating system,” or “philosophy.” Inasmuch as the word model has led to some unnecessary resistance to my concepts it is not clear to me that I made the best choice. My search, however, was intended to uncover principles of governance that were not only universal in their application but integrated into a seamless and practical whole that would deserve to be designated a model.

Over the years, the model has been received with interest and even enthusiasm in a number of countries. Endorsements have been received from, among numerous others, Peter Dey and James Gillies in Canada, Robert Monks and Earnest Deavenport in the United States, John Hall in Australia, and former British Petroleum company secretary Judith Hanratty. Perhaps the most pleasing endorsement was that from Sir Adrian Cadbury, who in 1990 unleashed the modern international flood of corporate governance reform. Sir Adrian (Cadbury, 2002b) said of Policy Governance, “For the first time, we are being offered a fully integrated and coherent system of governance” (p. xiii).

I published the earliest form of my theory in the late 1970s, then expanded on it with increasing frequency in the ensuing years. It was not until 1990 that the Policy Governance model found expression in book form in Boards That Make a Difference. Unexcelled sales for this kind of book led to a second edition in 1997. I am delighted now to present the third edition.

This edition differs more from the second edition than the second did from the first. I have added explanatory diagrams that tens of thousands of seminar participants have found useful. Policies created by real organizations that are used to illustrate my points have been updated, and more explanation on monitoring performance is given. An additional chapter on the problems and challenges of governance research has been added. Due to the mountain of Policy Governance publications since 1990, I have changed my approach to references. References clutter the text, even though they give readers further sources of information. So except for citations for quotations or other specifics, references are found in the “Further Reading” lists at the end of each chapter but are keyed to the text with “Want More?” icons inserted near the topics they augment.

I am grateful to the organizations that have allowed me to use their board policies to illustrate various points in the text, as well as to the individuals who have allowed their words to be quoted. To all the individuals and organizations who made statements and policies available that space constraints kept me from using, I am as grateful as if they had been published.

As always, I thank the countless boards, board members, executives, consultants, and other governance enthusiasts who have given my work so satisfying a reception for three decades.

Atlanta, GeorgiaDecember 2005

John Carver www.carvergovernance.com

Further Reading

1. Carver, J. “Leadership du conseil: ‘The Policy Governance Model’” [Board leadership: The Policy Governance model]. Gouvernance Revue Internationale (Canada), Spring 2000, 1(1), 100-108. Reprinted under the title “A Theory of Corporate Governance: Finding a New Balance for Boards and Their CEOs” in J. Carver, John Carver on Board Leadership. San Francisco: Jossey-Bass, 2002.

Carver, J. “Model corporativnogo upravleniya: novyi balance mezhdu sovetom directorov i managementom companii” [The model of corporate governance: New balance between the board of directors and company’s management]. Economicheski Vestnic (Yaroslavl, Russia: Yaroslavl State University), 2003, no. 9, pp. 101-110.

Carver, J. “Teoriya Corporativnogo Upravleniya: Poisk Novogo Balansa Mezhdu Sovetom Directorov i Generalnym Directorom” [Corporate governance theory: New balance between the board of directors and the chief executive officer]. A summary. In E. Sapir (ed.), Russian Enterprises in the Transitive Economy: Materials of the International Conference. Vol. 1. Yaroslavl, Russia: Yaroslavl State University, 2002.

Carver, J., and Oliver, C. Conselhos de Administração que Geram Valor: Dirigindo o Desempenho da Empresa a Partir do Conselho [Boards that create value: Governing company performance from the boardroom]. (P. Salles, trans.). São Paulo: Editora Cultrix, 2002. Carver, J. Una Teoria de Gobierno Corporativo [A theory of corporate governance]. Mexico City: Oficina de la Presidencia para la Innovación Gubernamental, 2001.

Carver, J. “Un modelo de Gobierno Corporativo para el Mexico moderno” [A corporate governance model for a modern Mexico]. Ejecutivos de Finanzas (Instituto Mexicano de Ejecutivos de Finanzas), in press.

Maas, J.C.A.M. “Besturen-op-afstand in de praktijk, Het Policy Governance Model van John Carver” [To bring “non-meddling governance” to life, the Policy Governance model of John Carver]. VBSchrift, 1997, 7, 7-10.

Maas, J.C.A.M. “Besturen en schoolleiders doen elkaar te kort” [Boards and principals fail in their duties toward each other]. Tijdschrift voor het Speciaal Onderwijs, Nov. 1998, 71(8), 291-293.

Maas, J.C.A.M. “Besturen-op-afstand in praktijk brengen” [To bring “non-meddling governance” to life]. Gids voor Onderwijsmanagement, Samsom H. D. Tjeenk Willink bv, Oct. 1998.

Maas, J.C.A.M. “De kwaliteit van besturen, Policy Governance Model geeft antwoord op basisvragen” [The quality of governance: Policy Governance answers fundamental questions]. Kader Primair, Jan. 2002, 7(5), 26-29.

Maas, J.C.A.M. “Policy Governance: naar het fundament van goed bestuur” [Policy Governance: To the foundation of good governance]. TH&MA, Tijdschrift voor Hoger onderwijs & Management, 2004, 11(3).

2. Cadbury, A. “Foreword.” In J. Carver and C. Oliver, Corporate Boards That Create Value: Governing Company Performance from the Boardroom. San Francisco: Jossey-Bass, 2002b.

Cadbury, A. “Foreword.” In J. Carver, John Carver on Board Leadership: Selected Writings from the Creator of the World’s Most Provocative and Systematic Governance Model. San Francisco: Jossey-Bass, 2002c.

Preface

This is a book about boards, particularly boards of nonprofit and public organizations. But rather than describe nonprofit and public boards, councils, and commissions as they are, Boards That Make a Difference prescribes how they can be.

This is a hopeful book. Boards can be the forward-thinking, value-oriented, leading bodies we claim them to be. In my consulting work with a multitude of boards and chief executives, I have found a great deal of cynicism and resignation. Knowledgeable skeptics think boards can never get beyond being spoon-fed by their executives and that, because of their nature, boards must remain fundamentally reactive. With good evidence, many people believe that boards will always stumble from rubber-stamping to meddling and back again. They believe the realities of group decision making forever destine boards to be incompetent groups of competent people. My impressions, too, are just as dismal, but I believe the cynicism is justified only so long as boards continue to be trapped in an inadequate design of their jobs.

Board members are as conscientious and as giving a group as one could ever hope to find. Members of volunteer boards and underpaid public boards interrupt their personal and occupational lives to support something in which they believe. There is not adequate space to give sufficient credit to the works wrought by board members in any given community in one year. The personal drive of board members has accomplished formidable tasks. The perseverance of board members has surmounted seemingly intractable barriers. The patience of board members has outlasted drudgery. The generosity of board members has made the impossible possible.

Board members arrive at the table with dreams. They have vision and values. In many cases, their fervently held beliefs and sincere desire to make a difference impel them to board membership in the first place. Symphony board members want to improve community culture. City councilpersons want to increase the benefits of citizenship. A trade association board wants to augment business opportunities. School board members want to prepare children for life. Boards of hospitals, port authorities, social agencies, chambers of commerce, credit unions, and other organizations want to offer their constituents a better life.

Yet, by and large, board members do not spend their time exploring, debating, and defining these dreams. Instead, they expend their energy on a host of demonstrably less important, even trivial, items. Rather than having impassioned discussions about the changes they can produce in their world, board members are ordinarily found listening passively to staff reports or dealing with personnel procedures and the budget line for out-of-state travel. Committee agendas are likely to be filled with staff material masquerading as board work. Even when programs and services are on the agenda, discussion almost always focuses on activities rather than intended results. Boards are less incisive, goal directed, and farsighted than their average members.

Much as board members and executives unintentionally conspire to water down the powerful work of genuine governance, they often have a nagging awareness that something is not quite right. Usually, however, their recognition is focused on a specific aspect of board folly. It is rarely the basic design, the system of thought. Concern is often expressed as complaints about time spent on trivial items, time spent reading reams of documents, meetings that run for hours and accomplish little, committees that are window dressing for what staff members want to do, meddling in administration, staff members who are more in control of board agendas than is the board, reactivity rather than proactivity, an executive committee’s becoming the de facto board, confusion about what is going on, a rubber-stamping of staff recommendations, and the lack of an incisive way to evaluate the executive.

Some of the preceding complaints apply to all nonprofit and public boards. In my experience, most of what the majority of boards do either does not need to be done or is a waste of time when done by the board. Conversely, most of what boards need to do for strategic leadership is not done. This sweeping indictment is not true of all boards all the time, of course, but I contend that it is startlingly true enough of the time to signal a major dysfunction in what we accept as normal.

In these pages I argue for dissatisfaction with what we now accept as ordinary and outline a path that boards can follow to become extraordinary. The failures of governance are not a problem of people, but of process. The problems lie squarely in our widely accepted approach to governance, including its treatment of board job design, board-staff relationships, the chief executive role, performance monitoring, and virtually all aspects of the board-management partnership. This book is a strong indictment of what is, but it is intended to make a compelling case for what can be.

The model presented here originated in the mid-1970s. Like many managers, I had training in a professional discipline rather than in management. As a CEO, or chief executive officer, I worked for years learning how to do what I was already paid to do. Those who worked for this manager-in-training endured that travesty far beyond what I can even now appreciate. As my skills as a manager grew, I became increasingly aware of the shaky foundation upon which management rests—the determination of purpose, which is largely a product of governance. Increasingly schooled as administrators, we worked toward haphazardly established ends as if we were introducing computer guidance into a Conestoga wagon. I was driven to discover what could bring governance into the modern age. Out of that quest, I developed an approach to governance that severely departed from much of conventional wisdom. Boards here and there wanted to hear more about it, so a consulting practice grew that subsequently made regular employment impossible.

I have worked with boards and their executives around the world, particularly in the United States and Canada. I meet with them twice in the average week. These clients have assets ranging from near zero to over $25 billion. In the course of this work, I have written articles on governance and executive management for such organizations as the U.S. Department of Health and Human Services (Carver, 1979b), the Canadian Hospital Association (Carver, 1989a), the Association of Mental Health Administrators (Carver, 1979a, 1981b), the Human Interaction Research Institute (Carver, 1984a), the National Association of Corporate Directors (Carver, 1980a), the University of Wisconsin (Carver, 1981a), the Florida League of Cities (Carver, 1984c), the Nonprofit Management Association (Carver, 1984b), the Indiana Library Association (Carver, 1981c), the National Association of Community Leadership Organizations (Carver, 1983), the Center for Community Futures (Carver, 1986b), and others (Carver, 1988a, 1988b). My work has been featured in audiotapes for the Public Management Institute (Carver, 1985a) and Family Service America (Carver, 1985b) and in videotapes for the Georgia Power Company (Carver, 1986c), the National Recreation and Park Association (Carver, 1987), and the University of Georgia (Carver, 1989b). Quite a few other unpublished writings of mine have been circulated (Carver, 1980b, 1985c, 1986a; Carver and Clemow, 1990).

I have run hundreds of governance and chief executive workshops for communitywide groups, state and national conferences, trade associations, and political bodies. The attraction for these clients was a model or framework that enabled them to see their roles and gifts in a new light. They were not always able to implement the model in full, but they had a new standard to shoot for.

So the past couple of decades have provided me with rich relationships with members and chief executives of literally thousands of boards located in every American state and in every Canadian province. The probing and challenging of these insightful clients contributed to the widespread applicability of my governance model. The model that emerged is generic, capable of whatever tailoring is necessary to fit any type of organization. And while I do adapt the model to business board settings, particularly to parent-subsidiary systems, the exclusive focus of this text is on nonprofit and public organizations. This extensive dialogue in which I forged a generic application of the model for nonprofit and public governance included a wide array of organizations.

public schools private schools liquid waste disposal Third World development YWCA hospitals mental health centers poverty agencies mental retardation junior league airport authorities parks and recreation women’s centers national church bodies housing authorities art guilds pest control districts city councils county commissioners libraries architects’ societies real estate boards sports facilities industrial associations local churches family services family planning adult learning credit unions regional planning zoos postrelease programs economic development women’s shelters chambers of commerce dental societies county fairs community theaters agriculture cooperatives wilderness programs alcoholism treatment private industry councils League of Women Voters child protective services health departments Hispanic leadership holding companies retirement funds rehabilitation centers national associations state boards of education state mental health systems medical specialty societies planning and zoning commissions health maintenance organizations community leadership training golf course superintendents employment services vocational centers extension services

I cannot begin to describe the personal and professional sustenance that these many boards and their executives continue to give me. Working routinely with organizations whose pursuits exceed my understanding and dedication is humbling even to a consultant’s robust ego. Their boards have educated me about topics such as waste disposal, international relief, public housing, and the ravages of racism. Their work and their determination have awed me time and time again. Not infrequently have I been literally moved to tears by their perseverance and commitment to make a difference in the world. Their contribution to me is not only one of the mind, in helping forge an approach to governance, but one of the spirit as well.

Out of that profound appreciation and respect, my counsel to boards minces few words. I am hard on boards simply because I know how good they can be. Out of what is, frankly, a love affair with boards, I have written this book for board members who want to make a difference. I have written it for board leaders who wish to guide deliberation toward the big questions. I have written it for executives who want a strong rather than a weak board, one that demands a strong executive as well. I have written it for executives who know that management can be only as good as its governing foundation. I have written it for the long-term benefit of taxpayers and donors, as well as the clients, patients, students, and other beneficiaries whose needs are to be served.

So come with me on an adventure into what strategic board leadership might be. Let us consider how a board can do in the boardroom what it sought to do in the first place: project a vision, infuse an organization with mission, bid a staff to be all it can be, and make itself grow a little in the process.

Organization of the Book

Chapter One recounts the varieties of boards, their predictable difficulties, and the need for more precise principles of governance. I seek to establish not only that individual boards need to function better, but that our idea of what “better” means is sorely in need of revision.

Chapter Two makes a case for a new approach to policymaking and what types of policies boards should make. Even though there is more to the board job than policymaking, I argue that reconceiving the nature of policy allows a new level of leadership to be born. Rather than use the traditional categories of board policies borrowed from administration, I develop four new categories tailored for the governing role.

In Chapter Three, I deal with the depth and breadth of board policy in a way that frees boards from staff details and even from the endless stream of approvals.

Chapter Four deals with policies about organizational results and initiates the next five chapters, which explain the four categories of board policy. These policies engage the board in governing outcomes rather than activities and resolve such issues as mission, priorities, and target recipient groups.

Chapter Five covers those policies that give the board control over administrative and programmatic action. These policies enable the board to fulfill its fiduciary responsibilities and to control the prudence and ethics of organizational practice without resorting to “meddling.”

Chapter Six deals with policies that establish an effective relationship between board and staff through a CEO. We explore the meaning of the CEO’s role and the board’s approach to delegating and to evaluating the performance of this important person.

Chapter Seven addresses the board’s relationship to its stockholder equivalents and its primary accountability to that trust. Policies covered in this chapter address the board’s governing process and its job description.

Chapter Eight extends the discussion of board roles to subgroups of the board. I explore ways to minimize committees and officers and ensure that they do not interfere with either CEO or whole board roles.

In Chapter Nine, I demonstrate how to make board policies “grow” by adding depth to initially very broad policy statements.

Chapter Ten focuses on keeping the board on track by building structured discipline and agendas into the long view.

Finally, in Chapter Eleven, I discuss the importance of thinking big, keeping the dream in front, and including other ingredients of strategic leadership.

I promise readers that they will never see governance in quite the same way again. In the midst of the great quality revolution in American management, I submit a new standard of what quality means in a board’s work. This book redefines excellence in governance. And because we have so far to go, it is an urgent argument for revolution in the boardroom.

Consequently, however gentle my intent, Boards That Make a Difference is a presumptuous book. It is presumptuous in broadly lumping together such apparently different organizations as governmental bodies, social agencies, quasi-public entities, private clubs, and foundations. It is presumptuous in claiming that virtually all such boards, councils, and commissions, even those that are not perceived to be in trouble, are currently performing at a distressingly low percentage of their leadership potential. It is presumptuous in depreciating finance and personnel committees; in belittling financial reports, budget approvals, and the office of the treasurer; and in exhorting boards to get out of long-range planning. And it is presumptuous in claiming that time-honored, virtually unquestioned beliefs and practices of nonprofit and public boards are the major impediments to their being the strategic leaders they could be. “The whole industry,” to borrow from an unidentified observer from Waterman (1988, p. 9), “seems trapped in a disastrous set of habits.”

I propose a sweeping revision, a new conceptual framework, so that we can conduct ourselves with purpose and performance. This is not a book of helpful hints, nor is it written to suggest incremental improvements in current board operation. The need I see is not so much to make boards better at the work they are doing, but to reinvent that work and its fundamental precepts, to design from the ground up a general theory—or at least a technology—of governance. My commitment is that boards and managers, impelled by a new comprehension of what governance is all about, will do no less than transform how we conceive and proclaim leadership in the boardroom.

Acknowledgments

For the intellectual spark that led me to question the conventional wisdom and thereby to create a new model, I am indebted to Wolfgang S. (Bill) Price. When I discovered his work in program policy planning in 1975 (it was later published in 1977), I thought it the most refreshing approach to governance I had ever come across. Bill’s acceptance of me as co-consultant changed the direction of my career.

In addition, the board members of Quinco Consulting Center in Columbus, Indiana, boldly accepted the challenge to adopt an untested governance method in 1976. In my eight-year association with that board, it remained faithful to its commitment. In doing so, it helped fine-tune a new approach, a contribution for which tens of thousands of nonprofit and public boards are unknowingly in Quinco’s debt.

Furthermore, the extensive support I have received from those close to me had much to do with my completing this work. Ronald P. Myers brought my board model to the attention of Jossey-Bass Publishers. Ken and Melanie Campbell, Rob and Kathy Kenner, Tom Lane, and Mary D. Shahan made their homes available for getaway writing. Sandra Meicher, Ronald and Sue Myers, David Mueller, and Sally Jo Vasicko offered commentary on the manuscript. My former secretary, Virginia Haag, chased references and made the painstaking transfers from one word processor to another. Lynn D. W. Luckow and Alan Shrader, my long-suffering editors at Jossey-Bass, offered more support and patience with my intermittent writing schedule than I had any right to expect. I am also grateful to the many former clients who allowed me to use their policies for illustration and to quote their words to make my points.

Carmel, IndianaFebruary 1990

John Carver

The Author

John Carver is a theorist, consultant, and arguably the world’s most published author on the design of governance by boards. With extensive name recognition in the field, he is widely regarded as the world’s most provocative authority on the topic. Sir Adrian Cadbury, who was instrumental in starting the current international renewal in corporate governance, recently called his work “as near a unifying theory of governance that we at present have.”

A native of Chattanooga, Tennessee, John Carver served four years’ active duty with the U.S. Air Force Electronic Security Command (1956-1960). He received his B.S. degree in business and economics (1964) and his M.Ed. degree in educational psychology (1965) from the University of Tennessee at Chattanooga and his Ph.D. in clinical psychology (1968) from Emory University, Atlanta. In 1968, he was inducted into the honorary scientific research society Sigma Xi. His formal education was augmented by frequent continuing education from Tulane University, Wharton School of Business, and the American Management Association.

After several years in the administration of a small manufacturing company, Carver spent the bulk of his time first in managing public mental health and developmental disability services, then in developing and applying governance and executive management concepts. His work in governance has spanned nonprofit, governmental, and corporate boards and consulting assignments on every populated continent. His consulting and public presentations are conducted under the name Carver Governance Design.

Carver incorporated the National Council of Community Mental Health Centers (now the National Council for Community Behavioral Healthcare), America’s oldest and largest trade association for providers of mental health, substance abuse, and developmental disability services in 1970 and served as its first chairperson. He presented testimony to U.S. House and joint Senate-House conference committees in 1969, 1970, and 1971. He has served as an adjunct and visiting faculty member at the University of Tennessee Space Institute, Tulane University, the University of Texas, and the University of Minnesota. He is currently adjunct professor at the Schulich School of Business, York University, Toronto, and at the University of Georgia Institute for Nonprofit Organizations, Athens, Georgia.

He is author of John Carver on Board Leadership (2002g). He and his wife, Miriam Carver, coauthored A New Vision of Board Leadership (Carver and Mayhew, 1994), Reinventing Your Board: A Step-by-Step Guide to Implementing Policy Governance (Carver and Carver, 1997c, 2006), and The CarverGuide Series on Effective Board Governance. He and Caroline Oliver coauthored Corporate Boards That Create Value (2002b). He is featured in the audiotape program Empowering Boards for Leadership (1992b) and the videotape Reinventing Governance (1993o). Carver has authored and co-edited the Jossey-Bass periodical Board Leadership since 1992 and has written a regular column for Contributions since 1997. He has published in Canada, the United States, the United Kingdom, Singapore, India, Australia, Brazil, Mexico, and Russia in publications such as the Times of London, Economic Development Review, American School Board Journal, Solicitors’ Journal, Gouvernance Revue Internationale, Chronicle of Philanthropy, Nonprofit World, Hospital Trustee, Leader to Leader, Public Management, Institute of Corporate Directors Newsletter, National Association of Corporate Directors’ Directors Monthly, Corporate Governance Quarterly, Corporate Governance: An International Review, Nation’s Cities Weekly, and others.

John Carver and Miriam Carver live in Atlanta and operate independent consulting practices from there. Together, they conduct the Policy Governance Academy, a specialized advanced training program for consultants in the theory and practice of the Policy Governance model. Their joint Web site can be accessed at www.carvergovernance.com. John Carver can be reached at 404-728-9444 or [email protected].

To Miriam Carver, my wife and colleague, for her love, support, and keen intellect and for her authoritative mastery of the Policy Governance model

With recognition to Ivan Benson, our executive assistant, for over ten years of faithful, competent, and trustworthy service

Prologue

Beginning and Ending with Purpose

Governing boards do not exist in nature. They are social constructs, which is to say that their purpose is what we say it is. The job design, rules, and processes of governing boards—which taken together I will call governance—are dependent on the purpose we assign to such bodies.

Although any group of people is capable of many roles, a serious paradigm of governance must be founded not on what a board can do but on what it must do—the essential elements rather than the optional ones that peculiar circumstances and inclinations may dictate. If we are to produce a science of governance, it is important to begin with an expression of purpose so fundamental that it applies to any body of persons with primary and topmost accountability for an enterprise. Such a universal underpinning could be called a theory of governance, a technology of governance, a governance operating system, or—the term I shall frequently employ—a model of governance. Given conceptual integrity in such a foundation, all further idiosyncratic elements and practices can be considered in light of whether they add to or at least do not impede fidelity to the basic principles.

The Policy Governance model is founded on just such a statement of essential purpose, one I contend to be true wherever the governing board phenomenon exists. Reduced to its minimum, the purpose of governance is to ensure, usually on behalf of others, that an organization achieves what it should achieve while avoiding those behaviors and situations that should be avoided.

That purpose may appear so obvious as to be worth little attention. But the governance practices typical in all types of organizations in all parts of the world neither fulfill that purpose nor are consciously designed to do so. Furthermore, widespread publications on governance and a host of consultants’ counsel about governance demonstrate the frequently unstated hodgepodge of purposes of governance. In the following chapters, I will make a case not only for the universality and utility of this simple purpose but for the concepts, principles, and discipline necessary for its fulfillment. If the core purpose is satisfied, all other board contributions and practices are optional. If it is not satisfied, all other board contributions and practices—no matter how intelligent or well conducted in themselves—will fail to yield accountable board leadership. A carefully crafted, conceptually rigorous purpose of governance itself, then, forms the heart of board effectiveness.

Introduction

It is virtually impossible to escape contact with boards. We are on boards, work for them, or are affected by their decisions. Boards sit atop almost all corporate forms of organization—profit and nonprofit—and often over governmental agencies as well. The elected forums of our political jurisdictions are boardlike structures: Congresses, parliaments, state legislatures, city councils, and county commissions. In all kinds of human activity, we find formally constituted, empowered groups deciding courses of action and future conditions toward which some body of people will aspire.