john m. nielsen, arm ceo, ohio transit risk pool & president, transit reinsurance, ltd. agrip...
TRANSCRIPT
John M. Nielsen, ARMCEO, Ohio Transit Risk Pool &
President, Transit Reinsurance, Ltd.
AGRIP Board Orientation January 29, 2007
AGRIP Board Orientation January 29, 2007
Success Starts At The TopSuccess Starts At The Top
Policy Governance:Policy Governance:
Today’s Agenda:Today’s Agenda:
History of Carver Governance Model
Overview of “Policy Governance”
Ends Policies
Executive Limitations Policies
Governance Process Policies
Board-Staff Relations Policies
Group discussion and Q&A
History of Carver Governance Model
Overview of “Policy Governance”
Ends Policies
Executive Limitations Policies
Governance Process Policies
Board-Staff Relations Policies
Group discussion and Q&A
History of Policy Governance:History of Policy Governance:
Based on the work of John Carver
Model used by hundreds of public entities across
the United States
AGRIP adopted model beginning in June,1999 -
Aspen Group facilitated early efforts
Based on the work of John Carver
Model used by hundreds of public entities across
the United States
AGRIP adopted model beginning in June,1999 -
Aspen Group facilitated early efforts
The Challenge of Board Service:The Challenge of Board Service:
Critical but often difficult role
Role is poorly defined—if at all
Little or no training or preparation
CEO-types often lack “Board Discipline”
Critical but often difficult role
Role is poorly defined—if at all
Little or no training or preparation
CEO-types often lack “Board Discipline”
“Very competent individuals…can come together to form a very incompetent Board.”
- John Carver
Typical “Governance” Problems:Typical “Governance” Problems:
Lack of proper focus and forward (future) direction
Lack of role clarity leads to “border incursions”
Board loses control of its agenda
CEO loses control of management responsibilities
Reactive, backwards looking, “Fix-It” orientation
Result: Organization neither well led nor managed
Lack of proper focus and forward (future) direction
Lack of role clarity leads to “border incursions”
Board loses control of its agenda
CEO loses control of management responsibilities
Reactive, backwards looking, “Fix-It” orientation
Result: Organization neither well led nor managed
Ten Principles of Policy Governance:
Ten Principles of Policy Governance:
The Board is Trustee for the OwnersThe Board is Trustee for the Owners11
22 The Board Speaks with One Voice - or Not at AllThe Board Speaks with One Voice - or Not at All
All Board Decisions Should be Embedded in Formal PolicyAll Board Decisions Should be Embedded in Formal Policy3 3
44 Policy Should be Formulated by Determining the Broadest Values Before Progressing
Policy Should be Formulated by Determining the Broadest Values Before Progressing
Ten Principles of Policy Governance:
Ten Principles of Policy Governance:
The Board Should Define and Delegate, Not React and RatifyThe Board Should Define and Delegate, Not React and Ratify5 5
66 The Central Duties of the Board:
- Determine Desired Ends
- ”Link” with Owners
The Central Duties of the Board:
- Determine Desired Ends
- ”Link” with Owners
Ten Principles of Policy Governance
Ten Principles of Policy Governance
The Board’s Role in Means: -Limit Executive Discretion by Policy-Otherwise Avoid Prescribing Means
The Board’s Role in Means: -Limit Executive Discretion by Policy-Otherwise Avoid Prescribing Means
77
88 The Board Establishes its Own Rules & Culture – by PolicyThe Board Establishes its Own Rules & Culture – by Policy
Ten Principles of Policy Governance
Ten Principles of Policy Governance
The Board Seeks to Create a Relationship with Management That is Empowering and Safe
The Board Seeks to Create a Relationship with Management That is Empowering and Safe
99
1010 CEO Performance Must be Monitored Rigorously, but ONLY Against Policy Criteria
CEO Performance Must be Monitored Rigorously, but ONLY Against Policy Criteria
Ten Principles of Policy Governance
Ten Principles of Policy Governance
Traditional Board Policy:Traditional Board Policy: Policy Governance:Policy Governance:
A Comparison Between...A Comparison Between...
Based on particular circumstance Based globally, on values
Focused on operations Focused on end results
Directs all employees Directs CEO
Prescribes means Establishes limits on means
Confuses roles Clarifies roles
Policy, then decisions Decisions ARE policy
Few broad policies Many narrow policies
Board-Staff Relations (BSR’s)Board-Staff Relations (BSR’s)
Policies Fall into 4 Quadrants:Policies Fall into 4 Quadrants:
Executive Limitations (EL’s)
Executive Limitations (EL’s)
Governance Process (GP’s)
Governance Process (GP’s)
EndsEnds
Board ActivitiesBoard Activities
EndsEnds
EL’sEL’s
GP’sGP’s
BSR’sBSR’s
CEO ActivitiesCEO Activities
Policies Fall into 2 Work Hemispheres:Policies Fall into 2 Work Hemispheres:
What Good? For Whom?At What Cost?
What Good? For Whom?At What Cost?
Ends:Ends:
The end results desired for the organization’s clients The end results desired for the organization’s clients
Provide criteria to measure performance Provide criteria to measure performance
Explicit policy statements of what the CEO
is NOT permitted to do
Anything not identified in Executive
Limitations
may be done by CEO in pursuit of Board
Ends
Explicit policy statements of what the CEO
is NOT permitted to do
Anything not identified in Executive
Limitations
may be done by CEO in pursuit of Board
Ends
Executive Limitations:Executive Limitations:
Delegation of Authority to CEO
Defines how Board and CEO, its only employee, will operate with each other
CEO reports ONLY to full Board
Board directs CEO ONLY
CEO evaluated on ONLY two criteria: Achievement of (Board prescribed) Ends
Avoidance of Violations of Executive Limitations
Delegation of Authority to CEO
Defines how Board and CEO, its only employee, will operate with each other
CEO reports ONLY to full Board
Board directs CEO ONLY
CEO evaluated on ONLY two criteria: Achievement of (Board prescribed) Ends
Avoidance of Violations of Executive Limitations
Board-Staff Relations:Board-Staff Relations:
Governance Process:Governance Process:
The Board of Directors is one entity. It is NOT a collection of individualsThe Board of Directors is one entity. It is NOT a collection of individuals
Establishes how the Board will operate:Establishes how the Board will operate: Defines Board’s job description and ground rules
Establishes standards of behavior, roles, commitments and code of ethical behaviors
Defines Board’s job description and ground rules
Establishes standards of behavior, roles, commitments and code of ethical behaviors
Board Role:Board Role:
Linkage to the ownership
Defines explicit values about: Ends
Executive Limitations
Board-Staff (i.e., CEO) Relationships
Governance
Assures executive performance
Evaluates resources consumed vs. benefits gained
Linkage to the ownership
Defines explicit values about: Ends
Executive Limitations
Board-Staff (i.e., CEO) Relationships
Governance
Assures executive performance
Evaluates resources consumed vs. benefits gained
Monitoring Process:Monitoring Process:
Every policy monitored by pre-determined process on pre-determined scheduleInternal or external reportsDirect inspectionsBoard self-assessment
Ends Measurement Measure what you hope to accomplishA crude measure of the right thing is better than a reliable measure of the wrong thing.
Linkages with Clients/Owners
Every policy monitored by pre-determined process on pre-determined scheduleInternal or external reportsDirect inspectionsBoard self-assessment
Ends Measurement Measure what you hope to accomplishA crude measure of the right thing is better than a reliable measure of the wrong thing.
Linkages with Clients/Owners
Benefits of Policy Governance:Benefits of Policy Governance:
Allows Board to add value and focus on the future
Focuses Board’s attention on End Results
Frees CEO to do job and avoid Board micromanagement
Provides clarity of roles reducing Board/CEO conflict
Makes policy the single driver for organization
Increases accountability for results
Aligns total resources of organization
Improves relationship with owners
Allows Board to add value and focus on the future
Focuses Board’s attention on End Results
Frees CEO to do job and avoid Board micromanagement
Provides clarity of roles reducing Board/CEO conflict
Makes policy the single driver for organization
Increases accountability for results
Aligns total resources of organization
Improves relationship with owners
AGRIP’s Experience with Policy Governance:AGRIP’s Experience with Policy Governance:
Has taken time to make the transition
A struggle at times—particularly for new BM’s
Discovered need for orientation/training
Identified Need for New Linkage Opportunities
We are finding what is valuable to us – what works, what doesn’t
Addressing challenges
Has taken time to make the transition
A struggle at times—particularly for new BM’s
Discovered need for orientation/training
Identified Need for New Linkage Opportunities
We are finding what is valuable to us – what works, what doesn’t
Addressing challenges
Challenge #1 Clarifying Roles: Challenge #1 Clarifying Roles:
The meeting agenda, the types of information
shared, and the issues have changed
What issues are in the Board’s arena?
Do we create new policy or amend old policies?
We’ve often had to stop ourselves to ask:
The meeting agenda, the types of information
shared, and the issues have changed
What issues are in the Board’s arena?
Do we create new policy or amend old policies?
We’ve often had to stop ourselves to ask:
Policy Governance changed the role of the Board
Policy Governance changed the role of the Board
“Is this the Board’s work or the CEO’s?
“Is this a policy level issue and what is policy?”
“Is this the Board’s work or the CEO’s?
“Is this a policy level issue and what is policy?”
Challenge #2Determining our Owners:Challenge #2Determining our Owners:
Why does this organization exist? For the benefit of whom?
We believe the member pools are the ultimate owners
Had to distinguish between our owners and other stakeholders/clients
Why does this organization exist? For the benefit of whom?
We believe the member pools are the ultimate owners
Had to distinguish between our owners and other stakeholders/clients
Challenge #2 Determining our Owners:Challenge #2 Determining our Owners:
Other stakeholders:
Partner Members
Pool Boards, CEO’s & Staff
Governmental Agencies
Other professional organizations
Other stakeholders:
Partner Members
Pool Boards, CEO’s & Staff
Governmental Agencies
Other professional organizations
1st Step: Who should we be hearing from? What groups have interests that bear engagement?
We decided all the stakeholders have important perspectives that should be tapped periodically
2nd Step: How can we best create linkages with our various groups?
We decided to meet on a rotating basis with the various constituent groups—using a focus group approach.
Some AGRIP sessions set aside.
1st Step: Who should we be hearing from? What groups have interests that bear engagement?
We decided all the stakeholders have important perspectives that should be tapped periodically
2nd Step: How can we best create linkages with our various groups?
We decided to meet on a rotating basis with the various constituent groups—using a focus group approach.
Some AGRIP sessions set aside.
Challenge #3: Linkage Activities:Challenge #3: Linkage Activities:
Challenge #4: Setting Ends:Challenge #4: Setting Ends:
Often tedious and time-consuming process
Critically important
Ends determine what benefits? for whom? at what cost?
Often tedious and time-consuming process
Critically important
Ends determine what benefits? for whom? at what cost?
Start with the broadest ends and drill down to more and more specific “sub-ends”
Start with the broadest ends and drill down to more and more specific “sub-ends”
AGRIP’s Ends Statements:AGRIP’s Ends Statements:
As a result of our efforts, the pooling community is united to achieve excellence in pool governance, management and services.
As a result of our efforts, the pooling community is united to achieve excellence in pool governance, management and services.
1. Vision Statement & Org. Mission1. Vision Statement & Org. Mission
As the recognized authority on and resource for information on inter-Governmental pooling, AGRIP is the leading national association forpool management.
As the recognized authority on and resource for information on inter-Governmental pooling, AGRIP is the leading national association forpool management.
AGRIP’s Ends Statements:AGRIP’s Ends Statements:
As a result of our efforts, members shall have information, knowledge, and skills necessary to effectively govern and manage their pools.
Sub-Ends 2.1: (a) Increasing pressure on price(b) Impending transition of pool leadership from the first generation to the next(c) Competition from brokerage/insurance firms(d) Aging population(e) Reduced government resources
As a result of our efforts, members shall have information, knowledge, and skills necessary to effectively govern and manage their pools.
Sub-Ends 2.1: (a) Increasing pressure on price(b) Impending transition of pool leadership from the first generation to the next(c) Competition from brokerage/insurance firms(d) Aging population(e) Reduced government resources
2. Effective Governance & Mgmt.2. Effective Governance & Mgmt.
AGRIP’s Ends Statements:AGRIP’s Ends Statements:
As a result of our efforts, members shall have confidence that their common needs are addressed and represented with dependability, reliability, and professionalism and to the highest standards of excellence.
As a result of our efforts, members shall have confidence that their common needs are addressed and represented with dependability, reliability, and professionalism and to the highest standards of excellence.
3. Member Satisfaction3. Member Satisfaction
AGRIP’s Ends Statements:AGRIP’s Ends Statements:
As a result of our efforts, members shall have an effective advocate for the advancement and promotion of pooling.
Sub-Ends 4.1: These efforts shall address the issue of producer com- pensation, both internally and externally.
As a result of our efforts, members shall have an effective advocate for the advancement and promotion of pooling.
Sub-Ends 4.1: These efforts shall address the issue of producer com- pensation, both internally and externally.
4. Advocacy4. Advocacy
Challenge #5: Measuring the Ends:Challenge #5: Measuring the Ends:
Unless specified by the Board in the Ends
Policies, it is the CEO’s role to decide how to
best measure the accomplishment of the Ends
Board monitors/determines whether the CEO
reasonably interpreted the Ends and whether
or not there was progress towards the Ends
Board always has ability to set new Ends
Unless specified by the Board in the Ends
Policies, it is the CEO’s role to decide how to
best measure the accomplishment of the Ends
Board monitors/determines whether the CEO
reasonably interpreted the Ends and whether
or not there was progress towards the Ends
Board always has ability to set new Ends
Your Turn:Your Turn:
Q&A
Share your experiences with Policy Governance
Q&A
Share your experiences with Policy Governance
John M. Nielsen, ARM
CEO, Ohio Transit Risk Pool &
President, Transit Reinsurance, Ltd.
AGRIP Board Orientation January 29, 2007
AGRIP Board Orientation January 29, 2007
Success Starts At The TopSuccess Starts At The Top
Policy Governance:Policy Governance: