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Frequently Asked Questions

How does the board delegate effectively to the CEO?

There are two categories of policies in Policy Governance® that provide direction to the CEO: (1) Ends, and (2) Executive Limitations.   The Ends describe, to whatever level of detail the board determines is needed, the organizational results that the CEO is accountable to produce, the beneficiaries, and what it is worth to produce those results (the cost).  These Ends policies are not in the negative.  They are “prescribed” as expectations. The second category of policies that provide direction to the CEO is the Executive Limitations policies.  A lot of people have difficulty understanding why limitations can be so effective, because the prevailing wisdom is that saying something negative must inherently be bad.  In this case, the reality is exactly the opposite.  While the board is ultimately accountable for everything about the organization, if there is a CEO, that person is “on the ground” and is the one who actually needs to get the job done. Giving the CEO as much authority as possible to determine how best to do that job is to the board’s advantage.  But at the same time, the board should not give away so much authority that it abdicates its governance role. Think of a teeter totter – it works best when evenly balanced.  Similarly, the balance between board and CEO needs to be such that the CEO has the authority to make decisions expeditiously, with as much freedom as possible for creative and innovative solutions, while the board still has authority and oversight sufficient to fulfill its fiduciary responsibilities.  Policy Governance® provides an elegant solution for this balancing act.  The board is always more powerful than the CEO, because the board sets the Ends (the results the organization is to produce, the beneficiaries, and what it is worth to produce those results), and the board sets parameters, or limitations, on the means that the CEO may use to achieve the results.  The limitations set boundaries. The board allows the CEO to use any means, as long as they fall within a reasonable interpretation of the board’s limiting policies.  In other words, “if we didn’t say no, it’s pre-approved.”  This gives the CEO much more creative freedom than saying, “do it this way, and come back for approval if you want to do it any other way,” which is more typical of how many boards function. Executive Limitations policies should always be about prudence or ethics.  What means to achieve the Ends would be unacceptable even if they worked, because they are imprudent or unethical?  Once the board has specified these limitations, to whatever level of detail the board feels necessary, it can allow the CEO to determine the most appropriate means.  Of course, the board then monitors to ensure that there is appropriate performance consistent with the policies.  (That’s another question – please check the FAQ on monitoring for more details.)  A combination of well constructed Ends and Executive Limitations policies, and structured, rigorous monitoring provides the board with complete control of everything it needs to control in order to provide future-oriented direction and fiduciary oversight. More details about how Policy Governance® works are available in the Introduction to Policy Governance® Workshop, our NEW Governance Coach Online Virtual Workshop Introduction to Policy Governance, as well as our interactive REALBoard Self-Directed Learning Modules.

What should an effective board meeting agenda look like?

In Policy Governance® in order for the board to do its own job effectively, but not interfere in operational matters it has delegated to the CEO, it is important to be able to differentiate among different types of information the board receives. Therefore, a simple organizing strategy for agendas in Policy Governance is to clearly separate the three types of information: (1) information for decision-making; (2) monitoring information, and (3) nice-to-know or incidental information about internal operations. It is helpful to board effectiveness to place the decision items near the front of the agenda. Information for decisions may be of two types:

  1. Information necessary for a decision that is being made in the current meeting. This should be clearly identified as a background paper, briefing note, or by some designation that makes it clear the board must read it in preparation for the meeting.
  2. Background information not directly related to a decision at the current meeting, but that IS important to the board’s understanding and will form part of the knowledge base the board needs to develop sound policies. This includes things such as environmental scanning information, trends about the industry, articles related to Ends issues, and background information about potential risks.  This information may be included as part of the “decision items” on the agenda – with a note that it is for future decisions. Or, if you prefer, add a separate category of “information necessary for future decisions.” In either case, the board members should be aware that this is information that they DO need to read in order to discharge their governance responsibilities.

For optimal efficiency, each decision and monitoring item on the agenda should also be linked to the correct policy category and the specific policy to which the item relates. This allows the board to review what it has already said about the issue in question, and then when it makes a decision, to do so by amending the appropriate policy. Thus, all board decisions that will result in more than a single, one-time action, are captured in a policy that can be appropriately monitored.

Incidental information includes:

  1. Information that the board has specifically requested be provided, even though it’s about internal operations. This requirement would normally be found in the Executive Limitation on Communication and Support to the Board.
  2. Any other nice to know information about internal matters that the CEO chooses to share.

Incidental information is best placed at the very end of the agenda, or even omitted entirely, and simply sent to the board members under separate cover. One reason for keeping incidental information items separate is so the board will not be tempted into making decisions about them, since these items have already been delegated to the CEO! This category of information should take up minimal board meeting time. And if board members are short of time, they should know that not reading this information in detail will not negatively impact their ability to govern, because this is not governance information.

In order to provide future-oriented leadership to the organization, a board should strive to have the lion’s share of its meeting time related to discussion and activity that will inform its Ends work. This includes planning and implementing ownership linkage, and enriching the board’s understanding of the external environment in which the organization operates, and the future potential for benefits that it could produce.

Additional details about board meeting agendas are available in the Policy Governance Toolkit Future Focused Agendas. You can also learn more about monitoring in our interactive REALBoard Self-Directed Learning™.  Module 8 addresses board processes, including agendas. Additional references available on this subject are included in PGIQ™Introduction to Policy Governance® workshop, and Virtual Introduction to Policy Governance.  Our Advanced Seminar provides more in-depth coverage of how to make your board agendas more “future-focused.”

How can we get started with Policy Governance®?

There are several suggested steps for a board to get started with Policy Governance®.

  1. Learn about what Policy Governance® is and how it works.
  2. Make a commitment that the board is prepared to learn how to apply the principles of Policy Governance®.
  3. Develop an initial set of policies.
  4. Review the draft policies against any legal requirements, and compare to existing policies to ensure that you have captured the key values of the board in the policies.
  5. Learn how to apply them in practice – this involves structuring your agendas to get the most benefit from the model, learning to monitor effectively, and developing a plan to deliberately gather input from your “owners.”

Because Policy Governance® is a significantly different approach to governing than most boards are used to, there is a learning curve, and there are usually some growing pains.  Using a competent consultant, who has been trained in the principles and application of the model is advised.  The benefits are well worth the investment.  At The Governance Coach™, we have developed a complete system to help you move from exploring the implications of the model for your board to full implementation.

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Policy Governance® Virtual Workshops

Introduction to Policy Governance® start dates:  October 2 & November 6

Assessing Monitoring Reports start date: October 17

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