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Simplifying the Board Policy Manual through Policy Governance

Most boards today seem to recognize that rather than making every decision as a “one-off,” it makes sense to create some form of standing decisions otherwise known as policies. Boards tend to make lot of decisions, however, and remembering them all can be something of a problem if they exist only in the minutes of past meetings. So at some point, a board member or staff support person will take on the job of pulling all the policies together into some sort of manual.

Once the policies have been gathered together, it is much easier to see what they do and don’t cover. Typically what the board finds is a mixture of instructions and decisions. Some are directed at the board itself and some are directed at staff. Some deal with matters of high import and others are of minimal significance. Some of the decisions only make sense in very specific circumstances, while others are much more generic. In other words, policy manuals that derive from decisions that boards have made “along the way” are usually incomplete and haphazard.

Realizing this, many boards make extremely noble attempts to get such manuals into shape. Using whatever already exists as a starting point, such boards consider the issues that they haven’t covered and attempt to fill in the gaps. Personnel, finance, program planning, use of technology, travel expenses, privacy, confidentiality, fire safety, conflict of interest, roles of committees, mission, vision, recruitment — the list goes on and on. And, that’s the problem! The board doesn’t know where or how to stop. The policy manual gets longer and longer and more and more complex and still the board isn’t sure that it has covered everything that it should.

The sheer number of policies makes it impossible for the board to track implementation or to notice which policies have fallen out of date or contradict another policy. Efforts may be made to update them, to make them more complete, to cross-reference them, or to assign them variously among board, committees, chair and staff. Most often, these attempts result in failure or a manual that is too complicated to understand. Worse yet, after all that effort, such manuals are routinely ignored.

When the board has said so much in policy that it is hard for anyone to recall, the board cannot help but start reinventing the wheel. Unaware of what they have already said, the board makes decisions that amend or completely change previous policies but the manual stays unaltered on the shelf becoming more and more compromised until someone rescues it and the whole process starts all over again.

For board policy making to be effective it needs to be treated as a much more deliberate art than common practice suggests. As far as I know, the best, and perhaps the only guide to the art of board policy is that created by John Carver in the Policy Governance(tm) model. It was in response to the problem of haphazard policy making that Carver created an innovative and effective way of looking at policy. His model proposes that all policies deal either with an end or a means. Ends are what the organization is for, while means policies deal with what the organization does to achieve those ends. Policy Governance suggests that all possible board concerns can be grouped into four categories of policy: governance process, board-staff relationship, executive limitations, and organizational ends.

Governance Process and Board-Staff Relationship policies define the board’s operating practices, how it delegates authority, and how it maintains accountability (the board’s “means”). “Executive Limitations” govern the behavior of staff while “Organizational Ends” policies express what the organization is for – defined as the answers to the questions “what benefits, for which people, at what cost.”

In the Policy Governance model, the board creates policy in each category starting at the broadest level before proceeding to address more specific issues, always progressing from broadest to narrowest. Finally the board gives its chair the authority to act within “any reasonable interpretation” of the first two categories, and its CEO the authority to act within “any reasonable interpretation” of the last two categories.

Board policy crafted in this way, comprehensively covers the whole organization and yet the written manual typically runs to no more than thirty pages with an average of five points on each. Delegation is clear and performance monitoring becomes fair and manageable for all involved.

Common misconceptions are that policy crafted according to this format requires a excessive amount of delegation and a traditional CEO. Carver suggests that a board should stick to saying “all it must” rather than “all it can” to maximize board and staff efficiency, but the policy format enables the board to delegate as little or as much as it wants to whomever fills the functions of the CEO. In the case of many smaller organizations, the CEO functions may be filled by board members themselves.

To sum up, effective board policy needs to be more than a simple collection of the board’s thoughts and decisions. Effective board policy needs to be comprehensive in scope, but brief in words. It must be clear as to how much the board is delegating and to whom. Most importantly, policy needs to be applied and monitored systematically. The board must ensure that those charged with the responsibility for creating and implementing policy are held accountable for their performance. Artfully crafted policy may look good on the page but it means nothing unless it is consistently used — and that’s a challenge for all boards including those that use Policy Governance!

The editorial board and contributors of Nonprofit Boards and Governance Review wish all our subscribers a very happy holiday season. We will return with our next issue on January 9, 2003
Nathan Garber, Editor-in-Chief

About the Contributor: Caroline Oliver

Caroline Oliver’s experience with the Policy Governance approach to purposeful, effective and ethical board leadership, and board leadership in general, spans over thirty years. Today she has an international consultancy with a client base in the UK, North America, and beyond. Caroline’s extensive client list includes colleges, hospitals, membership associations, charities, professional regulatory health organizations and faith based organizations. Her first book, of which she was general editor, was The Policy Governance Fieldbook: Practical Lessons, Tips, and Tools from the Experiences of Real-World Boards. It was published by Jossey Bass Publishers Inc. in 1999 and involved bringing together a team of consultants and practitioners to study the work of eleven not for profit organizations. Her second book, Corporate Boards That Create Value, was co-authored with the creator of Policy Governance, John Carver, and published in 2002 by Jossey Bass Publishers Inc. Her latest book, Getting Started with Policy Governance – Bringing Purpose, Integrity and Efficiency to Your Board, was published in 2009, also by Jossey Bass Publishers Inc. She is the current Managing Editor of the bi-monthly journal Board Leadership published by Wiley Periodicals Inc and author of numerous articles on governance topics. Caroline is the current Chair of the UK Policy Governance Association, CEO of the International Policy Governance Association, chief executive of Good to Govern and a member of The Xylem Group. She is also currently engaged in helping to write a new British Standard on governance due to be published by the British Standards Institute (BSI) in late 2013. She can be contacted at coliver@goodtogovern.com.

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