Exploring Policy Governance
Some concepts about governance to leave behind
We need to see everything that management does
We are part of management
We have to see management's financial statements
We are at the top of the organization chart, and we are the boss
We are on the board to give wise guidence to management
We earned our position on the board by our good works on committees
As board members we are part of the volunteer structure
Think about it.
Can you show up once per quarter
or once per month
or even once per week
and really expect to see everything
done by management?
It is even worse than that!
The only way to keep up is to demand management to prepare reports for you.

So, for  you to keep up, management has to write lots of reports.
And then you have to read lots of reports.

Sound Familiar?
The worse the trouble in your org, the more reports you'll have.
This costs a huge amount of management's time.
And probably you are still not really knowing what is the problem.

What's next? Are you going to live in the Mangement Suite?

No, but when things are going badly, you will feel out of control.

Truly, you cannot really keep up with the day to day events of management. 

But, it is even worse than that.
Here is the bad news:

Even if you could keep up with management...
Then you would be merely following management.
And your job on the board is expected to be leadership
not followship.

Keeping up with management is futile
And as a member of the board IT IS NOT YOUR JOB!
Policy Governance is a complete model of governance
that will give you the tools to be
- an effective leader
- and an excellent fiduciary

Here is the downside:
the job of governance takes learning and diligence.
Policy Governance is not intuitive.
No. Management is accountable for managing.
If you try to do management's job
you are meddling
and you are likely subverting management's accountability.

Your job is governance.
People expect to have to learn to be managers.

Why is it not expected that the job of governance
should also take some study and practice?
We need to talk about this.

Yes, the board is at the top of the org chart and if it passes a motion,
and it is a legal resolution, 
that motion is binding on the organization and its employees.
You (the board) do have the power of edict (command).

Nothing about Policy Governance removes your power of edict.

So, why is the general advice to a board to use policy
and not the easy hammer of edict?
Imagine this.

You are the boss, and an employee asks you for a decision.
What do you do? 

You decide, and then the employee goes and does the job.
It happens in the workplace every day. Right?

Now, everyone in the workplace with a stake in the organization will,
when they learn of the decision,
wonder why that decision was made that way.

So, all of the observers of that decision will interpret that decision to be
a general indicator of how situations like that should be resolved.

Pay attention: this is part is important.

Those observers will come to their own conclusions about what the 
boss valued when making that decision.

The word that we use for the stated practical application of a value is a "policy."

In other words, the employees and others will decide what policy was actually
the basis of that decision.

So, by making a decision, the other employees were watching and deciding what
was the policy behind that decision. This is called, 'policy by appeal.'

Sometimes people come to a useful conclusion about the policy that is likely behind
a decision... but most bosses would be horrified if they knew how their decisions
were being interpreted.

The point here is, that every time the board issues a decision, it is also revealing to
its staff that it must have some values associated with that decision. And so, the
staff will make up their own policies for what they think the board values.

Wouldn't it be better if the board simply expressed its relevant values (in policy) 
and then the staff would always know what was expected of them?

By the way, if there is a written policy, yet a boss makes a decision that is contrary
to that policy, the employees will assume that the unwritten policy, the 'policy by
appeal,' is the REAL policy - after all, it was the policy that produced the action.

Incorrect policy by appeal is a frequent consequent of edicts.
All of this is to explain why it is better to express
what is required (because it is valued) in policy.

Most people see a problem
and the solution comes to them as an action plan to solve the problem.

So, when board members see a problem,
the solution seems to be a command (an edict) to act.

It is better to use the current situation to create a policy that deals
with all similar situations. 

Policy Governance provides the tools to do this.

It requires some learning - this work is not taught in schools.
®
Sure you feel you need to do this,
but there is a better way to be sure that
management is doing its job
Is this true?
Yes, the board has the power
(or authority)
On most boards you are expected to pay lots of
attention to the financial statements
For many people new to Policy Governance this matter of not
seeing the financial statements is the place where they discover 
that governing with this model is truly different from the old way.

If you were hoping that you could simply ignore the fact that this board
was using Policy Governance, and you thought you might try to continue
the way you have on other boards, this issue of the financial statements
is likely to be a deal-breaker for you. 

Before you walk out, please consider how this works.
First, consider those financial statements that you think you want to see.

What do we have here? Likely there are Revenue & Expense statements, 
the balance sheet, maybe a cheque list. 

All of this broken down according to departments, 
or programs. And that’s all repeated every month, or quarter, or whatever.

There may also be some statements that reflect on how the organization is
performing, such as attendance, membership renewals, sales, etc.

So, you look at these statements. Perhaps in prep for the board meeting
you made some pencil annotations to highlight some figures that seemed
interesting or odd. At the meeting you raised questions about those figures.

And so did other board members. 

Management probably gave some satisfactory answers, 
or at least the answers did not seem to suggest that the situation 
was worse than was expected.

So then what happened next? 

There was a motion to approve those statements.

Probably you voted to pass that motion.

Sound Familiar?

You just voted to approve those statements. Right?

What do you really know about those figures? 

Each number is a summary. You know the heading for that summary, 
but do you have any idea, really, of what is behind that figure?

Oh yes, you did ask some clever questions and received what
seemed to be good answers. But those clarifications, which
made up the interesting part of the examination of the financial
statements, were not included in the motion to approve the statements.

The minutes of the meeting may, or may not, include the actual statements.
Likely those minutes will not include the related commentary. What
will be clear from the minutes is that your board approved the statements.

Exactly what has been established during this important part of your board
meeting? Has the board really established that the organization is financially
sound? Or only that the figures looked okay and the board trusts that
management’s story (which is not part of the record) seems plausible?

If you think that this is a satisfactory way of attending to your fiduciary
responsibilities, you may find that Policy Governance provides for a
higher level of diligence.

With Policy Governance, the board writes clear policy about the
financial conditions in the organization. 

This is not a trivial point, and it is a huge difference 
between the old form of governance and Policy Governance. 

Oh sure, some boards have SOME policies regarding finances.

Policy Governance boards don’t have SOME policies.
Policy Governance boards have written a complete set
of policies on the subject.

In a Policy Governance organization, the staff has the implied right
to say: “If you (the board) hasn’t said how it must be, you cannot
ask how it is.”

You don’t need to see the financial reports because your board has
said how it must be.

Since the board had said how it must be, the reports you will receive 
will have to demontrate, to your satisfaction, how it really is.

This part of Policy Governance is a BIG DIFFERENCE.
Okay, so you are thinking that the board wrote some poetry (policy)
about what financial conditions are required. Big deal. You’ve seen
boards issue policy statements before, and it hasn’t made much
difference.

Is this different?

Yes. 

Or maybe it is, depending on whether the board is really doing its job.

Its job, in this case, is rigorously attending to monitoring its policies.

As a board member you will receive detailed monitoring reports on
each of the board’s policies. 

Those written reports will make it clear what is the current situation of
the organization with regard to each policy; and there will be data or evidence to 
confirm the assertions. 

No, these are not called 'financial statements' — those are tools of management.

These monitoring data will directly address the words of the board’s policy. The
monitoring report, then is a tool of governance.

And yes, it will contain data necessary to confirm the assertions made by the report.

So you will see numbers. These numbers and written discussion are specifically 
relevant to your policies.

Can you trust the monitoring report?

• The board decides who is best qualified to write the report. 
• The author of the report must present it as a signed document. 
• The monitoring report becomes part of the board’s minutes. 

This is a very high level of diligence on the part of the board.

To sum up:

In policy, the board says how it must be.

In the monitoring report, the staff (or the author of the report)
describes clearly how it is, and provides the metrics to confirm
the report. 

When reading the report the board should have a clear
understanding of how its policies are being accomplished,
and it has the comfort of signed monitoring reports becoming
part of the board’s minuted record.

When you see this working, you will find that you have a 
better knowledge and control of your organization than
with the old practice of attempting to review staff’s
management tools.
This one is simple: no, you are not
Many boards act like a think-tank.

The problem is that the board has all of that authority.

Board members cannot give advice without the possiblity that the advice is perceived as a command.

The board members may see solutions, and think they are helping, but they are likely subverting the accountability of the staff.
Oh, but you have all of that experience and knowledge, and you care enormously for the organization. 

And you can see solutions that management may be missing. 

Isn't there some way to offer your knowledge and assistance?
Yes, but it is a bit tricky. 

So, proceed with caution.

The issue is that you do not want to
subvert the accountability of the staff
If you want to help the staff, including the CEO, you cannot do it as a board member.

You have to take off your board member's hat and go and offer your services to the staff member who can benefit from your knowledge or skills. In this role, you 
are a volunteer who is accountable to the staff. Make
sure this is understood!

There must not be a whiff of a possibility that the staff member is willing to receive your services because you are a board member. If there is even a remote chance of this, you are better to decide to be either a volunteer working in the organization, and accountable to the staff, or remain on the board. But choose only one role.

The staff member must remain accountable for his or her results — even if you are helping. The staff member, 
even if it is the CEO, must be able to say, "no thanks,"
to your offer to help.
There are a number of ways that board members find their way to their seats on the board. Here are some:

• excellent past service to the organization or to the related community
• election
• appointment by another organization
• appointed as the representative of another organzation
• recruitment by the nominating committee

All of this might explain how the board member arrived on the board. It should not speak to how the person behaves while on the board.

With Policy Governance the board either acts a whole — or it does not act at all. Also, it acts a a trustee for the cohort of the community that it identifies (in policy) as its owners.

Therefore the board is not the senior board in the organization's committee structure. Nor are the members expected to act as representatives for the groups that promoted or appointed them. 

The board acts as a whole on behalf of the ownership. It does not matter
how you arrived here. Now that you are on the board your background
may inform the wisdom of the board but you must now attend to the
whole ownership, not just those who may have been your constituents.
Nope, it is the same issue as this...
This is not a complete course
in Policy Governance.

We are just selecting a few topics
about this model of goverance that
some people, who are accustomed to
traditional governance, find confusing.

If you are about to join a Policy Governance
board, and you are familiar with the typical
board practices, these are some issues that
will arise and may cause you some concern.

If the explanations you find here do not give
you the comfort you need to govern with confidence
then please discuss the matter with your board Chair
or your governance consultant.

Probably you will not be raising any issues that have not
been already faced by many other board members before.

If you expect that the work on a Policy Governance board
will be similar to the work of other boards, you will be
disappointed. If you are prepared to study these new tools
of governance you will find that you have the means to
ensure that as a result of the work of your board, your
organization will achieve the community transformation
for which your association was formed.
Leave the edicts and strategy to management.

Your job on the board is to ensure that the  organization achieves what it must and avoids
actions and behaviors that are not appropriate.

If you are thinking about edicts and strategy you 
are likely thinking about how to meddle with the
affairs of mangement.

Part of learning to govern well is learning the new
tools of governance. It also means that often you should not do what you want to do. As a fiduciary,
you are speaking for others, not for yourself.
Thanks for taking the time to read this.
It was prepared by Robert Ballantyne of
http://governancecorporation.com
and
http://ballantyne.com

Policy Governance ® is a registered mark
of John Carver and is used by permission.