- The Challenges of the Reasonable Interpretation
Your legal counsel has challenged you with the question: Has your board identified its priorities?
Do you know what these priorities are? Your board has a huge responsibility. How is a board member supposed to keep track of everything that goes on within an organization when the job is a part time, and possibly volunteer position?
Let’s break it down. How much time does your board have to do the work? Then list its priorities based on the amount of time available from the areas of greatest importance to those which are less critical. For example your board may decide that it should place a high priority on legal compliance, fiduciary responsibilities and then work its way down to those areas which are not so critical until it has exhausted the time available. Details such as matters of board meeting decorum, board manuals and board education, while important, may not be deemed to have the same level of concern as legalities. Discovering that Robert’s Rules of Order has not been followed to the letter may be deemed as having less consequence than missed filings which could result in your organization losing its charitable status.
To do this effectively will require a hierarchical list. But where does the list end? And more important, will the list end before all the critical items have been adequately addressed? How does the board even know if the right issues have been covered? This assumes that it even knows what the right issues are. Should it be a board priority to make sure the snow is cleared from the front entrance of the office? Of course not – until someone slips and hits their head on the cement and your organization is sued for millions because the victim of the fall is incapacitated for life. Making such decisions can be quite overwhelming.
A simpler way is to reduce all the responsibilities of your board down to one sentence.
A board’s responsibility, to those on whose behalf it governs is to see that the organization achieves appropriate results for the appropriate people at an appropriate cost and that it avoids unacceptable actions and situations. Restated, a board needs to make sure what should happen, happens and what shouldn’t happen doesn’t happen.
So how can that be done? Instead of listing your board’s values and priorities hierarchically, the Policy Governance® model describes them as a series of nested mixing bowls. The largest “policy bowl” encompasses all the values and priorities. Each additional level of detail is nested inside the largest and broadest policy. Paraphrasing John Carver, in this way a board can keep its arms around the organization without having its fingers in it.
To operate this way, a board will need to unambiguously delegate some of its responsibilities to its CEO. Once it has clearly defined what authority has been delegated, it needs to formally monitor the CEO to ensure compliance. Of course it may choose to retain authority for certain areas and not delegate them to the CEO.
Now that your board has wrapped its collective arms around the largest bowl containing the macro organizational expectations as well as the legal and ethical boundaries, it needs to specifically decide how detailed its expectations for results and restrictions are.
Many boards have already done this by implementing the Policy Governance® system. If your board needs help with implementation or applying Policy Governance®, please call us. We’re here to help.
You can forget about that seemingly endless list of board priorities along with the equally endless board meetings. Your board can govern with effectiveness and excellence.
Policy Governance® is an internationally registered service mark of John Carver. Registration is only to ensure accurate description of the model rather than for financial gain. The model is available free to all with no royalties or licence fees for its use. The authoritative website for Policy Governance is www.carvergovernance.com.