- Never Have a Policy that Includes "Unless the Board Approves"
I was taking the car for a test drive as the salesperson espoused the virtues of the vehicle. Ten minutes into the ride I couldn’t imagine anyone would buy any other model than the one I would have to finance. As we headed back to the show room he offered to answer any questions I might have. His sales spiel should have rendered every potential question irrelevant. But it didn’t. “What reasons would the salesperson of another car manufacturer give me for not buying this car?” I queried. “Hmmm,” he replied; “No one has ever asked me that question before.
Arguably more boards don’t use Policy Governance than use it. So there must be some drawbacks to this model of governance, frequently referred to as the Carver model. With that in mind let’s take each of its principles and examine their drawbacks.
Drawback #1: The board is the ultimate owner
One of the Policy Governance principles is that that your board should act as the informed voice and agent of the moral and legal owners or members of an organization. It is not an end in itself and serves its own interests.
However if your board believes it has no legal or moral obligation to any individual or body or needing to be informed by anyone other than itself, then the Policy Governance doesn’t apply. If your board has any governance role at all, it will likely attest that it governs only on behalf of itself. Even if it has been appointed or elected by a body of people, the need to hear from the electing body ends at the point the board is elected. There is no implied requirement that it should interact with those who appointed or elected it. This principle alone would be reason enough not to use Policy Governance.
Drawback #2: Because part of the board’s job is to advise and direct the staff
John Carver would unapologetically state that the board is a link between the owners and the staff. The Carver model loses that board-staff association which allows the board to be involved in management. There is a clear distinction between the governing role of a board and the administrative role of management.
It only makes sense that staff should avail itself of the wisdom and knowledge found within the board. At times your board will offer advice and require that staff take direction from board members with expertise in a certain area. Whether board member input is advisory or directive in nature is something that a good CEO should intuitively understand.
Drawback #3: Because board members should be able to speak their mind outside a board meeting
One of the principles of Policy Governance is the idea that the board itself has a voice and that instructions are only expressed by the board as a whole. The Carver model allows for passionate debate during a board meeting but once an official motion of the board is passed, that motion expresses the mind of the board.
This is a great idea if all the members of your board agree with the decision. But what if a board member disagrees? This notion of a board speaking with one voice forces an individual board member to support a decision, even if that person has voted against it.
Drawback #4: Because ends deflect from the value of programs
The Carver model puts a great deal of emphasis on the outcomes or effects to be produced by an organization, while identifying who the recipients of the identified outcomes will be and the cost/benefit of the intended results. It refers to these as ends. Policy Governance renders passionate mission statements and compelling vision statements as inconsequential when the ends are not accomplished.
Your board will agree that the pursuit of ends accomplishment is a noble ambition. However the concept of ends diminishes the value of creative programs, staff initiative and hard work unless the ends are realized. Creativity, initiative and diligence should count for something even if they don’t work in the long run.
Drawback #5: Because the board’s job needs to be flexible
In the Carver Model there are policies that restrict the board’s behaviour. Admittedly there are advantages to this as it assures reasonable expectations of attendance, preparedness and decorum. Policy Governance goes beyond that to the point of actually limiting its own behaviour as it relates to the CEO.
Imagine your board imposing written limitations on itself in terms of how it interacts with the CEO in or out of a board meeting. Using a football analogy, how is a board supposed to make audible calls when it has locked itself down by its own policies? Furthermore, this Policy Governance principle only serves to paralyze individual board members from giving unilateral instructions to employees. Ultimately your board would be compelled to evaluate your CEO based only on stated policies and expectations. This Policy Governance principle would not allow for subjective input during the annual evaluation process.
Drawback #6: Because the board needs to be free at any time give instructions to the CEO
Policy Governance has what it calls executive limitation policies. These limitations explicitly state what a board would find unacceptable.
At first blush this sounds like a great idea. Upon more careful consideration these policies create a two edged danger. The first danger is that the negative “can’t do this, don’t allow that” language is too restrictive. The poor CEO lives in fear of doing something wrong. The corresponding danger is that it frees the CEO to make any decision which the board has not limited. This removes control from the board and even exposes it to surprise. Would it not make more sense to have a comprehensive list of what the CEO can do so s/he can’t do anything wrong? This way any major initiatives can be brought to the board for approval. While the CEO would be required to understand what the board means by major, s/he will eventually figure it out.
Drawback #7: Because the concept of policy sizes is too restrictive for the board.
Policy Governance requires that executive limitation policies be created in a sequential manner. This typically begins with the broadest policy that prohibits the CEO from - among other things, doing anything imprudent. This policy may be further developed by taking a category such as asset protection and creating a policy that prohibits the CEO from allowing organizational assets to be unprotected, inadequately maintained or unnecessarily risked, (which the board right determines to be imprudent). It will then take that policy and further define it by requiring that the CEO not subject the building and equipment to inadequate maintenance. Once it reaches a level of detail where it is comfortable, it will let the CEO make any reasonable interpretation of that policy, including his/her interpretation of “inadequate” or “unnecessary”. The board doesn’t have the option of saying “that’s not what we meant” or reactively changing the policy. It does not allow itself the luxury of using policies as bread crumbs to lead the CEO to the conclusions the board had in mind. After establishing such a policy, this principle does not allow the board to state which insurance company to use or how many quotes the CEO needs to receive, unless it has explicated stated that. Nor is the CEO required or expected to bring those decisions to the board.
But what if there is an insurance expert on the board who would like to weigh in on the discussion? Or what if a board member has a friend who would like to quote on the insurance? Don’t board members need to have the flexibility to provide input on any discussion at any time if they happen to have an opinion? The CEO’s job is to intuitively decide if the input is a command or a suggestion and if it reflects the view of the board or just one person. If two people have input, the CEO may want to meet with each individual to find out how strongly they feel.
The problem with the proactive Policy Governance policy idea of moving from the general to the specific and then allowing for any reasonable interpretation is that it restricts the board from providing arbitrary and random input.
Drawback #8: Because the idea of clarity and coherence of delegation limits flexibility
The Carver model is very emphatic that the identification of any delegatee must be unambiguous as it relates to authority and responsibility. It does not allow for any overlap between a board committee or the executive of the board with that of the job given to the CEO. When the board delegates authority to the CEO, it won’t allow itself or any sub-group to override that authority.
If the board is the employer of the CEO (as the Carver model would maintain), then shouldn’t the board be able to decide at any time to provide input or direction to the CEO? Shouldn’t the board be allowed to delegate whatever authority it likes and then arbitrarily take back some of that authority? One of the drawbacks of Policy Governance is its fixation on the clarity of delegation. Sure the CEO may feel jerked around from time to time, but s/he is being paid good money. One of the perks of a volunteer board should be the flexibility to delegate and then override that delegation.
Drawback #9: Because it allows the CEO too much flexibility to interpret policies
Policy Governance clearly states the results to be accomplished, the beneficiaries of those results and the cost/value of the results. It also limits what the CEO can do in accomplishing what Carver refers to as ends. It then tells the CEO that that it will accept any reasonable interpretation of its policies. It doesn’t permit itself to interpret its own polices, but leaves that up to the CEO. Using the asset protection example I referred to earlier, it will state that the CEO must not allow the assets to be inadequately insured. Then it allows the CEO to interpret inadequately. If the board hasn’t further interpreted what it means by inadequately, then it must accept the CEO’s reasonable interpretation.
If the CEO has the flexibility to use any reasonable interpretation, then the board gives up that flexibility. It can’t allow the CEO to use any reasonable interpretation. It must reserve the right to dismiss an interpretation provided by the CEO just because some or all members of the board don’t like it. It is critical that your board controls the CEO by ensuring that the board can make changes on the fly. It should be able to delve into as much or as little detail as it wants, whenever it wants.
Drawback #10: Because the board has to do too much work in monitoring compliance
Policy Governance places a heavy emphasis on monitoring organizational performance against previously stated ends policies and executive limitations policies – and only against those policies.
One of the drawbacks of this principle is the workload required by the board to painstakingly and meticulously develop these policies. Once the policies are developed, they need to be tenaciously monitored. However even worse, there is no freedom to make unilateral assessments of the CEO or redefine the reasons for which the organization exists. Policies are too restrictive for the board and don’t allow for random, arbitrary or reactive changes without changing the policies.
We have uncovered ten drawbacks of the Policy Governance model. Keep in mind that the Carver model is a set of integrated principles; not a garden salad of governance ideas. You are not allowed to pass up on the anchovy principle or ignore the tomato concept and still have a Carver salad. As such any one of these drawbacks should be enough to turf the idea using Policy Governance.
In the event that your board decides concludes that:
…then why not implement Policy Governance.
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.