Expert Coaching. Practical Resources.

October 4, 2016

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Richard Stringham

Evidently this is Not Evidence!

Earlier on in my consulting career, it was common to come across boards in which directors thought that the Board Chair should be the CEO’s boss. However, when a board uses Policy Governance®, board members should operate in a manner that recognizes the board as a whole is the CEO’s boss and the Chair is a peer of the CEO who is also accountable to the board, albeit for different responsibilities.

So it was concerning to come across a board that claims to be using Policy Governance, in which the Chair was acting as if he were the CEO’s supervisor. More troubling was that the rest of the board seemed oblivious to the situation. How could this be happening?

Once we had confirmed that the appropriate policies were in place, the next question was: Has the board been monitoring its compliance with those policies? Although the board was conducting regular self-monitoring, it wasn’t picking up on this area of non-compliance by the Chair.

Unfortunately, this didn’t come as a total shock for me simply because it is a common lapse with many boards. Self-monitoring can often become a case of “going through the motions.”  Perhaps a board member has been assigned to produce a monitoring report for a policy set. She can’t think of any time that the board has been non-compliant and submits her findings as evidence. Neither can the rest of the board members recall an instance of non-compliance. So all agree that they have been compliant.

But wait a minute! If the CEO was asked for a monitoring report regarding compliance with policies for which she is accountable, the board should never accept a report that says “I don’t recall being non-compliant” or “I believe that I’ve been compliant”. The board should always expect a level of rigour in evidence that demonstrates how the CEO actually knows that she has been compliant.

The same applies when the board looks to its own performance.

If you are a board member tasked with providing a monitoring report regarding the board’s policy compliance, look for logical sources of evidence.  Here are a few examples:

  • Meeting minutes are often a good place to start. For policies that speak to a board committee’s charter or terms of reference, look at the reports they’ve produced as well.
  • In the case described at the beginning of the article, the board would likely have learned about non-compliance if the reporter had asked the CEO!
  • Of course, board members should use their own observations to help collect evidence. This can be improved if each board member is assigned the job of monitoring a policy at the start of the reporting period so that she/he can be alert for non-compliance for those specific policies. You might also consider appointing the same person as the champion to flag significant infractions of the policy if and when they actually occur throughout the reporting period.
  • If board members are reimbursed for expenses, it would make good sense to examine expense claims and payments to ensure they align with your policies regarding expenses.
  • Alternatively, the board could arrange to have the auditor (if your organization has one) check that expenses paid aligned with the policy. (If this is your expectation, make it clear to the auditors. Don’t assume that it will be included in your standard audit.)
  • On a similar note, you can also use other external experts (e.g., a Governance Coach) to monitor (audit) board performance.
  • Which leads to our final idea: if you were an external auditor, where would you look for evidence of compliance? If you are a board member assigned to monitor a policy, it helps to think like an auditor!

Self monitoring needn’t take a lot of the board’s meeting time, especially if all is on track. However, the board still needs to set an example of rigour and candidness that enables it to improve. Otherwise, what example would it be setting for others?

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