Getting Started with Policy Governance E-Book

Caroline Oliver

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

Seitenzahl: 359

Veröffentlichungsjahr: 2009

Beschreibung

In this newest book on the Policy Governance approach to board leadership created by John Carver, Caroline Oliver gives readers practical, hands-on tools for getting the most from the system in the day-to-day operation of their boards. In the Policy Governance Fieldbook, Oliver explored the experience of 11 organizations that succeeded and failed in using Policy Governance. Now, she has drawn upon the most important lessons from that experience as well as her experience in helping many more organizations along the Policy Governance road to governing excellence.  The result is a wealth of tools and resources for helping readers to:

• Decide if Policy Governance is right for them
• Identify and link with owners
• Develop means policies
• Create Ends policies
• Monitor Policies
• Run meetings
• Evaluate
• Plan for the future

Leseprobe

Table of Contents

Praise

Title Page

Copyright Page

Foreword

Dedication

AUTHOR’S NOTE

Acknowledgements

ABOUT THE AUTHOR

ABOUT THIS BOOK

HOW TO USE THIS BOOK

WHY POLICY GOVERNANCE MATTERS

chapter ONE - Exploring Policy Governance

WHAT POLICY GOVERNANCE IS

ACCOUNTABILITY TO OWNERSHIP: THE THEORY THAT DRIVES POLICY GOVERNANCE

VALUES INTO ACTION: THE WORKING PARTS OF POLICY GOVERNANCE

THE BENEFITS OF USING POLICY GOVERNANCE

MOVING ON

chapter TWO - Choosing Policy Governance—or Not!

DECIDING HOW TO DECIDE!

REVIEWING YOUR CURRENT APPROACH TO BOARD LEADERSHIP

LEARNING ABOUT POLICY GOVERNANCE AND OTHER APPROACHES

ASSESSING THE REWARDS AND COSTS OF CHANGING TO POLICY GOVERNANCE

IDENTIFYING AND ADDRESSING BOARD MEMBERS’ QUESTIONS AND CONCERNS

CONFIRMING WHAT YOUR BOARD HAS LEARNED

MAKING UP YOUR MINDS

MOVING ON

chapter THREE - Knowing Who Owns Your Organization

OWNERSHIP: THE SOURCE OF A BOARD’S AUTHORITY

MINE TO OURS: THE RIGHTS AND RESPONSIBILITIES OF OWNERSHIP

WHO ARE YOUR LEGAL AND MORAL OWNERS?

BEING OWNERS’ REPRESENTATIVE

KNOWING WHAT YOUR OWNERS WANT FROM YOU

BUILDING OWNER RELATIONS

RELATIONS WITH OTHER STAKEHOLDERS

MAKING OWNERSHIP COUNT

MOVING ON

chapter FOUR - Understanding the Policy in Policy Governance

WHAT IS POLICY?

TRADITIONAL WAYS THAT BOARDS EXERCISE CONTROL

A NEW WAY FOR BOARDS TO EXERCISE CONTROL

THE FIRST TWO CONTAINERS: ENDS AND MEANS

SUBDIVIDING THE MEANS CONTAINER BETWEEN BOARD AND CEO MEANS

DESIGNING POLICIES WITHIN THE POLICY CONTAINERS

MAINTAINING YOUR POLICIES

MOVING ON

chapter FIVE - What Does Your Ownership Want?

DEFINING YOUR DESTINATION

HOW ENDS POLICIES LOOK

THE PROCESS OF DEVELOPING ENDS

MOVING ON

chapter SIX - How Can You Govern How Your Ends Are Achieved?

THE MEANS CONTROL CONTAINERS

CREATING POLICIES FOR CONTROLLING THE BOARD’S MEANS

CREATING POLICIES FOR CONTROLLING THE CEO’S MEANS

KEEPING YOUR POLICIES ALIVE

MOVING ON

chapter SEVEN - How Can You Keep Your Board Accountable?

BOARD ACCOUNTABILITY

FUNDAMENTALS OF THE MONITORING PROCESS

MONITORING ENDS POLICIES

MONITORING EXECUTIVE LIMITATIONS POLICIES

CEO EVALUATION

MONITORING GOVERNANCE PROCESS AND BOARD-MANAGEMENT DELEGATION POLICIES

BOARD EVALUATION

MOVING ON

chapter EIGHT - Embarking on Policy Governance

GETTING YOUR PEOPLE GOING

ADDRESSING YOUR ORGANIZATION’S CURRENT CIRCUMSTANCES

PLANNING AND IMPLEMENTING POLICY GOVERNANCE

MOVING ON

POLICY GOVERNANCE RESOURCES

REFERENCES

INDEX

“What a truly outstanding and thought-provoking book! It changed how I work with boards overnight and forever! If we all took the advice within the pages of this book, then organisations would deliver greater value to their owners and be better places to work.”

—Jay Bevington, Assurance and Advisory Public Sector, Deloitte & Touche LLP

“This is a very interesting addition to the literature on Policy Governance.® It will be useful to both boards getting started on Policy Governance and those who want to refresh their ideas on using it.”

—Judy Mitchell, past chair, Oxfam Australia

“This a very well-written and easy to understand must-read for all those interested in effective Board Governance. The Policy Governance framework is a coherent model that allows all types of boards to understand their role and those of the Chair (or Chief Governance Officer) and the CEO. Caroline Oliver explains clearly how the model works and introduces the reader to the necessary tools to create the framework.”

—John Zinkin, chief executive officer, Securities Industry Development Corporation (SIDC); deputy chairman, Institute of Corporate Responsibility, Malaysia; visiting fellow, International Centre for Corporate Social Responsibility, University of Nottingham, UK; and managing director, Zinkin Ettinger Sdn Bhd

“Getting Started with Policy Governance provides an excellent guide to boards considering a change to policy governance leadership. Caroline Oliver’s expertise shines through with her skillful explanations, useful examples, sample policies, and many tools shared. A must read for any board considering Policy Governance.”

—Carol-Ann Yakiwchuk, president, the Canadian Dental Hygienists Association

“For boards wanting to raise their game, this book is very thought-provoking and helpful. It’s a must for all board members; board chairs—ignore it at your peril!”

—John Bruce, chairman, Southend University Hospital NHS Foundation Trust

“A comprehensive, yet concise, book which provides an excellent introduction to those new to John Carver’s highly influential Policy Governance model and, at the same time, systematically guides boards through the implementation of the model.”

—Yuen Teen Mak, PhD, regional research director (Asia-Pacific), Watson Wyatt Worldwide, and co-director, Corporate Governance and Financial Reporting Centre, National University of Singapore

Policy Governance® is the registered service mark of John Carver.

“Getting Started with Policy Governance breathes incredible life into the theory and practice of Policy Governance. This book will open many exciting doors to those who practice its principles or who are sincerely seeking a new way to govern with excellence.”

—Susan Mogensen, CEO, International Policy Governance Association (IPGA)

“Policy Governance remains the world’s most conceptually coherent theory of board governance. In her latest book, Caroline Oliver masterfully translates the theory into practical application of Policy Governance as a vehicle for boards to help them deal with organisational complexity and bring purpose, integrity, and efficiency to their work. Her ability to communicate potentially complex issues clearly, simply, and succinctly is outstanding.”

—Stuart Emslie, CEO, UK Policy Governance Association, and assistant director, London Centre for Corporate Governance and Ethics, Birkbeck, London University

“Caroline Oliver provides proven tools and techniques for maximizing governing performance. With fifteen years of consulting success condensed into one book, it’s a must read for anyone working on or with a board.”

—Ray Tooley, P.Eng., CEO, OurBoardroom Technologies

“The principles Caroline Oliver outlines in this book were invaluable to us in clarifying the critical distinction between the owner and employee perspectives. I recommend Policy Governance for any employee-owned enterprise wishing to implement a sustainable, ownership-driven governance model.”

—Mike Haney, CEO, Athens Group, Inc

“As Mae West once said, ‘Too much of a good thing can be wonderful.’ Caroline Oliver has provided THE book for boards to use to govern themselves in the best model that exists—the Carver Model. She has cleverly described how boards can make more time for the important things—like why they were formed in the first place and trying to make the world a better place for all of us.”

—Chris Beth, 2009-2010 president, California Park and Recreation Society

“Anyone following the events surrounding the financial turmoil in 2007 and 2008 has good reason to wonder if corporate governance is working. Caroline Oliver’s latest book provides a route map to an innovative system of governance that boards should find well worth considering and even trying. It also provides many clues as to how some of the recent financial sector problems could have been prevented. Shareholders, too, should be interested in this book, as it is about them, describing a system for how boards steer their organizations in their owners’ interests.”

—Paul Moxey, head of corporate governance and risk management, Association of Certified Chartered Accountants

“This is a great read. Such a book is long overdue: it is comprehensive, accessible, and fills a big gap in the market.”

—Geraldine Peacock, CBE, former chair of The Charity Commission of England and Wales, UK

Readers are invited to download and use the Tools from this book provided in electronic format at the Web site address given above.

The Tools are available FREE online as PDF files for printing and, in the case of the forms and checklists offered as Microsoft Word files, for filling out on your computer.

Copyright © 2009 by John Wiley & Sons, Inc. All rights reserved.

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Policy Governance® is the registered service mark of John Carver. Used with permission. The ® after Policy Governance is a symbol used to protect the integrity of the principles and practice that make up the Policy Governance model. Its use does not imply any financial obligation to the service mark owner.

Library of Congress Cataloging-in-Publication DataOliver, Caroline, date. Getting started with policy governance: bringing purpose, integrity, and efficiency to your board/ Caroline Oliver; foreword by John Carver. p. cm. Includes bibliographical references and index.

eISBN : 978-0-470-48113-4

PB Printing

FOREWORD

In Getting Started with Policy Governance, Caroline Oliver has once again contributed her keen insights and lucid prose to the growing literature on board leadership. Having coauthored two previous books consistent with the Policy Governance® model on the subject and numerous articles published internationally, here she addresses board members and others linked by interest or livelihood to governance in a way both personal and precise.

Caroline added Policy Governance expertise to her already extensive experience with organizational issues by attending the Policy Governance Academy™ in 1995. The Academy is a five-day intensive experience that Miriam Carver and I conduct and is offered to persons already possessed of considerable Policy Governance knowledge. Of the approximately three hundred governance leaders worldwide who have now gone through this specialized training in the theory and practice of Policy Governance, not one exceeds Caroline in integrity, commitment, and sheer energy devoted to reforming board leadership. She was instrumental in helping to create, then lead, the International Policy Governance Association in 1999 and later the United Kingdom Policy Governance Association in 2006. These membership associations facilitate mutual support, communications, and learning opportunities for Policy Governance consultants and organizations using or considering using the model. Beyond helping organize Policy Governance consultants, Caroline led the charge to have Europe-focused Policy Governance Academies conducted in Britain, networking feverishly and effectively, as part of her successful efforts to spread Policy Governance in the United Kingdom.

Policy Governance® is the registered service mark of John Carver.

In Getting Started with Policy Governance, Caroline takes readers by the hand on a journey through learning about, considering, and implementing the principles of the Policy Governance model. She does so using comparisons and analogies to smooth the conceptual shift from governance-as-usual to governance excellence. She cautions that embarking on an unfamiliar yet compellingly reasonable governance reform will not be easy. She invites us to remember our novice initiation to bicycling with its wobbling, scrapes, and embarrassments as a necessary prelude to expert cycling. As with cycling, governance control that doesn’t compromise progress must live in harmony with progress that doesn’t compromise control. Wind in our hair without bruises on our knees drives board leadership as well as cycling.

Like all others who teach the Policy Governance model from the Academy’s base of understanding, Caroline explains the ends-means distinction, proper policy formulation, balancing board diversity and authoritative unity, chief executive and chief governance positions, and other features of the model. But more than most other writers, Caroline positions her consideration of the board role squarely in the theme of ownership—the legitimacy base of moral authority from which boards govern. She returns to that frequently underappreciated thesis throughout the book, repeatedly drawing the reader’s attention back to the whole reason for having boards to begin with. This unrelenting emphasis on an organization’s ownership and the board’s representative role in owners’ interest imparts a unique flavor to this book.

Policy Governance was designed for the fulfillment of governing boards’ awe-some accountability. A rigorous conceptual framework I developed in the mid- 1980s, it departs from the traditional—and still most common—governance approach of simply tacking on an unending sequence of “best practices” without transforming the underlying governance thinking. (All existing corporate governance codes fail to make these underlying changes.) It addresses, on one hand, the nature of the relationship between a large group and its authoritative representative board, council, or commission. On the other hand, it addresses the productive relationship between that representative group and the executive or operational organization. The simple objective is that the representative group—as an active link in the chain of moral authority from owners to operators—causes its organization to perform in a way consistent with an informed summary of owners’ wishes.

What sets Policy Governance apart from all other attempts to improve corporate governance is its philosophical and theory-based foundation. Standing alone, as Britain’s corporate board pioneer Sir Adrian Cadbury has attested, in its total system approach to board leadership, Policy Governance is a robustly logical answer to the question, “How can a group of equals acting on behalf of others ensure organizational performance accountable to the interests of those owners?” That question is one that has elusively challenged corporate governance, but has been just as thorny a problem for boards of nonprofit organizations and governmental units.

The model is not a structural design but a conceptually coherent set of concepts and principles—sufficient to be called a theory of governance—that apply in any setting where that question arises. No mere Foreword can explain it properly, though other resources are available to do that. My own Boards That Make a Difference (Carver, 2006), to which Caroline refers, is one, but her own explanation in these pages also serves the reader well.

At any rate, a corporate board ensures that shareholders’ interests are fulfilled by the conduct of business, trade association members’ interests are fulfilled by organizational pursuits, and city residents’ interests are fulfilled by municipal government action. But as a theory of governance, Policy Governance also carries extensive and largely unexplored implications for political bodies beyond the obvious applications to city councils, boards of education, and other local authorities.

Getting Started with Policy Governance is addressed, of course, to boards of individual organizations. But no one more than Caroline has grasped the utility of Policy Governance principles for the larger world beyond the boardroom. Consequently, Caroline’s interest in Policy Governance is of broader scope than its utility considered board by board. Her allegiance to better governance extends to the wide sociopolitical environment that makes organizations and boards possible in the first place. Let me illustrate with a few examples.

As she points out, Policy Governance differentiates between the owners of an organization and the beneficiaries of that organization. Sometimes these roles overlap considerably as, for example, in a trade association. In a democracy with respect to any state, provincial, or national government, citizens are both the owners and most of the beneficiaries. (If a government chooses to grant foreign aid, the foreign countries are beneficiaries though not owners.) It is clear in the Policy Governance paradigm that the governing body is directly linked to owners but not to beneficiaries. The latter are connected not to the board but to the staff or, in the case of governments, the agencies and bureaucracies. Yet citizens, pursuing their own individual interests as government’s consumers, will attempt to influence actions the legislature, congress, or parliament should be taking on behalf of the ownership. Without the distinction between these two important but separate roles, elected officials are prone to shortsighted and undemocratic actions. From a Policy Governance perspective, then, legislative bodies would draw a sharp distinction between their duty to citizens as owners and bureaucracies’ duty to citizens as beneficiaries.

A closely related implication of Policy Governance concerns lobbyists. As argued by the social contract theory of Jean Jacques Rousseau and embodied in the Policy Governance model, it is the responsibility of the representative body to take the measure of citizens’ (as owners) values and desires in an impartial manner, that is, in a way truly representative of the whole. When legislative bodies do not do that (and I argue that none do), they are dependent on specific, highly motivated subsections of the whole for their public input. In no way does the cumulative total of the voices thus heard add up to the whole, nor does it validly represent the whole, the legitimate expression of which Rousseau calls the “general will.” Although David Hume, John Stuart Mill, and Rousseau understood the need for smaller groups such as legislatures and councils to legislate on behalf of the public, such groups acting as agents confront the difficulty of knowing the minds of their principals. Groups of citizens—what Rousseau called “partial societies”—band together to have their voices heard; hence the institution of lobbyists. But as Rousseau demonstrates, there is no reason to expect that the general will can be deduced from these partial societies. Worse, lobbies are well known to obstruct elected officials’ allegiance to the general will. From a Policy Governance perspective, legislative bodies would minimize or eliminate their dependence on lobbyists, choosing instead to develop and perfect a statistically reliable way to know the minds of those it is their duty to represent.

Moreover, the Policy Governance ends-means distinction has vast implications for governments. Perhaps nowhere else is the confounding of ends and means more damaging to public welfare and the public purse than in national and state or provincial programs. As Caroline explains, Policy Governance causes organizations to be directed by board-stated ends and left free to experiment or choose means limited only by board-stated ethics and prudence boundaries. Yet many, if not most, government pursuits are legislated as means, not as ends, then organized around means more than ends. Consequently, departments of government are massive means machines that derive their funding, their rewards, and their nature from their means rather than from their ends. From a Policy Governance perspective, legislative bodies would broadly prescribe ends and encourage all the creativity that government programs can muster, short of violating clear standards of ethics and prudence.

Similarly, Policy Governance dictates that decision making proceed with a disciplined sequence from broadest expressions of intent toward narrower expressions. As Caroline makes clear, this method also makes delegation easier, since at any point, legislative action can stop and executive action begin. State or provincial legislatures, for example, would never interfere in the way a local school system organizes classes and curricula, though they might well make demands about the levels and types of learning to be produced for the public treasure.

As one final example of the implications of the Policy Governance model beyond the boardroom, there is nothing more crucial than the ethical obligation expressed by terms like stewardship, agency, and Robert Greenleaf’s servant-leadership . There is nothing new about the ideal that elected public servants are just that: public servants. Unfortunately that ideal is regularly plundered by elected officials themselves. Yet as long as citizens as beneficiaries make demands for their individual or specific group claims, citizens-as-owners cannot effectively punish political pandering and demand that elected officials not confuse their individual aggrandizement and their individual political brawls with doing the public’s business.

The reader can be confident not only that Caroline Oliver conveys clearly the powerful principles that comprise the Policy Governance model, but that she approaches the subject from a wider stance than simply board leadership alone. She writes from a passion for solving the timeless challenge of how we as human beings in large groups can make legitimate, fair, wise decisions for ourselves and our futures.

John Carver

Atlanta, GeorgiaOctober 2008

To my dad,Michael Dawbarn Oliver,who showed me the wonder of words and ideas

AUTHOR’S NOTE

Reading Jossey-Bass’s “Guidelines for Authors” tells me that this is my “optional” opportunity to frame this book by providing background information and “a more personal picture” of how this book came to be written. I can’t resist, not least because I suspect that this may be the last book I write about Policy Governance. This is my third book on the subject, and in it, I attempt to distill everything I have learned in the course of a fascinating journey of almost fifteen years. I am still on that journey, but it is time to move on. I have, at last, done all I need to do to prove to my own satisfaction that Policy Governance, while inevitably not the final word on governance, is a really great place for every board to start. Now I want to devote my time to making it happen on a scale that I and others have so far failed to realize. Other people will, I hope, write more about it; I need to do more about it.

Explaining why one man’s ideas have gripped me so fiercely is not easy. I often sense that people who know me are disappointed that I am pursuing someone else’s ideas and not my own. Yet the thing is, I feel that John Carver’s ideas have given me a wonderful impetus for exploring my own ideas without which my own thinking would be nothing like as productive.

Over the last fifteen years, I have read the works of and met and debated with many of the great and good of corporate governance, and never have I found anything that has made me seriously revisit my commitment to furthering Policy Governance. I have come to believe that this is not because I am stupid or blinkered or bigoted but because right now, there is nothing to compare with it. In other words, I honestly believe that if you want a governance system today, there is only one, and Policy Governance is it. Maybe other governance systems will emerge, but I am pretty confident that if they do, they will take the form of improvements that emerge from better understanding and use of Policy Governance rather than a completely fresh start.

Therefore, I see no choice for me or my Policy Governance colleagues other than to continue to inform people about this great possibility. Making this choice sometimes feels like being committed to communicating the value of an apple in a world that knows and understands only pears. But it has to be worth it. All the best things in life seem to me to come as a result of the work of small groups—families, teams, boards. If I can continue to help boards—small groups in charge of big ambitions on behalf of all of us—be even a little more effective, I will be fortunate indeed.

October 2008

Caroline Oliver

ACKNOWLEDGMENTS

Although I appear to have written this book alone, it is very much built on experience drawn from working with my earlier coauthors John Carver, Mike Conduff, Susan Edsall, Carol Gabanna, Randee Loucks, Denise Paszkiewicz, Catherine Raso, and Linda Stier. Thank you all for making my writing journey such a fulfilling and enjoyable experience.

The thoughts and work of John and Miriam Carver imbue everything in this book. To say “I couldn’t have done it without you” sounds like a cliché, but in this case, it is clearly true. Thank you, John and Miriam, for your generosity and for everything you put into continuing to distinguish the principles and practices that make Policy Governance such a coherent system for organizing governance.

I continue to be inspired by all the people who are giving so much in order to bring Policy Governance to the world. I would like to pay particular tribute to the past and current board members of the International Policy Governance Association—Bill Charney, Mike Conduff, Eric Craymer, Nanci Erkert, Carol Gabanna, Phil Graybeal, Jan Maas, Jannice Moore, Denise Paszkiewicz, Susan Rogers, Linda Stier, and Sue Stratton—and of the U.K. Policy Governance Association—John Bruce, Vijay Mistri, Valerie Moore, Susan Rogers, and Ray Tooley. My deepest thanks also go to the past and present CEOs of both organizations—Howard Stier, Susan Mogensen, and Stuart Emslie—who respectively bring great talent and drive to their work despite a minimum of resources; they are owed a huge debt of gratitude.

My consulting colleagues form a wonderfully supportive community, and many thanks are due to those who have contributed to this book (acknowledged throughout) and to the many more who have offered their help. In particular, Marla Mullen has worked diligently with me to try to explain Executive Limitations as clearly as possible, and my good friend Linda Stier has supported me on every step of the way, her insight and thoughtfulness a constant creative spur.

Estelle Hamoline, far more than my executive coordinator, is a colleague and a friend, and her husband, Raymond Tooley, far more than a business partner, is a constant force for progress and also a friend. I am very grateful to have them both by my side.

Much of the credit for this book must go to my clients, who continue to teach me every day. My consulting experience has involved working with boards of organizations that vary immensely in size, scope, and culture. This book is the direct result of everything I have learned from them. To the extent that this book may help other boards understand what Policy Governance is and how it works, they will have all my previous clients to thank.

I would also like to express my appreciation for the support and encouragement of Dorothy Hearst, Allison Brunner, and Paula Stacey at Jossey-Bass. Paula Stacey deserves a very special mention. She has made numerous highly practical suggestions for improving the original manuscript and given me much direct help in implementing those suggestions. In short, she has been a magnificent and indispensable support, and I shall be forever grateful to her. The road traveled to produce this book has been far from smooth, and our plans have been overtaken time and again by unforeseeable circumstances. Allison Brunner, Jossey-Bass’s lead social sector editor, has exercised patience and determination to get through in just the right measures, and I am full of admiration.

Finally, to my family—Ian, Carol, Anna, and Fiona—thank you, with all my heart.

ABOUT THE AUTHOR

CAROLINE OLIVER has been exploring how boards can excel at group leadership for almost fifteen years. Her study of Policy Governance goes back to reading the first edition of John Carver’s seminal book Boards That Make a Difference in 1994; since then, she has facilitated many hundreds of board interactions, uniting and inspiring boards of all descriptions.

Today, she enjoys bringing all she has learned not only to her consulting work in the United Kingdom, North America, and beyond but also to her writing, which encompasses contributions on governance issues to journals and magazines around the world. She is general editor of The Policy Governance Fieldbook: Practical Lessons, Tips, and Tools from the Experience of Real-World Boards (1999) and coauthor, with John Carver, of Corporate Boards That Create Value: Governing Company Performance from the Boardroom (2002). Caroline Oliver is founding chair of both the International Policy Governance Association (2000-2005) and the U.K. Policy Governance Association (2006-present). She is chief executive of the international consulting firms Good to Govern and The Governance Corporation and chair of OurBoardroom Technologies Inc., a company dedicated to providing online tools for organizing effective governance process. Further background is available at www.goodtogovern.com, www.thegovernancecorporation.com, and www.ourboardroom.com.

ABOUT THIS BOOK

HOW TO USE THIS BOOK

If you are completely new to Policy Governance and want basic information on how it works, I would advise you to start at the beginning and carefully read the first chapter, which gives an overview of Policy Governance. I deliberately wrote this overview in language that will be very familiar to most board members. My aim is to introduce you to the ideas in a way that is as reader-friendly as possible. Next, the chapters on ownership and policy (Chapters Three and Four) will help you understand the fundamental ideas and practices of Policy Governance in more depth.

If your board has some knowledge of Policy Governance and is trying to determine what the next steps are, you will want to explore the process set out in Chapter Two on how to go about deciding whether to adopt Policy Governance. The tools and suggestions that are provided will help your board develop a decision process that it will be comfortable with.

If your board has made the commitment to adopt Policy Governance and wants to get started, this book provides the instruction, tools, and information about additional resources that you need. While I have tried to be comprehensive in taking you through the implementation process—from the steps of crafting policies through how to set up a plan for the first year and monitor your policies—there is no way that a single resource will be enough. For that reason, in the resource section at the end of the book, I include a thorough listing of places to get more information on Policy Governance.

If you are interested in copying and distributing the tools and resources in this book, please feel free. They are available for you to duplicate and use. You will find the tools referred to in the text at the end of each chapter. You can also find additional resources at www.policygovernanceassociation.org.

Please note that although this book is aimed at potential and actual Policy Governance users across the world, the spellings throughout the book conform to Jossey-Bass’s house style, which calls for American English. If you would like any of the tools in other forms of English, please do not hesitate to e-mail me at [email protected].

WHY POLICY GOVERNANCE MATTERS

Did you think that governance was boring and dry? Think again. At one level, Policy Governance is no more and no less than a system through which boards can conceptualize, organize, and fulfill their mandate. At another level, it is something that can help fix many of a board’s day-to-day problems. But far, far more important, it is a powerful tool through which we all, as global, national, and local citizens, can fulfill our dreams. Through this book, I hope to engage you—whatever type of organization you care about and whether you are a board member, a board officer, or a consultant—in a mind-expanding exploration that will make your leadership as exciting and productive as possible.

chapter ONE

Exploring Policy Governance

Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.

Margaret Mead

Exploring Policy Governance means visualizing an entirely different world of board operation—what it looks like, what it feels like, and what it produces. In this chapter, you are going to learn the basics of what Policy Governance is, how it works, and what you can expect to get from it.

This chapter aims to help you to help your board

• Understand what makes Policy Governance unique as a system for organizing board work

• Understand the basic theory and practice of Policy Governance

• Examine the benefits of Policy Governance

WHAT POLICY GOVERNANCE IS

Policy Governance is a complete system through which boards can conceptualize, organize, and fulfill their mandate. Like all systems, it has several component parts that work together to provide a complete approach to a particular job. A shorthand way of expressing the completeness of the Policy Governance system is to call it a model. Thus, in the literature the Policy Governance model or the Carver model, or sometimes the Carver Policy Governance model. Everything in the model fits together because it is an expression of the integrated theory and principles that underlie John Carver’s work and that have allowed his approach to become the single most influential model of governance in the world.

Operating from a model that is based on an integrated theory is important in two ways. First, without a fundamental theory guiding your actions, practice will inevitably become haphazard and, ultimately, highly risky for all concerned. Of course, practice is essential, and many of us learn best through concrete experience. But unless practice is derived from theory and the experience derived from practice is used to further inform the theory, how can practice ever be truly practical? In any case, in the same way that it wouldn’t be a great idea for a group to tackle a challenge without having some theoretical understanding of the nature of the challenge, it isn’t a great idea to start governing without having established some theory about the nature of the board’s job that makes sense to everyone. I have seen many boards descend into endless disagreement not because they aren’t all wanting to do a good job but because they have no agreed-on theory about what the job is. I have seen many board members who have become apathetic, not because they don’t care but because they have tired of trying to make a difference in the midst of confusion. I have seen many boards become totally stuck on board and CEO evaluation issues because they have no agreement about what good performance looks like.

The second reason for operating from a model that is based on a theory that integrates all board work has to do with efficiency. By definition, the value of working from a complete model rather than from a collection of best practices is that all the parts of a model are specifically designed to work together. For example, when you are flying in an airplane, driving a car, or riding a bike, you know that you need all its components to be working together in order to get you safely to where you want to go. Similarly, when you are governing an organization, you need to be sure that as far as possible, everything you are doing is working together to get your organization going safely to where you want it to go. Boards are complex mechanisms involving the energies of chairs, board members, CEOs, staff, and external stakeholders. With a complete model, everyone’s role, purpose, and practices can be aligned toward the same ends. Without a complete model, people usually find themselves and their practices pulling in different directions.

Everything about the Policy Governance system aims to help boards enable their organization to achieve their goals as efficiently and effectively as possible. This book aims to help you understand and use that system to best effect. One device that I will use in this book is the creation of analogies, for I believe that in likening the unfamiliar to the familiar, analogies can often be helpful in developing understanding of something new. It’s helpful to think of Policy Governance as a vehicle that your board can use to get where it wants to go. In particular, let’s observe some important points by examining how using Policy Governance is like riding a bicycle:

• Like a bicycle, Policy Governance is a vehicle, a means of getting wherever you choose to go. It is not a destination.

• Walking and riding a bike are two entirely different modes of travel. Similarly, governing with traditional tools and governing with Policy Governance are two entirely different modes of operation.

• Riding a bike, like using Policy Governance, does not feel natural before it is learned, but once fully experienced, it is never forgotten.

• Learning to ride a bike, like learning to operate through Policy Governance, requires having the courage to entirely let go of one form of control in order to gain a different form of control.

• Once you have learned to ride a bike, you can ride any bike to any destination. Similarly, once you have learned Policy Governance, you can use it on any governing body.

As with any new skill, mastery of bicycle riding—and of Policy Governance—is a function of practice.

ACCOUNTABILITY TO OWNERSHIP: THE THEORY THAT DRIVES POLICY GOVERNANCE

In the same way that the benefits of cycling are the result of all a bike’s component parts working together, the benefits that Policy Governance offers are the result of the careful creation of a complete system. Policy Governance starts with a theory. This theory drives certain understandings about the board’s job, which eventually translate into movement toward the organization’s goals.

Ownership: The Power Behind Your Wheels

The theory or belief that lies behind Policy Governance is that organizations exist to fulfill their owners’ purposes and that boards exist to represent those owners. Therefore, Policy Governance theory asserts that the power that propels any board forward should be its interpretation of the best interests of the owners of its organization.

Given that board power is owners’ power, it follows that clarity about who an organization’s owners are is fundamental. For corporations and their shareholders, as well as for membership associations and their members, the meaning of ownership seems obvious. For many nonprofit and public organizations, however, it is often not at all clear and, therefore, needs to be defined by the board.

Policy Governance theory positions ownership as both a legal and a moral issue. Legally, your organization’s owners are the people who, according to your bylaws, have the right to vote at general or special meetings of shareholders or members. However, your board can also choose to define a much wider moral ownership that includes everyone to whom it feels it should be accountable, which might include many others whom your board sees as actually or potentially invested in your organization’s long-term future in some shape or form. For example, the board of a food bank might well have a legal ownership that consists of board members alone but decide to operate as if it were accountable to either its entire local community or a subset of the community such as “all those who care about poverty.”

A board can only begin to truly govern if it can identify its owners—the people on whose behalf it is governing. And they must not confuse owners with other stakeholders such as customers and employees. A board that sees itself as governing on behalf of its owners will collectively shoulder responsibility for the proper care of its organization in the interests of all current and future beneficiaries. A board whose members see themselves as individual representatives of particular interests will not.

The significance of ownership will be explored in far more detail in Chapter Three but is summarized in the following list:

Owners are . . .

• the source of the board’s authority

• the people to whom the board is accountable

• a touchstone for and ultimate legitimizers of board decisions and actions

• a force for unifying the board in common cause

• the most likely source of future board leadership

• essential for stability and sustainability

• a protection against warring self-interests

• concerned about the care of the overall organization

Accountability: The Chain That Brings Power to Your Wheels

Having identified owners’ best interests as the power that you should be using to drive your wheels, you need to connect that power to the wheels that can move your board and your organization forward. Policy Governance is designed to provide that connection through a chain of accountability, as follows:

1. The board as a group must connect with and be accountable to the source of its authority: its owners.

2. The board must interpret its owners’ best interests in order to define what the organization is for and how it should operate.

3. The board must ensure that the organization performs according to its interpretation of its owners’ best interests.

VALUES INTO ACTION: THE WORKING PARTS OF POLICY GOVERNANCE

Having created the chain of accountability that connects the power of your owners’ best interests through your board to your organization, you have to actually turn the wheels and go. In other words, you have to put the theory into practice. This brings us to what we might call the “moving parts” of Policy Governance—the components that make the organization move. These components, essentially, are actions that the board needs to take.

Define the Difference Your Owners Want to Make

The Policy Governance system starts from where owners start—that is, from an overall perspective in which the organization is merely a vehicle for delivering the benefit that they seek. As the owners’ representative, your board’s main purpose is to ensure that what owners want their organization to produce gets produced. In other words, what matters to boards about the organizations that they govern are the external impacts they make, not the means of making them. This does not translate into saying that boards have no interest in means at all. It does translate into saying that if boards fail to keep everyone’s focus on the reason for everything they do, the doing will quickly go awry.

To put the Policy Governance system into practice, boards have to identify the difference their owners want their organization to make, not in terms of what the organization is going to do but in terms of the impact it is going to have on people’s lives. This involves answering three questions:

1. What benefits should your organization produce?

2. For whom?

3. With what cost-efficiency?

In the Policy Governance system, the answers to these questions form your organization’s Ends. Whether you call them Ends or something else really doesn’t matter as long as you have answered all three questions at some level.

You will find a lot more on Ends in Chapter Five. For now, the important things to understand are that Ends are essentially what you want your organization to achieve and that whereas most boards typically address this issue by creating a mission statement and approving a strategic plan, in Policy Governance, boards are asked to be more rigorous. Answering the three Ends questions is not easy, but unless they are clearly answered by the board, the organization will, to some degree, be rudderless and its accountability therefore hazy.

Assign Responsibility for Making That Difference