Don’t Look Under the Covers?
- Posted by Dee Incoronato
- On October 11, 2016
- CEO Evaluation, Monitoring
If you’re on a board, it’s so tempting to look under the covers! In Policy Governance®, who gets to look? The Board? The CEO? Well, that depends. In Policy Governance®, the Board writes policy that guides the management of the organization. There is a clear sequence as the Board commands through this one careful channel, the CEO (by whatever title). It then becomes the CEO’s responsibility to reasonably interpret policy. This interpretation is given to the Board in the form of an internal monitoring report, including a rationale for the interpretation and evidence of compliance.
What if the board doesn’t like the interpretation? As long as the interpretation is reasonable, it’s acceptable. However, if the Board realizes the interpretation is in an entirely different direction than it intended when writing the policy, then it must go back to the boardroom to further clarify or rewrite policy. If the interpretation is not reasonable, then the Board has the right to reject the interpretation.
What if the Board feels compelled to review the stated evidence? The board can choose to ask an external auditor or inspector that reports directly back to the Board to examine the evidence; for example, most organizations require a financial audit done by an outside audit firm. The Board also has the right to directly inspect the relevant documents, activities, or circumstances to test policy compliance; for example, the monitoring report for an Executive Limitations policy on Treatment of Staff may state as evidence of compliance that there are personnel policies in place. The Board may request to see the personnel policies to directly inspect whether they are compliant with the criteria in board policies. However, direct inspection must be used wisely. It is always a comparison of evidence to board policy criteria, never a “fishing expedition” or an invitation to wander around or offer consulting advice in operational areas.
The Board tells the CEO the results it expects, not how to achieve the results. Clear delegation from the Board through policy places clear accountability on the CEO’s shoulders. The Board looks under the covers through an internal monitoring report, an external report, or through direct Board inspection. The CEO looks under the covers by interpreting policy, giving a clear rationale of the interpretation, and finally evidence of compliance with the policy. In conclusion, both the Board and the CEO look under the covers, they just do it differently!