The benefits and challenges of the Policy Governance model.
Benefits of the Policy Governance® Model
Clear Direction is Given to the CEO
- Organizational outcomes are defined in policy by the board.
- Any constraints on operating methods are defined by the board.
- Any values or priorities of the board are addressed in the Ends.
- Any worries or concerns of the board are addressed in the constraints.
- Any other operational choices not covered in policy are left to the CEO.
- The values and perspectives of the owners are expressed in the policies.
True CEO and Operational Accountability is Achieved
- Expected outcomes and operating constraints are clearly and completely spelled out.
- Clear authority is passed to the CEO so that nothing stands in their way of accomplishing what the board directs.
- The board formally monitors CEO and Organizational performance with data based evidence.
Board Becomes Accountable to its Owners and Itself
- The board clearly recognizes its rightful role of representing the interests of the owners, not the operational organization.
- In order to fulfill this role, the board purposefully links with the owners to understand their values and perspectives.
- A board job description defines the unique value-added role that the board and the board alone is qualified to fulfill.
Agendas and Meetings are Enhanced
- Board meetings, and their agendas, center on the value added work of the board, not on operational minutiae.
- A process exists for bringing diverse perspectives into informed decisions through healthy dialog and deliberation.
- Meetings may or may not be shorter, but they are almost always more focused and more substantive.
Board is Proactive in their Policy Development
- A complete set of policies are developed that cover anything the board feels is important.
- A formal process of developing policy is followed, assuring that policy always begins at the broadest level and works its way into smaller levels in an orderly fashion, resulting in policy that is clear and serves as a useable reference for decisions and behavior.
- Policy is set in advance to address known issues, rather than waiting to react to issues as they arise.
- New policy development is automatically triggered when increased understanding, unforeseen events, or new owner concerns or desires are not covered within current policy.
- Policy is continually tested and updated through rigorous monitoring and review.
Board Defined Ends Drive the Organization
- Instead of deriving our purpose from what we do, our purpose defines what we must do.
- The Board defines what the organization is for and lets the CEO decide how to get there, rather than making the CEO decide what should be done and then deciding if the CEO is right or wrong.
- The Ends (which answer the questions of "What benefits, for Which Recipients, at What Justifiable Value) spell out what the Organization is to achieve.
- The CEO then determines what the Organization needs to be and do in order to realize the purpose.
Challenges of using the Policy Governance® Model
It is Totally Different from Traditional Board Concepts
- It provides guiding principles, methods, and processes that are different than what you have experienced in being on or watching other boards.
- Not only do you have to learn the new way, you have to unlearn the old way.
Many People will not Understand It When You Tell Them
- Policy Governance is still growing in visibility and recognition but there are many who have not heard of it.
- When they hear you are using it they may not understand what you mean or why you need to do things differently.
Requires Education Inside and Outside of the Boardroom Too
- Because it is different and is about more than just memorizing new rules, it requires ongoing learning and practice to get good at it. It will not happen over night and the board must plan on continual education.
- Educating your ownership and the public about what Policy Governance is becomes very important, especially your ownership.
It Requires Ongoing Reasoning through the Board's Issues
- It is principles based, not rules based.
- It is not as easy as learning "the new rules", you have to learn the underlying values and concepts and apply them to the issues in front of you.
Many Organizations Use an Outside Consultant
- Because it is so different it is often more effective and efficient to use a consultant to get up and running.
- This can require an investment of often limited organizational resources (generally a modest investment).
It Requires Board Discipline
- In Policy Governance, the board is clearly in charge of itself.
- The CEO no longer works "behind the scenes" to guide the board.
- To be self-directed, the board must be disciplined, and willing to discipline itself.
- If the board is not disciplined, it can result in falling back into old habits and methods, undermining the value of the time and other resources it invested in its governance.
- Sustaining the use of Policy Governance must be a purposeful choice and proactively pursued or it could fall by the wayside.
Using Policy Governance can Require Some New Definitions in Relationships with "Parent" or "National" Organizations.
- Policy Governance asks the board to define who it serves.
- In a regional, state, and national Organizational network this requires defining who works for whom (is the larger Organization our owner or do we own the larger Organization?)
- It is easier if, but not necessary that, all levels of the Organization are using Policy Governance. If they don't they may need to be educated about it.
It Requires Proactive Contact with Owners
- The board must seek out the values and perspectives of those they represent.
- This means that they must develop mechanisms for reaching out to the entire ownership, not just those who show up.
It Requires the Board to Give Up Management of Operational Issues
- The CEO is delegated all operational authority within the boundaries set by the board.
- The board is rarely asked to get involved with or make operational decisions at the activity or program level.