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Operational Definitions

CEO Monitoring

The board defines its expectations for performance in two categories; Ends to define desired outcomes and Executive Limitations to define unacceptable conditions, activities or events which then limit managerial choices in operational planning.

In all cases the board will stop their definition at a relatively broad level. The intent is to capture the values by which decisions shall be made, not to make the actual decisions. It is expected that the CEO will need to make additional lower level (more detailed) decisions within these areas. Because the board both demands that the policy requirements be met and recognizes that any given word may be interpreted differently by different individuals the board allows “any reasonable interpretation”; further decisions will be made but they must be consistent with the actual policy they are made under. The CEO’s interpretation then sets the actual benchmark for measuring compliance.

In monitoring, the board requires the CEO to provide a written report explanation of their reasonable interpretation, justifying why that interpretation is indeed reasonable in an objective way that can be measured and checked. They also require that the CEO provide data that actually will allow them to be assured that the policy criteria, as reasonably interpreted, are actually being met. Promises, pontifications, and efforts are not enough; they need to be able to know that the actual criteria have been met or to know any reason why they have not.

Operational Definition

So what does an operational definition look like?

It should be:

  • Declarative – a solid, concise, clear statement of what the policy means to the CEO in terms that will allow them to put it into “operation”. That is, it should define the policy well enough to be the first step in taking physical action.
  • Measurable – if you get what you measure then it makes sense that you should have a definition which you can measure. To be operationally valid it has to not only let you take physical action but should also allow you to know if you are getting the expected results. Definitions that are too abstract, vague, or wishy-washy as to defy measurement are not really an operational definition.
  • Testable – the definition and its measure should be clear enough that the veracity of the report can be tested. The measure can be replicated if performed by the board or some person other than the CEO.

Justification

The reasonableness of the operational definition should be justified within the report. “Just trust me” or “because I say so” do not give the board the opportunity to test the information nor does it offer them any assurance that the CEO’s interpretation is indeed a reasonable one. There are different levels of justification that might be offered:

External Source for Standards (Preferred) – using and externally developed and monitored standard from a source that understands and is recognized in your field.

Internal Research (Next Best) - developing your own standards from your own research. For example, standards as apply to customers could be developed by conducting focus groups or a survey with customers and standards applying to a policy addressing staff could be developed by conducting focus groups or a survey with staff. The standard may not be statistically significant or recognized outside of the organization but it is derived from actual research which can be measured and replicated.

Providing the Reasoning or Logic Behind your Definition (Most Questionable) – outlining for the board the process of thought between their policy and the CEO’s reasonable interpretation including the steps of logic taken and the underlying assumptions used.

Measuring Against the Standards

The board may have addressed a level of performance (e.g. “in the top 10%) in their policy. If not, the CEO should identify how this organization should compare to others, taking into account the resources available and the relative priority of the issue addressed in the policy. For example, if the average or defined best practice in your field is rated at 75, the CEO will want to use as their interpretation that average or best practice, something more than it, or something less than it based on how this organization compares to others using the standard and on how important this issue is to this particular organization. Aiming to be better than others in the field in a particular area probably means a higher standard than average and an issue more important to this organization than most others probably means at or better than average.

Typical Monitoring Process Flow – Internal Report

  • The CEO presents a report doing three things:
  • Illustrating her or his interpretation of the policy.
  • Justifying why they feel the interpretation is reasonable.
  • Providing evidence of compliance with the policy (which may be based on performance on one or more indicators identified by the CEO).
  • The board asks first, “Is the interpretation reasonable?”
  • Yes: Go to the next question.
  • No: Ask the CEO to come back with another interpretation
  • Yes, but it is not what we meant: Change your policy to reflect what the board means, either by rephrasing or going to the next level down until it is clear.
  • The board asks second “Is the interpretation justified?”
  • The board asks third “Will the information/evidence provided indicate compliance?
  • Yes: Go to the next question.
  • No: Tell the CEO to come back with different or additional evidence.
  • The board asks fourth “Is the CEO in compliance with the policy?”
  • Yes: The report is accepted.
  • No: The CEO may offer an explanation and plan of correction AND/OR the board may ask for a plan of action, set a deadline for return, or take any other action it deems appropriate and necessary.
  • If the individual board members reach acceptance and the Chair hears no concern, it is accepted as a separate item on the consent agenda.

Proposed Process for the Board

  1. The monitoring schedule is set in policy a monitoring type, frequency and date is defined for each policy in the Ends and Executive Limitations Policies
  2. For each policy in the Ends and Executive Limitations Policies, the Chair or the Governance Task Force assigns each individual policy to an individual Board member.
  3. Each Board member promises to really understand the Policies they have been assigned and to become the “internal expert” on those Policies.
  4. Before the board session at which a given policy or policies will be assessed, the board members will receive a monitoring report on each of the policies due at the next meeting. They will be asked to make their own judgment as to whether or not the CEO’s monitoring report measures up to the criteria defined in the policy. If they accept that the interpretation provided is indeed reasonable, the criteria for the remaining report is whether or not it shows compliance with the CEO’s interpretation of the board’s policy, not the actual words in the policy. An evaluation sheet will be provided either online or via email that will guide the Trustee through evaluating the report.
  5. The evaluation forms are either completed online or completed and forwarded to the “internal expert” to be compiled and summarized.
  6. There is an item placed on meeting agenda for CEO Assurance (or Acceptance of Monitoring Reports).
  7. When the agenda reaches that item, the person assigned to that policy may give a short summary of what they saw in the responses. The Chair can then ask the Board if it wishes to consider any action (for example; policy changes, plan to learn more about it, or an improvement plan) based on what it has learned.
  8. If the Board does have something it would like to take action on the Chair helps the Board determine how and when.
  9. Each year the assigned Policies are rotated so that no one person becomes attached to the same Policy year after year.

Evaluator: ________________________________________
Send to Board President by: __________________________

 

Policy Governance Executive Limitations Evaluation Form

A tool to be used by individual board members as they evaluate the monitoring reports designated in Board-CEO Linkage

Policy being monitored:
(Insert actual policy)

 

1. Was this report submitted when due?

Yes
No

2. Did the report lay out the CEO’s interpretation of the policy?

Yes
No

3. Is the interpretation justified?

Yes
No

4. Was I convinced that the interpretation is justified and reasonable?

Yes
No

5. Did the interpretation address all aspects of the policy?

Yes
No

6. Does the data show compliance with the CEO’s interpretation of our policy?

Yes
No

 


Comments regarding further policy development:

1. Is there any area regarding this policy that you worry about that is not clearly addressed in existing policy?

______________________________________________________________________

______________________________________________________________________

2. What policy language would you like to see incorporated to address your worry?
______________________________________________________________________

______________________________________________________________________

______________________________________________________________________