Susan Mogensen 
August 3, 2015What is at the heart of Policy Governance®?
Policy Governance is a set of ten principles that enables boards to lead organizations accountably and effectively on behalf of a moral or legal ownership. These principles help boards to organize and to clarify all expectations of the CEO1, board committees, and board members, and to make sure that these expectations are being met.
See also: Policy Governance: Six Benefits Over the ‘Traditional’ Approach
How do Policy Governance boards minimize risk?
Boards state in policy what staff actions, decisions or organizational circumstances would not be acceptable, even if they were effective in achieving the Ends. These ‘Executive Limitations’ policies typically put off limits operational means that are illegal, imprudent, or unethical. The board then regularly monitors compliance with these (and all other) policies. The board’s intent in creating Executive Limitations is to minimize risk to the organization on behalf of owners; not to tell the CEO how to do his/her job. The concept is like building a corral inside which the CEO operates freely — as long as he/she complies with any reasonable interpretation of the Executive Limitations policies.
How do boards make sure that their policies are being followed?
Creating policies is only a start. To be accountable to owners, boards must monitor compliance with their policies. When monitoring the CEO’s compliance with Ends and Executive Limitations policies, the board as a whole will determine if (1) the CEO’s interpretation of board policy is reasonable, and (2) if evidence supports compliance with that interpretation. This process involves setting up a monitoring schedule that identifies the frequency and method by which each policy will be monitored and the submission of reports as scheduled.
See also: Policy Governance Walk-Through: How to Write a Monitoring Report
What happens when the CEO doesn’t follow the policies?
Compliance issues will normally be identified through this monitoring process. When a CEO reports non-compliance, he/she should indicate a timeline when he/she will be able to show compliance with the policy. If the board determines that a CEO’s interpretation is not reasonable and/or the evidence does not support compliance with the interpretation, it might also stipulate a timeline for a revised report, increase the monitoring frequency of that policy, change the monitoring method for that policy, change or delete the policy itself, choose to do nothing, issue a warning, take disciplinary action, or fire the CEO. See also: Carver Governance Design’s Monitoring FAQ.
What about judging plans made by the CEO?
All criteria for judging the CEO’s performance are stated by the board in its Ends and Executive Limitations policies. Monitoring compliance with these policies is how the board learns how well the organization – and therefore the CEO – is performing. While a CEO might wish to share additional information (e.g., plans) with the board or ask one or more board members for advice or ideas, these communications would be considered separate from the monitoring process in place.
See also: Suffering Board Approval Syndrome?
Our board members want to help the CEO/staff. Can they?
The CEO is free to invite board members (or owners or anyone) to help him/her to achieve the Ends (and comply with Executive Limitations) as volunteer staff support at any time. When board members volunteer, however, they must take off their “board member hats” and understand that, when acting as volunteer staff, they are now accountable to the CEO. Board and staff members should also bear in mind that board authority is group authority and no individual board member has any individual authority unless that authority has been specifically delegated to that board member by the board as a whole.
Can boards come up with any policies they like?
Yes – as long as the policies are written in a way that is consistent with Policy Governance principles and they reflect the board’s wise and informed consideration of the owners’ values. In the ongoing policy creation and amendment process, therefore, it is critical to understand what Policy Governance principles are, and how they work in practice. The board must also regularly link with the ownership to discern their values and have good information about the industry, sector or relevant field of endeavor.
See also: The Ultimate Troubleshooting Guide for All Boards of Directors
Wouldn’t it be easier if we were a “working” board?
If a board chooses to operate as a “working” or operational board, it must still ensure that its core governance responsibilities are being fulfilled. As such, a board could use Policy Governance principles to govern the organization, and then — mindful that its members will be wearing multiple “hats” — conduct meetings as a management/operational body as well.
The greatest challenge in using Policy Governance is that it represents change from doing things they way they were always done before. To enjoy the benefits of using Policy Governance, e.g., having maximum owner-accountability and creative freedom for staff, it is important to invest the time needed to ensure that all board members and management understand what is (and is not) consistent with Policy Governance principles. This investment pays for itself many times over when common areas of organizational dysfunction disappear, and instead, owners are satisfied with the results being achieved, board members and the CEO are clear about their responsibilities, and staff are motivated and productive.
See also: Workshops and The Board EXCELerator
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1 For simplicity, the term CEO is used here to refer to the lead of operations, whether that person’s official title is CEO, Executive Director, General Manager, or other.
