Implementing Policy Governance: A Cost-Benefit Analysis

Before we decide to invest in anything major, either as an individual or as an organization, we often undertake a cost benefit analysis. We usually start by listing the benefits, the potential upside of moving forward. If we want to make sure we’re considering all the angles, we also list the potential downsides. So, what might a board considering implementing Policy Governance^® put on a ledger of costs and benefits?

On the “Benefits” side, a board might consider any or all of the following to be a significant enough reason to begin a Policy Governance journey.

1. Policy Governance is a system of governing that focuses the organization on achieving results consistent with the organization’s purpose, helping to avoid confusing activity and effort with organizational effectiveness.
2. Policy Governance takes a systematic, proactive approach to the governance of risk. These are not just risks that most commonly come to mind – those arising from client or member services, financial management, or asset protection – but also the risks of board members being unclear about their roles or duties, or being without a documented process for evaluating organization and CEO performance. Policy Governance provides a framework to address every area where risk arises.
3. Monitoring is an integral element of the Policy Governance system that allows a board to assure itself that its policies are being implemented. The board can be confident that it will have reliable data about every aspect of the organization where it has set direction, limits or expectations.
4. Role clarity! Sometimes I want to say, “Enough said.” Fuzziness about the role of the board and the role of CEO, and the gray areas that exist between, gives rise to the frustration and conflict that starts many boards searching for a better way.
5. The systematic approach of Policy Governance is less affected by changes in board members or the influence of personalities. Of course, this doesn’t “just happen.” It requires a board to apply the principles and adopt good practice.
6. As a Board becomes more comfortable with the system of governing, it makes efficient use of the time it needs to assure itself that the operational organization is working as it should.
7. The time gained as a result of that efficiency creates space in board meetings for intentionally addressing future possibilities and uncertainties, allowing a board to engage in strategic foresight that provides true leadership.
8. Policy Governance makes possible the early diagnosis of problems. Whatever the governance puzzle, the principles provide a path to course correction.
9. While Policy Governance is a universal design, it is individually tailored. This means that boards create policies and practices that fit their unique context.
10. A board doesn’t need to figure out everything on its own. It is possible to learn from other boards. A board can look for articles about other organizations’ experiences. A board can also invite someone from a board that has been using Policy Governance for a while to speak to your board.

All of the above sounds good – but surely, the other side of the ledger is not blank. What are the costs of which a board must be aware?

1. It will be necessary to invest time and money. Any board that starts on this journey needs to educate itself. Whether it undertakes this independently or with the expert help of a consultant, board members will need to spend time learning about the principles of Policy Governance and understanding how they apply. Education needs to be an ongoing fact of board life. Searching for books, articles, videos, speakers, events that will guide this work is essential.
2. There is a learning curve, sometimes steep and sometimes prolonged. Developing four categories of policies, two of which – Ends and Executive Limitations – are unique to Policy Governance doesn’t always come easily. Changing the board’s paradigm of how it sets direction and controls operations takes time and can be frustrating. Learning how monitoring works can be an uphill journey. Developing monitoring reports and assessing monitoring reports are two new skill sets that take time to acquire.
3. Policy Governance requires discipline and effort. Rather than assembling a patchwork of “best practices,” Policy Governance asks a board to apply all ten principles. A board can shape the governance system to its specific context but it must have the discipline to avoid compromises or short cuts. It must make the effort to figure out puzzles using the principles. Discipline is key. But remember, no athlete has won an Olympic medal, nor has a musician ever played brilliantly without the discipline of consistent practice.
4. The agenda of the first few meetings, reviewing the first monitoring reports, evaluating application of its own means policies are all likely to feel awkward. We rarely, if ever, learn new skills without some initial discomfort, with some wondering if this is really going to work. Remember the first time you put on a pair of skates, and although you wanted to move forward, someone suggested you push sideways. “Really?” you thought. And yet, as you overcame the initial awkwardness, you learned to skate with increasing speed and efficiency.
5. It’s difficult not to be inpatient. It is not unusual to want everything to work perfectly the first time out. Learning a new operating system – or even the latest version of the one you have used for years – can be annoyingly slow. “Why can’t I figure this out? Maybe I should just uninstall this version and go back to what I had finally figured out?” Sound familiar? So it can be with early days of Policy Governance implementation. It is important to acknowledge the possibility that this will happen.

When individuals or organizations consider change, they often focus only on the benefits of change. However, successful change requires acknowledgement and understanding of the downsides and objections as well as appreciating the power of the inertia created by being comfortable with the status quo. This is important to remember when you decide to move forward with Policy Governance. Focus on the benefits but remember anything of value takes effort. Enjoy the journey!

If your board wants to look more deeply at how Policy Governance might work for you, get in touch. Our consultants can help you consider your cost-benefit analysis and draw on the breadth of experience from our work with a wide diversity of boards to answer your questions.