Leading through Policy with the Policy Governance® Model
(Using the Policy Governance Model as developed by Dr. John Carver)
by Eric Craymer
Policy Governance is a registered service mark of John and Miriam Carver, whose website can be found at www.carvergovernance.com
Leadership in Policy GovernanceWhat is the board's role? Some say that it is to watch after management. How can the board lead if it is watching "after"? This indicates that the board lets the manager act first, and then corrects the manager if he or she makes a mistake. This is not leadership.
Policy Governance recognizes that the board members should not just be called leaders but that they should actually do the leading. They are the link between the wishes and desires of those they represent – the owners – and the operation that will be built and managed in order to accomplish those wishes and desires. Their role is to make sure that the organization actually performs as expected by the owners, while avoiding any imprudent action that would violate the values and trust of those they represent or put the organization at undue risk
How can they best do this? They do not have the time, nor likely the expertise, to actually be present and to make the day-to-day decisions of that operation. How can they lead for results and safety without actually being there?
Policies – What Are They?
The method through which the board can lead the organization without actually being present on a daily basis to make the decisions is by developing policy. Most decisions are based on a framework of values or perspectives. What do we hold important? What criteria should guide our decisions? In Policy Governance, the answers to those questions become explicit and available to all through the development of board policies that address all areas of organizational activity.
Policies are written statements that are designed to provide the necessary framework of values and perspectives and thus guide further decisions. Policies set up rules, defining what is to be accomplished and what should not occur. The policies are embodiments of the values and perspectives of the greater authority that the board stands in to represent. If policies direct all further decisions, then the best place for leadership is in the development of policy.
The Logic of Policies
If policies are to be the basis for decision making, they should be usable. They should be clear, and organized in a manner so that they can be readily accessed. They should have a logical flow that aids in their clarity and comprehension. And they should be written with very exact use of language so as to avoid any possible misunderstanding or confusion.
Policies are of different sizes or scopes. Just as Earth is smaller than the universe, but bigger than North America, any given policy fits somewhere in a spectrum of biggest to smallest. Consisting of language rather than physical being, policies are probably better thought of as being within a spectrum of broadest to narrowest. To be usable, board policies need to clearly indicate where they fall in that spectrum.
Policies in Policy Governance are always stated at the broadest level first. Broader policies are bigger, more general ways of stating a position of values or perspectives. To say that you value dogs as pets also indicates, if left at that point, that you value all dogs (size, color, breed, and temperament). Each broad value or perspective contains many smaller ones. If the board needs to address these smaller sizes in order to express the framework it is building, it does so. For example, you may also want to say that you value dogs as pets, but only dogs that do not bite. To maintain clarity and order, the board states policies only one step at a time. It does not jump from the broadest to anywhere it is interested but must rather proceed, logically, only to the next lower level, then the next, then the next.
If the board starts below the broadest or skips a level, it is possible that a given decision or issue may not be addressed. If that issue or decision is at a lower level than the scope of the board's framework this does not present a problem, because the board has already shared its values; therefore the decision, staying true to what the board has said, will result in an acceptable outcome. If, however, a gap in policy levels results in issues not being covered in a particular area or not at a level at which the board does have a value or perspective, it opens the chance for a decision or action to lie outside of the framework.
By beginning policy with the broadest way of addressing what it is the board wishes to say, the board will know that at the least, it has control at that level. Any decision made below it will be addressed to some degree at the broader level. Developing further policy one level at a time below that broad statement ensures that there are no gaps between one level and the next. This continues to logically seal off the area that it addresses, so that the board's perspectives and values are more and more well defined until such a point that the board no longer cares about the interpretation of its words. Moving level by level, the board builds a stable and complete set of outer policies that will hold and contain those inside them.
At some point the board will feel that it has said enough. Its values and perspectives will have been accurately captured. How will it know when this point is reached? When it can accept any reasonable interpretation of what it has said? That is, would any possible interpretation by a reasonable person, using the policies as written, result in a decision, outcome, or situation that the board would find acceptable? If so, the board has said what needs to be said and may stop. If not, there is more that it must say to capture the framework it is forming.
Any reasonable interpretation is essentially already approved by the board. The board is basically saying that you may make any decision within this framework because we articulated our values and perspectives. If you follow what is written, you will be in compliance with our desires.
By stating the first (or Global) policy, the board has already limited the range of interpretation allowable. If at any time it is uncomfortable with what any reasonable interpretation may be, it continues to the next lower level. This in effect further limits, or reduces in size, the range of allowable interpretation. In this manner, the framework that a decision must fit within becomes smaller and smaller at each further level of policy.
In a like manner, by choosing to start where it does within the Global policy, the board has also limited what it can address at lower levels. If the Global policy is the broadest one, and each lower level is narrower, then the only purpose of a lower level is to further define or delineate the level above it. If a value or perspective has not been addressed above, it cannot be addressed below.
In Policy Governance, it has been discovered that there need be only four areas of policy content, which address all of the important aspects of an organization. With policies in each of these four areas, there is a complete framework of values and perspectives to guide all areas of organizational decisions.
These areas, briefly described, are:
- Ends Policies – These policies deal with the issue of defining the reason for the organization's existence. Specifically they define what benefit is to be created, for whom, and at what value for the identified set of recipients. Ends policies are always stated in terms of the customer who receives the benefit.
- Executive Limitations Policies – These policies allow the board to direct the choice of operational methods and organizational conditions. Rather than telling the CEO what to do, these policies tell the CEO what methods cannot be chosen in pursuit of the Ends and what organizational conditions or states would be unacceptable, even if the Ends were achieved. The Executive Limitations should reflect the owners' values concerning prudent and ethical organizational behavior or conditions and should stop short of naming preferred methods or providing management with consulting advice about "how to."
- Board-CEO Linkage Policies– These policies describe and define how the board's authority is passed to the CEO, how the board will check up on the organization, and how the board will exercise direction to and authority over the CEO. Linkage policies spell out the roles of the two and the relationship that they will have.
- Governance Process Policies – These policies are the explanation of, and agreement to, the methods that the board will use to accomplish its own work. They define the board's value-added job, its style of interacting, and its process for making decisions.
If the board is going to be so precise in the way that it develops policy, it should also be very precise in the way that it captures and records those policies. The purpose is to make sure that a framework for further decision making and action is not only available but usable. For clarity it is important to record the policies in a logical manner that will show the board exactly where it has left off and allow the people using the policies to quickly determine what has been said and what leeway they have to make the decision.
Policy Governance policies do this by starting at the broadest level in each of the four areas. This broadest statement about the values and perspectives of the board (standing in for some group or owners with even higher authority) is illustrated as being on the outermost edge of a circle. It is often called the Global Policy because it applies to all else below it. If the board has more to say, it develops policy at the next more specific level of detail, further defining what is said in the level just above it. This is a lower level policy and only adds more definition to that which is above it.
These lower level policies will be developed to deeper levels of specificity until the board is comfortable with any reasonable interpretation. Often people think of the policies as being within a circle with four quadrants (one for each of the four policy areas) and with the broader value at the outside and sub-policies ringed inside at deeper levels. Your policy manual will illustrate this same order of the policies in an outline fashion with the largest more encompassing policy as the first in the section and each deeper level of further definition at levels below that. The Global Policy is, for example, 1.0; the first level of policies below it are 1.1, 1.2, etc.; and below that are 1.1.1, 1.1.2, 1.1.3, etc., and so on. In the actual policy this hierarchy is illustrated by indenting each successive level one step further (see below).
1.0 Global Policy
1.1 First-level Sub
1.1.1 Second-level Sub
1.1.2 Second-level Sub
126.96.36.199 Third-level Sub
How to Develop Policies Initially
While each board has a separate set of values and perspectives, they often center on very similar topics. John Carver, the inventor of Carver Policy Governance, has captured these central areas of concern into a set of Sample Policies. They may serve as a starting point for a board's development of an initial policy manual designed for practicing Policy Governance.
A good way to begin is for the board to produce a list of those things that it is worried about in each of the four policy areas with the exception of the Ends. What is it that the board worries might happen or might not? What would be unacceptable to the board within that particular area?
With that list in mind, consider the Sample Policies one area at a time and one policy at a time, starting with the Global Policy. The board deliberates a number of questions and makes a group decision concerning how the policy should be worded to best capture the values and perspectives that the board holds on this issue. For each Sample Policy, the board will deliberate and formulate its answers to these questions:
- Is this policy pertinent to our organization? Do we have any concerns about the concept it represents?
- If it is pertinent, are we comfortable with the preamble (opening statement)? Do we have any concerns about what is said or how it is said? If so, what is the group's decision about what and how it should be said?
- After the first level, has the board said enough? Are the values and perspectives it wants to be used in this area sufficiently defined and delineated that any reasonable interpretation of these words would be acceptable?
If the answer to #3 is Yes, move on to the next sample policy which addresses a new topic. If the answer is No, then proceed in a like fashion into the next lower level of the sample policy you are already looking at, using the same 3 steps above.
When all of the Sample Policies have been edited so that they represent the values and perspectives that the organization holds, the board must ask itself if there are any areas that it wishes to address that are not covered within the Sample Policies. If there are, it must determine what worry or concern it has, frame that worry or concern into an issue, and then state the values and perspectives concerning that issue at the broadest possible level.
Once the broadest level is stated, the board determines where it fits, on its own below the broadest or at lower level of a topic already covered. Then it follows the same 3-step process outlined immediately above in determining appropriateness and level of depth needed.
How to Develop Policies after the Policy Manual Is Adopted
Policy making does not end once the policy manual is adopted. Policy making is a perpetual task that comprises the primary output of the board. Because the board has decided that the most effective way for it to govern is through policies, it follows that any issue it faces must be dealt with within policies. If the policies are found to be based on incorrect assumptions, proved wrong by experience, or found to be incomplete, the board has more work to do. If the policies are the only tool it uses to control and direct the organization, the board must constantly assure that the policies available are appropriate and complete. Policies are written for clarity but can be changed at any time that the board, following its agreed-upon process for deliberating and deciding, chooses to do so.
When a new issue arises, the board must maintain the logic and discipline of the model that are the basis of much of the board's power.[[?Does "its power" refer to the model, or to the board?]] To do so, the board should follow the sequence of steps below:
- First, it must determine what the real underlying issue is.
- Second, it determines whether it has already said something that is in any way connected to this issue. The board does this by identifying which of the four policy areas pertains to the issue and reviewing each policy there.
- Third, if the board has said something about the issue, does the current information indicate that it has said enough, that the values and perspectives it has already stated are complete enough to allow any reasonable interpretation?
- If not, more policy is needed. What is the broadest way of stating the issue and at what level does it logically fit within the current policies? Which level of policy does it further define and delineate?
- If yes, the current policy stands and any reasonable interpretation of it is still acceptable.
- If new policy is developed, the board follows the same process of moving to deeper levels of definition and delineation one level at a time until any reasonable interpretation is acceptable.
Using Your Policy Manual
The Policy Manual should always be up-to-date and available. Ideally, each board member will have an accurate and timely copy at every meeting. When an issue arises, the board will deal with it through policy, so the first place to start is with the policy that it has already written.
- Determine which of the policy areas is associated with the issue.
- Open your manual and turn to the Policy Manual Index.
- Looking at topics within the appropriate area, check to see if there is an existing policy that appears related or identical to the issue.
- Turn to that policy and read it.
- Ask yourselves, "Does the policy, as written, address this issue?"
- If so, ask yourselves, "Given new information, have we said enough or do we need to say more?" This could result in changing how the current level of policy is stated or in adding one or more additional levels of policy below the existing one.
- If not, ask yourselves whether the issue represents something important enough to require policy development.
- Any new policies follow this same process.
GUIDE: What if you have a concern? What do you do with it?
Individual has a concern
- Identify the source and determine the real underlying issue.
- Whose issue is it currently (does Policy leave it with the board or with the CEO)?
- If it is the CEO's issue, you can recognize it as such and offer that person any information or advice you have, knowing that the CEO does not have to listen to it.
- If it is the CEO's issue at this time but you are still uncomfortable, you can take the issue to the board chair or the full board and explain why you feel uncomfortable even though you know it is the CEO's issue, and ask them to help you think it through.
- If it is a board issue, bring it up to the board chair or request that it be added to the agenda following your standard process. Share your concern and thinking and allow the full board to determine whether it now shares your concern. If it does, address it in Policy by adding, editing, or deleting.
Board has a concern
- If it is an issue that has already been addressed in a Policy that you now feel is not accurately or completely captured, determine where and how to deal with it in the appropriate Policy (add, edit, etc.).
- If it is an issue that has already been addressed in a Policy that you believe still accurately and completely captures your values but circumstances or CEO Monitoring cause you to be less than confident, use your monitoring schedule.
- Increase the frequency of the internal report for the full Policy or one single lower-level Policy lying under the broadest statement.
- Add or change the method of Monitoring from Internal to External or (in extreme cases) Direct.
- NOTE: check to make sure that you're not mistaking dislike of a reasonable interpretation of the Policy for lack of confidence in it. If in fact you just don't like the interpretation, you have to choose between ignoring it or changing the Policy language to make it more specific.
Creating Group Wisdom
The reason that board consists of several or more members is that there are many perspectives for any given matter. The board's job is to consider all it feels are pertinent and then make an informed decision. The board's work then is in forming group wisdom. How do you do this?
- Assume that each person has a valid perspective.
- Seek to understand that perspective. Use open-ended questions like these:
- "How did you arrive at that conclusion?"
- "Could you walk me through your reasoning?"
- "We seem to have different perspectives. Can we try to find out what leads us to them?"
- "Can we identify points we agree on and work from there?"
- "Why is that important to you?"
- When each perspective is understood, develop criteria for choosing those that are appropriate to the question at hand.
- Seek win-win resolutions that may combine the interests of each perspective in new and creative ways.
Possible Process Guide for Turning Issues into Policy
Here is a tool to guide your dialog, followed by a worksheet version on the following page.
Step 1: What value is the issue about? What is your important intention?
- What is this about?
- What is our interest? What do we hope to achieve?
- But why is that important (5 times) or what good would come from that (5 times)?
- Repeat the first three bullets as a group 5 times to get to the real value.
Note: this requires group deliberation:
- Telling – Listening – Understanding – Creating Group Wisdom
Step 2: What is the largest way of describing this value or interest?
- What other issues might be related to this one?
- Looking at the other issues as a group, is there a higher-level value that encompasses them all?
- Repeat until you reach the broadest way of stating the issue that is still relevant to your organization.
Step 3: Where does this value fit?
- Which of the four policy quadrants does it fit?
- Ends – benefits, beneficiaries, value of exchange
- Executive Limitations – prudent and ethical management conditions and processes
- Board-Management Delegation – formal delegation of authority and accountability to CEO
- Governance Process – how the board does its work and its ownership accountability
- Which level is it at?
- Part of Global (first lower level)
- Just below the Global but by itself (second lower level)
Below something that is already below the Global (third lower level)
- Step 4: What is the right way to express it?
- What words best capture the meaning?
- What grammatical structure makes it the most clear?
Step 5: How much detail is needed?
- Test the depth of definition against "any reasonable interpretation" of the policy as written:
- Can anyone think of any interpretation that would fit within the language but not be acceptable?
- Can anyone think of a commonly accepted definition, or one used by an outside expert group, of anything close to this policy concept? If so, is the definition one that the board would not find acceptable?
- Does the Board agree that this language could lead to a reasonable interpretation that would be unacceptable?
If the answer to this last point is Yes, add another layer of detail and then repeat this step until a majority of the board members can say that they can accept any reasonable interpretation of the policy as written.
WORKSHEET: Board Issue Presentation –
Preparation for Board Deliberation and Decisions
The following form may assist the committee, task force, or individual asked to prepare information preparatory to a board deliberation or decision.
What is the Issue?
History and Background
Alternative Courses of Action
Implicated Policy Changes