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Policy
Governance® is a
comprehensive set of integrated distinctions that, when consistently
applied, allow governing boards to realize their accountability.
Policy
Governance® starts from certain principles about governing boards,
which can be said to be true across all cases. These
“universal principles” were not invented by John Carver, but are
very clearly distinguished by him and are the basis for Policy
Governance®:
Principles of Governance
1.
Ownership:
The source of board legitimacy – to which the board must morally
and/or legally connect its authority and accountability for the
organization. Other “stakeholders” such as staff,
customers and suppliers are not “owners” unless they
independently qualify as such.
2.
Governance:
The job of the group granted full accountability and full authority
for value produced on behalf of those who morally if not legally own
the organization. The servant-leadership work of the highest and
initial authority within the organization.
3.
Board Holism:
Board authority lies in the group’s one voice honed from the
diversity of the whole group
4.
Accountable, Effective, Delegation:
In
being accountable for an entire organization’s conduct, achievement,
values, and destiny, a board has no choice but to exercise
unambiguous control. However, the imposition of controls on
delegates can be as destructive to owner interests as it is
favorable to them. Consequently, a board needs to exercise a
type of control that safeguards owner values, optimally empowers
human beings in the enterprise, and never delegates the same
responsibility or authority to more than one point.
The following design
distinctions make the principles of governance operational.
Operational Design
Policy:
Explicit, brief, written statements of values and perspectives,
which guide all current and future decisions.
These board
decisions are made in categories, which separate what the
organization is for from what it does.
In each category, the board begins by making its decisions at the
broadest level and, as necessary, continuing into more detailed
levels that narrow the interpretative range of the higher levels,
one articulated level at a time.
Policies, then, are grouped as follows:
Policies about Ends:
The
board prescriptively defines the intended results, changes, or
benefits that should come about for specified recipients,
beneficiaries, or otherwise designated impacted group, and at what
cost or relative priority for the various benefits or various
beneficiaries. In equity corporations, Ends typically describe
shareholder value.
Policies about Means:
All decisions that are not Ends, are “means” by definition.
1) The board defines in writing and takes full
responsibility for agendas, behaviors, values-added, practices,
disciplines, and conduct of the board itself and of the board’s
delegation/ accountability relationship with its own subcomponents
and with the executive part of the organization.
2) The board defines
proscriptively and in writing, those conditions it requires staff to
avoid even if they work. The board does not circumvent the
spirit of this rule by using negative language merely to prescribe
preferred means.
Reasonable Interpretation:
In
authorizing further decisions - beyond the ones recorded in board
policies - the board grants delegates the right to use any
reasonable interpretation of those policies. In each instance,
the delegate is never ambiguous.
Monitoring:
The
board periodically receives information, providing evidence that
performance in both governance and management complies with a
reasonable interpretation of the board’s stated expectations in
these domains.
These
governance and
design distinctions exist and are real when distinguished and don’t
exist when they are not distinguished. When distinguished, and
therefore brought into play, they allow for a governing board to
realize owner accountability. When they are not distinguished,
and so not brought to play, true owner accountability is not
available.
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