Nine Steps to Implementing Policy Governance

N MY workshops, board members and I chief executives always have ques- tions about implementation. Because Policy Governance is so different from the board role that has been taught and experienced for so many years, most of a day is required to get the concepts and principles across. As a result, discussing aspects-including the traps!-of implementation doesn’t get as much attention as it deserves.

In this article, I want to spell out some factors to keep in mind as your board tries to move from traditional governance toward the more powerful board leader- ship available with Policy Governance. The foremost challenge is finding a bal- ance between moving so slowly as to lose the critical momentum and moving pre- cipitously without adequate understand- ing and consideration.

Gradualism can kill implementation by keeping two conflicting governance systems operating at the same time for too long. I have observed that the more slowly implementation occurs, the more likely it will never fully occur at all. Some members will impose slowness as a tactic not to change at all. Others will simply fall back into more familiar methods if both old and new are operating simultaneous- ly. It isn’t a successful trapeze jump as long as you are hanging on to both trapezes.

when board members have not had time to understand the model and think through the impending changes will cause hollow implementation (adopting the words and formats, but not the sub- stance or commitment) or outright rejec- tion. Jumping to the second trapeze is foolhardy if you haven’t checked out the condition of the second trapeze. The U.S. Supreme Court desegregation term, “all deliberate speed,” phrases my recom- mendation well: move ahead just as quickly as careful consideration will allow.

On the other hand, making rapid shifts

Policy Governance brings an entirely new way to operate and to think about the expression of board leadership. Beware the comment that, “we’re already doing things this way.” The comment will almost always be masking a superficial understanding of Policy Governance. With an incomplete grasp, one can mis- takenly see the model as merely reiterat- ing familiar bromides like “boards should deal with policy,” “boards should stick with long-term planning,” or “boards should set goals and then leave managers alone.” While there is some limited truth in these representations, Policy Governance involves a far more thorough reordering of how governance is conceived.

In so radical a shift, how is a board to overcome the unfamiliarity, occasional resistance, and lack of newly required skills? Let me suggest the following sequence to be followed. It is a little different from the sequence I use when personally helping a board put Policy Governance into action. This sequence is for boards bravely implementing on their O W .

1 Be sure that board members and the CEO understand the model. Without good theory-if the word “theory” sounds too ivory-towerish to you, substitute “overview” or “sense of the whole”- actions don’t mean as much and don’t fit together in an efficient total. Dealing with one tree at a time may be rewarding and concrete, but dealing with forests wields far more power. Until a board fully grasps the ideas and philosophy of this new technology of governance, implementa- tion will be like putting new wine in old bottles. Board members’ words may change, but governance will not be trans- formed. How often have I heard a board talking about ends and means, limita- tions policies, or other accoutrements of Policy Governance, but in reality doing

virtually the same things it was doing before. The board can test itself to see if members fully understand the model. For example, consider discussing whether each of the various issues an organization faces is an ends or means issue. Or take a board member’s fear about finances, per- sonnel, or other staff means; discuss how that fear could be used to amend an exec- utive limitations policy.

2 Make a f u l l board commitment to this major change. There is no reason that the decision must be unanimous, but it should represent the board’s voice as a body. If moving to Policy Governance is only what the chairperson, CEO, or influ- ential committee wants to do, it will fail. Moving to Policy Governance imposes certain costs, such as discomfort with unfamiliarity, extra work early in imple- mentation (though not necessarily after- ward), and perhaps a consultant to help. The board should face these costs hon- estly, considering whether the expected improvements are worth all the trouble.

Further, it is far best to either commit to the entire model or not, rather than to loosely “adopt the model” in a way that allows each element to be debated and decided independently. Such piecemeal action opens the way for board members to compromise on the parts, yielding a result that is such a mixture of gover- nance philosophies that no one philoso- phy holds any power. (Once a watch design is conceived, you don’t vote on each little gearwheel. The “democratic” compromise between A and B is not nearly so effective as either A or B imple- mented with full commitment.) This kind of compromise, incidentally, is a major dereliction in governance: failing to make hard choices on an overarching issue, then making decisions on subissues that, taken as a whole, are inconsistent and even conflicting.

3 Put the board’s commitment to moue ahead on paper. This step creates, in effect, the board’s first governance process policy. For example, the board might adopt a simple, general statement such as, “We will govern with an empha- sis on vision rather than internal preoc-

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cupation, encouragement of diversity, strategic leadership more than adminis- trative detail, clear distinction of board and chief executive roles, collective rather than individual decisions, future rather than past or present, and proactiv- ity rather than reactivity.” However much detail the board puts into this ini- tial policy, it can be revisited as imple- mentation proceeds to help the board keep itself on track.

4 b Develop all policies except en&. Ends will be saved until last. First you must put the system as a whole into place.

a, Develop all the executive limita- tions policies. Some board members will be put off by the negative wording, but remember that it is designed to produce a positive effect. Executive limitations policies prohibit the staff conditions, activities, conduct, and decisions (staff means, as opposed to endr;) that board members worry about. Unacceptable staff practices concern boards, causing worried preoccupation with these means (rather than ends-boards normally pay little attention to them anyway) to merci- lessly clutter agendas and premeeting mailings. Creating boundaries for the staff early in the implementation sequence allows the board to relax about operational issues and put single-mind- ed attention on further policy develop- ment.

policies. The first step in creating these policies has already been taken (in step 3). Now add other policies dealing with the chairperson’s role, board member commitment, committee principles, committee products and authority, and board job description. In doing so, the board gives studied attention to how its own conduct and productivity must be in order to achieve good governance.

c. Develop all the board-executive relationship policies. Having completed policies that define its own job (gover- nance process) and the limits that apply to staff actions (executive limitations), the board can now safely contemplate a philosophy of strong executive delega- tion. Now it is time to create policies on

b. Develop all the governance process

the nature of board-CEO delegation, CEO job expectations, and the approach-and even the schedule-for monitoring CEO performance.

5 b Adopt a single temporary ends policy. It may seem odd that the most important of board policies is saved until last. I have found that only after getting the clutter out of the way can boards pro- ductively deliberate about ends. The policies already mentioned clear the clutter, trivia, and ritual actions from the agenda. Moreover, ends take longer to work through than the foregoing poli- cies, and, in fact, their development never stops. The board’s ends work goes on in perpetuity. In other words, it works best to get everything else out of the way, then work on ends forever. Since devel- oping ends policies is slow work, and since a long delay before operating with the new principles is asking for trouble, adopt a tentative policy to plug the gap. My clients often adopt a statement that says, “Until ends policies are developed, the ends of the organization will remain as previously stated explicitly by the board or as found implicitly in previously adopted board documents.” At this point, all the policies necessary to begin operating with Policy Governance have been drafted. With the exception noted below, the model can be safely put into effect.

It is best to get started on real ends policies to replace this temporary one as soon as possible after implementation. It is a very common problem for boards to get this far but, because things start working so well, fail to tackle and resolve the difficult issues that would enable the ends policies to be filled out. I have seen boards still stuck with their “temporary” ends policy over a year later!

6 DO an administrativeand perhaps legal check. When a board has policies in the Policy Governance format and uses principles of the model, virtually all other board documents and pronouncements except bylaws become unnecessary. If the adopting board has operated for some time using conventional gover-

nance, there are bound to be many other directives, documents, and pronounce- ments already in effect. Most of these elements are unnecessary baggage that will seem superfluous when you are ready to implement Policy Governance. In fact, the motion putting all the policy drafts into effect will, at the same time, repeal personnel policies, budgets, old policies, and other approvals. Most pre- vious board documents (personnel poli- cies, budgets, salary schedules, and so on) with which the new policies will con- flict can simply be “given” to the CEO. The board is rid of them; the CEO can change them as he or she sees fit, yet the hard work they embody does cot go to waste.

Before taking such a severe-albeit essential-action, you must be certain that the new policies do not conflict with law or with the bylaws. If the new poli- cies conflict with bylaws, change the bylaws. If the new policies conflict with law, then alter them so that the law is not broken. Who does the administrative and legal check depends on the organi- zation. What matters is that it be done carefully and without bias. Hence, a

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WORDS OF WISDOM

“After years of experience I have learned that policy is defined as any- thing and everything the mayor and council want to get into; administra- tion is anything and everything that is ieft over!”

-Wendall White City Manager

Charlotte, North Carolina

“The job of the board of directors is, in proportion to its intrinsic impor- tance, one of the least studied in the entire spectrum of industrial activities.”

-J. M. Juran and J. K. Louden The Corporate Director

(American Management Association, 1966, p. 7)

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Nine Steps (continuedfrom page 5) board committee, individually assigned board member, or CEO could carry out this role. When the survey of possible loose ends and conflicts is complete, you are ready for the kickoff.

7 Have the first few agendas ready to go. The immediate problem that the board will encounter after setting the model in motion will be the concrete matter of what to do at the next board meeting. As you prepare to implement, it is important to prepare so that meeting agendas do not go on as if nothing has changed (doing so will mean you are, in fact, not on the model after all). Even if you plan to do nothing at the first post- transition meeting but have a discussion of ends and the difficulty of defining them, that is much better than falling back on previous agenda formats to avoid the anxiety. It should not be diff- cult to invite speakers on ends topics to your meeting, or merely to decide what the board needs to know in order to dis- cuss ends options intelligently. This dis- cussion leads to ideas about what to schedule for board education.

Absolutely do not have the staff create board agendas, although the board can invite staff members along with others to argue various points of view with regard to large, long-term ends issues. Remember that the board agenda is a matter of governance process, so the board chair has the authority to use any reasonable interpretation of whatever the board has said about agendas. One of the governance process policies would have dealt with this issue. It is acceptable for the chair to ask for help, since he or she will be learning new behavior just as will everyone else. But it is not accept- able for the chair to default on the task or turn it over to the CEO!

8 Design the first steps in connecting with the ownership. The ownership is the legitimacy base to whom the board is accountable, for whom it is the actual or “civic” trustee. Lay plans to form and

meet with focus groups, confer with other boards, or have relevant statistical data gathered. Don’t forget to put your philosophical position about this topic and your plan for getting it underway into policy form within the governance process category. Connecting with the ownership, like setting agendas, is a mat- ter of governance process, so the com- plementary board and chair roles in the matter are similar: the board establishes its broad-brush intention, the chair fills in the details. For example, the board of one large membership association I met with decided that it wanted to schedule reBonal meetings with focus groups of association members. The chair worked out the details and the assignments. A public social senice board decided that meeting with other public, community boards would be its first exercise in link- ing with the ownership (in this case, con- necting with other organs of ownership), but left the chair to determine which other boards in what order and with what scheduling urgency.

9 Set a specific date to iizaugurate the system. To the extent possible, avoid phasing in the new paradigm; after pru- dent assurance that all is in order, switch completely to it in one move. As I alluded to the change earlier, treat the transition like jumping from one trapeze to anoth- er. When you do decide to jump, don’t halfway jump or jump in phases.

On the implementation date, all the policy drafts become effective and all previous board pronouncements still affecting the present and future are ter- minated. Because all directives of the board will now be supplanted by the new policy system, old personnel handbooks, investment policies, purchasing proce- dures, budgets, long-range plans, and virtually any directive of the board must be repealed. To a great extent, all the preparation to make the final shift exer- cises many of the new governance skills that boards need to make the new sys- tem work. So the changeover, when it comes, might well be an easy and natural step. This would be a good time for the board to congratulate itself and perhaps have a party with its staff?

The time required for going through this implementation sequence varies greatly depending on the circumstances and the people. For a national or interna- tional board that meets three times per year, the sequence ordinarily runs a dif- ferent pace from one that meets monthly in a community. A board of nine moves more quickly than a board of thirty. When I help a board go through these steps, the policy development phase can be covered in a few days, though unas- sisted implementation can take as long as a couple of years. Under the most ideal conditions, a board can move all the way to implementation in two or three months (full implementation does not imply that all ends policy develop- ment is completed, just that the board is operating on the model). Ideal condi- tions usually include an agile, small, informed, conceptually flexible board; few harsh pressures on the board at the moment; and low tension with pressure groups and press. These conditions do not stop implementation but do slow it down. Most of my clients have taken from six to twelve months. Whatever the specific circumstances of a given board, however, getting the system in place saves precious and costly staff time and board member time, more pointedly harnesses the energy of people toward mission, and gives creativity a wide but safe berth.

But make no mistake, completing the nine steps above means only that the real gouernance work can begin. Three efforts will demand the majority of board time and energy forever. First, the ends will need continual attention in perpetuity, for the world continues to shift and human needs change in priority. Second, finding ways to gather owners’ input is not easy, nor as yet are there well- researched strategies for doing so. Third, sufficient self-evaluation and redevelop- ment are needed so that board leader- ship can continue to improve, rather than begin to deteriorate. These three activities are unique leadership tasks, embodying the challenge and the chan- nel for board members to be strategic leaders.

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