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CARVER POLICY GOVERNANCEĀ® GUIDE
Everyone seems to be busy. Board members read materials and crowd board and committee meetings into their personal and business lives. Staff members report to work daily, and many leave tired when itās time to go home. Computers compute, transportation transports, and all manner of special machinery hums continuously. It all looks impressive, seems well intended, and runs as if it had a life of its own. But does all this admirable activity actually work? How do we know we arenāt all fooled by our own busyness? Is everything happening that should? Is anything happening that shouldnāt? Is the staff spending its time wisely? Are employees adequately trained? Are we paying too much for rent? Are there any off-balance sheet transactions going on? Is the board using its scarce availability well? Is it being a good employer? Is it spinning its wheels?
There are people at every level from board to upper management to frontline staff working hard with the intention of doing good jobs. The board, at the very top of the heap, not only wants to know whether all those jobs add up to something right and honorable but is legally and morally accountable that they do. It is no wonder that board members are continually worried about the weight of this accountability. In this Guide, we address the boardās need to know whether the board itself and its operational organization are getting their jobs done.
As important as evaluation is, it is only one part of a total systematic view of governance. The upside of that integrated view is that every part makes more sense in the light of the whole. The downside is that no single question can be answered properly unless the whole is understood.
Therefore, we encourage you first to read the Carver Policy Governance Guide titled The Policy Governance Model and the Role of the Board Member for an overview of the Policy Governance model. For the reader who doesnāt have that Guide, here is a brief summary.
Policy Governance in a Nutshell
ā¢ The board exists to act as the informed voice and agent of the owners, whether they are owners in a legal or moral sense. All owners are stakeholders but not all stakeholders are owners, only those whose position in relation to an organization is equivalent to the position of shareholders in a for-profit corporation.
ā¢ The board is accountable to owners that the organization is successful. As such, it is not advisory to staff but an active link in the chain of command. All authority in the staff organization and in components of the board flows from the board.
ā¢ The authority of the board is held and used as a body. The board speaks with one voice in that instructions are expressed by the board as a whole. Individual board members have no authority to instruct staff.
ā¢ The board defines in writing its expectations about the intended effects to be produced, the intended recipients of those effects, and the intended worth (cost-benefit or priority) of the effects. These are Ends policies. All decisions made about effects, recipients, and worth are ends decisions. All decisions about issues that do not fit the definition of ends are means decisions. Hence in Policy Governance, means are simply not ends.
ā¢ The board defines in writing the job results, practices, delegation style, and discipline that make up its own job. These are board means decisions, categorized as Governance Process policies and Board-Management Delegation policies.
ā¢ The board defines in writing its expectations about the means of the operational organization. However, rather than prescribing board-chosen meansāwhich would enable the CEO to escape accountability for attaining endsāthese policies define limits on operational means, thereby placing boundaries on the authority granted to the CEO. In effect, the board describes those means that would be unacceptable even if they were to work. These are Executive Limitations policies.
ā¢ The board decides its policies in each category first at the broadest, most inclusive level. It further defines each policy in descending levels of detail until reaching the level of detail at which it is willing to accept any reasonable interpretation by the applicable delegatee of its words thus far. Ends, Executive Limitations, Governance Process, and Board-Management Delegation policies are exhaustive in that they establish control over the entire organization, both board and staff. They replace, at the board level, more traditional documents such as mission statements, strategic plans, and budgets.
ā¢ The identification of any delegatee must be unambiguous as to authority and responsibility. No subparts of the board, such as committees or officers, can be given jobs that interfere with, duplicate, or obscure the job given to the CEO.
ā¢ More detailed decisions about ends and operational means are delegated to the CEO if there is one. If there is no CEO, the board must delegate to two or more delegatees, avoiding overlapping expectations or causing confusion about the authority of the various managers. In the case of board means, delegation is to the CGO unless part of the delegation is explicitly directed elsewhere, for example, to a committee. The delegatee has the right to use any reasonable interpretation of the applicable board policies.
ā¢ The board must monitor organizational performance against previously stated Ends policies and Executive Limitations policies. Monitoring is only for the purpose of discovering if the organization achieved a reasonable interpretation of these board policies. The board must therefore judge the CEOās interpretation, rationale for its reasonableness, and the data demonstrating the accomplishment of the interpretation. The ongoing monitoring of the boardās Ends and Executive Limitations policies constitutes the CEOās performance evaluation.
Finding Out What We Donāt Know
To delegate, as it must, the board has to set out its expectations for the CEOās job, and to have effective governance, it must set out expectations for its own job. Setting out expectations is a prerequisite for checking performance, for those expectations form the criteria for evaluation. Since the board is accountable for the organization, it would be irresponsible to allow others to make decisions with authority the board has handed out without checking that the authority was used in accordance with board expectations. Giving away authority without checking on its proper and effective use is not delegating but abdicating.
Throughout these Guides, we use the word evaluation to include both monitoring and self-evaluation. We use monitoring to describe the boardās checking on performance of the operational organization. If you p...
