A Carver Policy Governance Guide, The Policy Governance Model and the Role of the Board Member

John Carver, Miriam Mayhew Carver

• Publisher: Jossey-Bass
• Year: 2009
• Print ISBN: 9780470392522
• eBook ISBN: 9780470456088
• Edition: 2
• Topic: Business
• Subtopic: Nonprofit Organizations & Charities
• Index: Business

The Carver Policy Governance Guide series includes six booklets that offer board members a description of John Carver's Policy Governance model of board leadership. Policy Governance enables a board to fulfill its accountability to its organization's "owners, " whether the owners are association members, city residents, company shareholders, or a community of interest. Policy Governance addresses the board's engagement in financial, programmatic, and personnel matters; roles of officers and committees; reporting and evaluation; agendas; and other aspects of the board job.

The Policy Governance Model and the Role of the Board Member sets out a clear vision for excellence in board leadership. It gives board members an understanding of the concepts and principles that are at the very heart of John Carver's innovative Policy Governance model. This guide details members' main tasks and presents the guidelines needed to transform a board into an effective group that consistently leads powerfully.

The Policy Governance model is based on the functions rather than the structure of a governing board. It outlines commonsense principles about governing that fit together into an entire system. The practices of the Policy Governance board, which are consistent with the principles, allow it to control without meddling, focus on long-term organizational outputs, powerfully delegate to a CEO and staff, and discharge its fiduciary responsibility in a visionary, strategic manner. Because the model is a total system, the Carver Policy Governance Guide series offers boards a complete set of principles for fulfilling their various obligations.

Carver Policy Governance® Guide

If you serve on a board of directors, work for one, or observe one, you may have wondered whether there is any rhyme or reason to governance. You are not alone. Many have noticed characteristics of even good boards that are hard to explain.

Why, for example, do boards tend to spend hours debating small issues while large ones sail by comparatively unexamined? Why do groups of competent and assertive individuals allow themselves to be held hostage by the loudest or most insistent board member? Why do boards spend hours making decisions that they then forget they made or that go unrecorded or, if recorded, are difficult to locate? Why do boards, realizing the need to evaluate the performance of the organization they govern, try to perform such an evaluation in the absence of previously stated criteria? Why is the focus of boards on the present, or worse the past, instead of the future? Why do they seem more concerned about the activities of the organization than its outcomes? Why do boards approve reports of things that have already happened? And why don’t they consider the consequences of not approving them? Why do they so often treat the chief executive officer (CEO) as either their friend or their enemy but rarely as their employee, to whom clarity and fairness but not subservience are owed? Why are boards of effective individuals so often ineffective groups? How can “model” boards, like Enron’s was said to be, allow complete disaster? Why do current corporate governance writers complain that it still isn’t clear what the role of a nonexecutive chair should be?

These and other questions commonly cause confusion and, in the end, ineffectiveness in governing boards. We are referring here to boards of all sorts: of nonprofit, for-profit, governmental, and cooperative organizations. You can get a clear answer to the question “What is your job” if you ask anyone in the organization except the board. Yet the board is accountable for the organization, its successes and its failures, and the board has more authority than any other part of the organization.

Imagine

It isn’t difficult to imagine what excellent governance by boards should look like. Most people would agree with these ideals: boards should know who they work for; they should require their organizations to be effective and efficient; they should be in control of their organizations; the control they exercise should be of a type that empowers, not strangles; they should be fair in judging but unafraid to judge, rigorously holding delegatees accountable; they should be disciplined as to their role and their behavior; they should require discipline with regard to the role and behavior of their individual members; as the highest authority in enterprise, they should be predictable and trustworthy.

This is quite a vision for the governance of organizations, whether they be nonprofit, for-profit, or governmental. Yet as compelling as that vision is, in reality the process of governance is the least developed element in enterprise. It is, as you have no doubt noticed, a job that is ill-defined, undisciplined, dependent on staff rather than exercising leadership of them, and often actually irrelevant.

What accounts for the difference between the vision and the reality? Our answer focuses not on the skills or aspirations of the people who serve on boards but on their not using a governance system worthy of the importance of their job. Using a good governance methodology and first-rate discipline, boards can be visionary yet practical leadership bodies. The method and discipline of Policy Governance require much of board members to be sure, but what important job can you name that does not require a period of learning and ongoing discipline? We argue in the Carver Policy Governance Guides that achieving excellence in such an important leadership role is worth giving up some old practices, adopting some new ideas, and transforming the very nature of boardroom activity. The simple message is that boards can truly be effective leaders.

A Theory-Based Framework for Leadership and Accountability

Why is it important or even useful to base board practices in a governance theory? First, let us establish that by “theory,” we don’t mean head-in-the-clouds notions that are unrelated to the real world. We mean a carefully constructed set of ideas that completely cover a subject at a level deep enough to get underneath all the surface differences that are easier to see. In fact, theory is built by observing actual phenomena in enough places and under enough conditions that the underlying realities start showing themselves. Modern knowledge and capability had their greatest advances when someone worked out theories to replace trial-and-error or superstition. That is how people figured out gravity, germs, aerodynamics, and atoms. When sound theory becomes available, however, practices that seemed to make sense before are exposed as inadequate while practices no one had thought of before turn out to be essential. Until the Policy Governance model came along, governance had not yet benefited from such theory-building.

The Policy Governance model, created by John Carver, is a job design for boards, a prescription for leadership by any governing board in order to enable the quality of leadership of which boards are capable. It is a model in the conceptual rather than the structural sense, created to answer these questions: How does a group of equals, usually on behalf of someone else, direct an organization so that it is successful? How can it empower those who work in the organization as much as is safely possible, and how can it drive the organization toward the accomplishment of its long-term purpose? How can the board be crystal clear about what it should do and what should be left to others? And how can it be disciplined enough as a group to maintain a clear separation of function between its job and those of the people to whom it delegates? And what, when you get right down to it, is the difference between governance and management?

In order to answer these and other important questions, Policy Governance has a small number of principles or rules that, taken together, describe a complete operating system for boards. But you will find that these rules require the board to act very differently from what the traditional board is used to. Policy Governance is a new game and learning it poses challenges, especially for those used to the old one. One of the challenges you will have as a board member is the system nature of Policy Governance. Just as in a mechanical system, such as a clock, all the parts contribute to the functioning of other parts as well as to the total purpose. This is not unlike members of a sports team enhancing one another’s performance as they all aim toward winning the contest. Removing just one cog from one wheel in an analog clock keeps it from telling time. Clocks, unlike governance, are products of careful design; typical board practices have not been designed so much as inherited. The strength in designed systems is their accuracy and power; the weakness is that they don’t work if we pick and choose which parts to use and which to omit.

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So if you are a board member, it is important to be ready for new learning that can be counterintuitive until you master the ideas and practices. Policy Governance is an approach unlike anything that went before, even by the best of traditional boards. This can be a particular challenge if you have years of active board experience.

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You may be aware that the reason for having a board at all is so that it can ensure accountability in and for the organization it governs. This means that the board occupies a special place between the organization’s owners and the operating organization. The board is the agent of the owners and works for them, while the CEO is the agent of the board and works for it. Ownership is a concept that is very clear and even legally defined for some organizations. Shareholders own the company. Members own the trade association. Residents of a geographical area own city government and public school systems. But in nonprofit organizations without legal owners, it is useful to consider that they too are owned by persons outside the board, often a community or a community of interest. Policy Governance boards act consciously on behalf of owners and spend a considerable amount of time connecting to them and understanding their diversity.

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So if you are a board member, you must make your decisions on behalf of the owners, not the staff, today’s clients or recipients, or yourself. Morally, even if not legally, you and your board colleagues are agents of the owners.

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It helps for boards to see themselves as active links in a chain of command, a...

Table of contents

• Cover
• The Carver Policy Governance® Guide Series
• Title Page
• Copyright
• Carver Policy Governance® Guide
• About the Authors
• Notes
• Jossey-Bass Policy Governance® Publications
• End User License Agreement