Reflections on ‘Policy Governance' – Part 1How efficient are your Board meetings, whether it is a board of a local sports club, arts association, school or some other association or organisation? Do you spend long hours in discussion over minute details of management or approvals or some other operational issue but never really see any progress in the organisation? Is the strategic plan hidden in some folder? Can your Board really sway the principal or chief coach or art curator and achieve outcomes that the Board's vision has encompassed? Can you define on whose behalf you, as board member, are acting? If it is merely yourself, you may be in breach of the spirit of the law if not the law itself, for most Boards of association are legally acting on behalf specific owners of the association. And that raises the question – can you identify who the moral and legal owners of your organisation are – not your customers – but the owners ? Do you act for them? Can you prove this?
If you answered yes to the first few questions and no the final few your Board is in desperate need of a new governance framework. I have just completed a little over seven years on a school board, many as a deputy chair and finally as a chair. I am not an expert in running boards, but have learnt a lot, especially about Policy Governance ® developed by John Carver. We also had a board that spent many hours of meetings talking about matters we really did not need to speak about and in many cases had no right to speak about – I am not a licenced teacher nor an expert in pedagogy – yet we were telling the principal how to do his job rather than telling him what we wanted as the end result of him doing his job.
As a result of a search and some wise advice and counsel our school (King's Baptist Grammar School) adopted the Carver model or governance framework called Policy Governance®. The method allows the expert in running schools – the Principal sometimes called the Chief Executive Officer (and many schools do use the term CEO or COO rather than principal especially when budgets run into the tens of millions, although this person must be a registered teacher, in this State at least.) What of the role of the Board? The Board stays out of management and provides a concrete, flexible policy framework to determine 1) the End result and 2) the boundaries in which the CEO can operate, 3) including linkages to the Board, and 4) boundaries for the operations of the Board (more later). It is second item that trips a lot of people up, although understanding ENDS often also confuses those taking on the Carver model the first time. The board no longer MANAGES but GOVERNS and they do it though policy. Furthermore the policy can be fairly non-specific, except when there is an issue of interpretation . Carver states the method works “through explicit statements of values, rather than reactively or through event-specific decisions”.
Now this is a very radical difference. One Board attempts to tell the CEO of a widget making organisation on how to make widgets – when no one on the Board actually knows what goes into a widget, although all Board members make thorough use of them. The policy governance Board sets the boundaries for what the widget maker can do to make these widgets (e.g. only materials less than $40/kg can be used) and what the final product or END will be – widgets must be suitable for disable persons older than 65 years and affordable for those on a pension. Note that in this case the Board does not tell the widget maker how to do his job. Also note that the END is very specific, but perhaps not specific enough – you could add “the battery life must exceed 15 hrs. between charging”. It is the CE and his engineers who will need to find the best solution within the cost limitation. In John Carver's philosophy, the most general policy is created first, and more specific ones are added, only to a point where the desired END is achievable or interpretable.
One more thing – the Board never instructs staff – the Board only instructs the CEO with one voice, through policy, who then uses his or her professional management skills in organising the staff to achieve the END. In my school this was specifically written into policy to ensure it did not happen – too much confusion arises if the Board instructs both the CEO and one or more staff members. The converse is also true. Staff do not go to the Board, but rather the CEO for instruction. And for those worried about complaints etc., we had a code of conduct and of course various other laws to ensure fair treatment of staff and method of review.
What does this mean in real life?Firstly, you must have a clear vision and mission of the organisation. Without it, you cannot possibly decide upon the end result you want. I would suggest this must be in the foundational document such as the Constitution. Note carefully – Policy Governance does not use the term “strategy” because the entire framework is the strategy, and the END is what is being produced, changed, created for a specific group of people or needs and some defined cost – the END is the result or outcome. The vision therefore needs to articulate who the product or service will be for, what people or need will enjoy the product, benefit or service and the cost.
Secondly the Board needs to understand who their legal and moral owners are – on whose behalf is the Board acting? This is because legally and morally you act on behalf of the owners in instructing the CEO. In my case we did not know who the owners were. The Constitution or founding documents merely indicated that any parent was equivalent to an owner and furthermore, this ceased at death or if an application in writing was made! This posed a problem because after 20 years the body of parents was large, nebulous, generally un-contactable and un-interested (although one of our greatest source of new enrolments is from parents who were once students of the school – a show of confidence in the school, if ever there was). You may well ask why it was written in this way. Like many church schools, this school started with less than 50 students in a church where the parents contributed to the management and governance of the school, putting in both time and resources to get it going. Parents were church members who owned the church and school – when their children grew up, the parents remained owners, because they were in the church. However as the school grew and diversified it had to move outside of the church and become established as an organisation in its own right. The Constitution did not keep up with the reality of the school. We could never get a quorum at an annual general meeting because the ownership body was too large. Furthermore, most parents saw themselves as customers not owners. So we set about changing the Constitution to from an association within the organisation (there are many models for this) who are ‘interested and concerned persons' and who act as the legal and moral owners of the School. It is to these people we seek feedback on policy proposals, ask about where they think the school should be heading, what the elements of the ENDS should be, discuss difficult issues such as funding, generally consult as the ‘ownership' group and seek endorsement for new Board members.
Thirdly, it means you must be able to trust the CEO. The policy governance method cannot be prescriptive, else you would end up with a telephone dictionary sized policy manual, unworkable and impossible to maintain. I had a wonderful relationship with the CEO – he is not your best friend, although he or she may be – but a subservient of the Board, with which the Chair has an employer – employee relation. As a Board you have a legal responsibility to appoint the CEO. Therefore, if you cannot trust your CEO, appoint a new one! How do you determine whether your CEO is any good? Carver states that the achievement of the ENDS is your sole method of determining the achievement of the CEO. More on this later.
Fourthly – you must butt out of management issues. You have no say in management, except by a set of “executive limitations” policy. How the widget is made is NOT YOUR BUSINESS (I will explain in more detail another time because this is not quite true – for instance if you want only “green” energy to be used, then you demand this in policy as an “executive limitation”). How the grade two teacher teaches language is NOT YOUR BUSINESS, ever! You as the Board however, can demand an END that says that you expect all grade two children to be able to meet the 75% percentile compared with “like” schools (there is a cost to this that you will need to consider). You also demand monitoring (which also costs and needs to be funded), through policy, that will indicate whether the method being used achieves the result – but you as a non-teacher do not enter into pedagogical debates.
Therefore, the most important element as representatives of the owners of the organisation is a set of policies that gives the CEO a framework (which are really the outer bounds, not the inner details) in which to work, along with the expected results called ENDS, the nominated people or need this applies to and the cost. For a school the END is in relation to what results/benefits/changes for which people and at what cost. For instance your school may want children prepared for vocational employment, who live in your area at a cost affordable by the 30 percentile of the district. Our school is a Christian school and the Board along with owners determined the END was “ KBGS exists as an R-13 Christian School to provide excellence in education and to create a Christian community where students experience the love of God and have opportunity to respond to Him, at a cost comparable to the geographical area and financial capacity of parents.” Under this high level policy sits seven specific ENDS what articulate the overall mission and vision of the school as set out in the Constitution.
Principal elements of Policy Governance- my observationsOwnership - the Board connects the organisation with the owners. The Board governs - it is not merely an advisor; in fact it proffers little advice but commands the CEO. Owners are not necessarily the stakeholders, or at least not all the stakeholders. In our case most stakeholders saw themselves as customers not owners.
Policies in four groups, with various depths (i.e. some policies have more explicit information, for instance in our case, dealing with media):
- Ends policies (can be called anything) - speaks to the organisation through the CEO and is what the owners want in the final product or service etc.
- Executive Limitations - speaks to the CEO and sets the bounds in which he or she acts to achieve the Ends.
- Governance Process - speaks to the Board and sets the bounds in which the board acts.
- Board - CEO linkages - speaks to the Board and CEO and creates the conduit between owner and organisation.
The Board always speaks with one voice, with a conduit to the CEO via the Chair, and in written policy. Therefore the authority comes from the Board, not a group of individuals acting for themselves.
The ENDs forms the so called strategy, or rather, the substance of the mission of the organisation , although this term need not ever be used. They are (1) the results, changes, or benefits that should come about for (2) specified persons, beneficiaries, needs or some targeted group, and (3) at a defined cost or relative priority for the various benefits or various beneficiaries. Ends statements cannot include every benefit, but must reflect the mission of the organisation.
Executive Limitations: are policies that govern the CEO, written in a proscriptive way such that 1) the means (or processes) are not prescribed and, 2) place boundaries around unacceptable activities or processes, irrespective of their functionality. These are often written as exceptions - the CEO must , and accordingly must not fail to … etc.
Any Reasonable Interpretation: This aspect of Policy Governance is often the most frightening to Boards. It means you are leaving the interpretation of policy to the CEO and his or her staff, and the Board (if the Board policy has been written by the owners), who will use their professional knowledge and understanding in interpreting these. For hard cases, or where ambiguity existed we delegated this to a subcommittee. (I would suggest Carver policy takes 3-5 years to bed down, with constant refinement. Also I recommend also using “scenarios” or “test cases” to test the policies for interpretability, functionality and workability.)
Governance Process spells out how the Board behaves. A board that cannot follow its own policies is not worthy to be a Board.
Monitoring: The board monitors organizational performance solely through 1) assessment of whether a reasonable interpretation (having the CEO write what the interpretation was helps here) of the Ends and policies, and 2) a reasonable interpretation of the Executive Limitation. The Monitoring IS the CEO's evaluation, i.e. there is no performance review as such because the monitoring reveals all.
Agenda: Since the Board is always forward focused in this model, the Board sets the agenda for the short term - say one year and for the long term - in our case up to six years as it match our financial/building/maintenance cycle. Of course, the agenda is fine-tuned prior to each meeting, but the Board as a whole, which may as in our case included the CEO, carefully prepared a 12 month agenda. This the CEO found helpful, as it set (3 months prior to the New Year) the monitoring agenda. The Agenda is set by the Board, not the CEO. It does not contain review of staff or process activities or endless approvals, but is a proactive discussion of governance. Indeed we reviewed all Board meetings, which included questions as to whether the owners were in purview, whether we deviated into management or process issues or whether the discussions were forward focused and governance orientated. Only a structured agenda, with brief supporting documentation and written expected outcomes for every item avoided falling into old ways!
The Reality - my observationsThe Carver Model really worked. It took a lot of effort in learning and implementing it, but the pain was very worthwhile. It also requires constant vigilance, because it is easy to fall back into old ways and meddle with management rather than governance - the Chair must be strong on this point.
In my situation, being a school, outside influences had to be taken into account, such as the school's registration process, Commonwealth requirements and State requirements. However, these can be built into the Executive limitations in a fairly broad statement without compromising governance. Furthermore, we created time-limited Executive limitations for specific projects - i.e. when extraordinary funding was received for a library and sports centre as part of the Commonwealth (Australia) BER program. The executive limitation set out the expected monitoring and various aspects related to value for money and expenditure specific for these projects (in the end it was barely half a page long).
Creating an active ownership group is taking its time, and learning to interact with it is also a work in progress. However, we know who exactly these people are, and they do have a keen interest in the organisation.
The Carver model allows the CEO to get on with his or her job and is not much concerned about the process he or she follows, provided the END's are met. This posed a dilemma in a Christian school, because our philosophy involves the person him or herself, their self-care and spiritual care. That is, the Board took an interest in the CEO (the Principal in my case) as a person. Therefore, we stepped outside of Carver and undertook performance reviews that excluded outcomes but examined these four elements related to these two aspects – spiritual and physical self-care. Having a great principal is what a school wants, but if he or she burns themself out in a few years doing good, then the School may be left in a worse position.