Susan Mogensen 
January 15, 2013Monitoring Executive Performance Using Policy Governance®
Say, when’s the last time you had *this* conversation? Not recently, or ever? Seems that companies and organizations are always messing up. But it doesn’t have to be that way; let me show you why. In a perfect world we should see inputs and expectations flowing into an organization, people do their thing, and then good results come out the other end, leaving the ownership community, citizens, members or shareholders happy.
Instead, what do you often get? Call this governance dysfunction. Inputs flow in, but what comes out the other end is poor results or failure. Now people will be people, right? We’re always going to be stumbling around, making mistakes. Which is precisely why many boards opt to use a system to govern, so that even when people do mess up, we have a clear way of knowing about it and fixing it before the whole thing comes crashing down.
The system I’m talking about of is Policy Governance®, and here’s what the chain of events looks like: input from the ownership, combined with good information, gets absorbed by the board, with individual directors filtering all this info through their own values and views. Then the board as a whole creates a policy manual, parts of which are interpreted by (in most cases) a CEO. Then the staff devise plans and procedures, actions and decisions are made, and results happen.
Now let’s zoom in on the operational part of this chain and see what needs to happen when it comes to monitoring performance using Policy Governance. The first step has the CEO interpret the direction stated in board policy. Once that is done, plans and processes to achieve results can be formulated, and the work can begin. So for the board to be accountable, it has to know both the first and last parts of this chain. First, what are the CEO’s interpretations? Second, what actually resulted? What boards don’t need to see is all the clutter and fluff in the middle — you know, the stuff about here’s what we are doing, here’s what we’re planning to do, blah blah blah.
This system requires CEOs to interpret board policy reasonably. So in a monitoring report, the CEO will re-state the board policy, perhaps define some terms or make a short pre-amble, then outline specifically what one will be able to observe, because the policy exists. The observable conditions will then be backed up by a rationale, telling the board why this interpretation is reasonable. Then, for the evidence piece, the CEO gives facts or data showing how each observable condition has been met or not met.
What you end up with is a way to transform conceptual expectations into reality, and to enable boards to be effective and accountable. Wow. Imagine the possibilities. This is Susan Mogensen, with Brown Dog Consulting.
