Management consultant and author, the late Peter Drucker, observed in his 1974 book, Management: Tasks, Responsibilities, Practices that all boards share one thing in common—they are all dysfunctional. I disagree. There is one factor that makes some boards healthy and productive, and others not. I have come to this conclusion over the past few years as I’ve learned more about how healthy boards function.
I’ve been forced to think about this issue much the last few years. As CEO of a ministry, I report to a board, what Drucker called “that organ that supervises top management (p. 627).” I also serve on a board, as do many of my friends. I have recently been invited to join another board, governing an organization which provides consulting services to executive leaders and boards. So I have become very interested in what makes some boards healthy, vibrant, and productive and others not.
If you serve on a board, whether a church or small ministry board to a large corporate board, I believe these principles and observations will be of help to you, as they have been to me.
The Traditional Approach
Most boards operate substantially the same way. They spend most of their time determining programs and strategies and deciding how to implement them. Or they use their meetings to evaluate and approve programs, strategies and expenditures proposed by management (the Pastor, Executive Director, President, CEO—hereafter just “CEO”).
This traditional approach creates many problems for board members and CEOs, resulting in no one being as effective as they could be in fulfilling the organization’s mission. Board members feel the burden of making these “operational” decisions concerning strategy or programming without detailed knowledge of the capacities and day-to-day realities of the organization, field, or market. Therefore, these strategies and programs often are not efficient and do not advance the organization’s mission well.
The CEO is often left wondering what he can and cannot decide without board approval. The board has authorized specific strategies and programs, but he is not sure how many related decisions he may make without receiving further board approval. This results in delayed decisions that await board approval instead of being made promptly. The typical board also fails to empower the CEO to lead. Furthermore, it often creates tension and unhealthy relationships between the CEO and the board. None of these scenarios helps to advance the mission of the organization.
The Alternative Approach
A large part of the problem is that relatively little systematic thinking has been done concerning governance. There has been a monumental amount of work done to identify the essential features of good management (I especially like the books by Jim Collins). Yet few have thought about the essential features of good governance.
Enter John and Miriam Carver. In the 1970s they begin thinking deeply about how board best operate. I believe they have identified the essential principles of good governance. As principles, they are adaptive and applicable to all board contexts. All these principles must be present, in some form, for a board to be healthy and productive. Most boards apply various governance principles that do not fit together seamlessly. The Carver approach takes the core principles and outlines a strategy that unites them into a seamless whole proven over and over to produce the desired results of governance.
For this reason, Carver Policy Governance® is the only governance model to be registered. It is now being used by leading companies, flourishing ministries, and non-profit organizations the world over. I am thrilled that Global Scholars, the ministry I serve, has adopted this model, and the positive results are evident in many ways!
However, many find it hard to grasp the essential features of Carver Policy Governance®. Even introductory articles explaining the model are lengthy and technical. Therefore I set out to write a short, simple, and clear overview of the model. I’m sharing my overview in this blog.
The Essence of Carver Policy Governance
The essence of the Carver Policy Governance® model is precisely defining the responsibilities of both the board and CEO and empowering each to be successful in these duties. The board is responsible for defining the purpose of the organization (the Ends) and delegate to the CEO the achievement of these ends. It is also the board’s task to define for the CEO his or her limitations in achieving these Ends (Executive Limitations). The board then asks the CEO to report regularly on compliance in achieving these Ends. Within this, the CEO is free to make a wide range of decisions as to how to accomplish these Ends, within these Limitations.
This approach dramatically benefits both the board and the CEO. It serves board members by allowing them to focus on the two things they can do best. First, the board can focus its attention on defining the purpose of the organization—why it exists and therefore what it should be doing. Second, the board establishes the boundaries within which the CEO must operate, to protect the organization from organizational circumstances and CEO decisions that they believe would be detrimental to fulfilling its purpose.
The policy governance model also gives the CEO a great deal of freedom to focus on what he or she can do best—make strategy and programming decisions based on his or her more detailed and current knowledge of the organization’s operational capacities and market or field realities. The CEO has the assurance that any decision based on a reasonable interpretation of the board’s Ends and limitations is appropriate, without the board stepping in to question or change a decision he has made. The result is clarity of roles, better decisions, an empowered CEO who can flourish as a leader, and ultimately the organization’s purpose being more thoroughly, efficiently, and effectively fulfilled.
A Parenting Analogy: Empowering Vs. Overbearing
Several analogies illustrate how Policy Governance® applies ordinary and common sense leadership principles to board governance. Suppose you have a four-year-old son named Johnny. Johnny has been sitting on the couch watching cartoons since he got up. So you say to him, “I want you to go outside now and get some exercise. Just stay in our yard.”
In this example you have given him two directives: (1) an objective, or “end”—to get some exercise, and (2) a limitation—to stay in your yard. You don’t care what he does outside, as long as he obtains this end within your limitation. This gives Johnny the freedom to decide how he wants to reach this end—he may climb a tree, swing on the playset, kick around the soccer ball, and so on. All of these are “reasonable interpretations” of the end you have given him, and within your limitations. You occasionally peek out the window to monitor his activities to see if he complies with your directive and limitation. If he does, you are happy with any choices he makes within those constraints.
However, if he decides to interpret “exercise” as sitting in the sandbox and playing with his trucks, you would go out and explain this is not a reasonable interpretation of what you meant when you told him to get some exercise (he is “out of compliance”). You would then further clarify your end by saying, “I want you to do something active that will get your blood pumping.” You have now given him a sub end you believe he needs to reach your end. You would continue to occasionally monitor whether he continued to be "in compliance" with your stated end (getting exercise).
Similarly, if he ran down the street kicking the soccer ball as a way of exercising, you would also go out and have a talk with him. He was reaching the end of getting some exercise, but in a way that violated the boundaries you gave him. So you would clarify these limitations, bringing more specificity if need be. Once back in your yard you would occasionally monitor whether he was he continued to be "in compliance" with your limitations (staying in the yard).
With your clarifications he plays the rest of the day, choosing a number of different ways to get exercise in your yard. You are happy he fulfills your end within your limitations. You have also honored his ability to make many decisions on his own. You and Johnny have healthy communication and develop a more trusting relationship that day. The same process and results underlie Policy Governance®.
The more overbearing approach is deciding Johnny needs some exercise and telling him straight out, “I want you to get some exercise. Go outside and climb the tree in our yard.” When he tries to comply he may find there is a wasp nest in the tree, and so that is not the best way to get exercise. Now because you have specified exactly what he is to do in order to reach the goal of getting some exercise, he has to come back inside to tell you he can't do what you asked due to "field realities" you did not know (and proving this to be the case if you question him).
Once you understand the field reality and agree he can't climb the tree he will ask you what else he can do to get exercise. Next you now tell him to go out and swing. But when he tries to do so he finds the swing is broken. Again, he has operational knowledge that you don’t have, and as a result, there are “field realities” prohibiting him from following your new directive. So once again he must come back to you, explain the situation, prove it is the case if you question him, and then wait for yet another directive.
In the end, both you and Johnny waste much time and effort, and so he gets less exercise (he has less adequately accomplished the goal). And in the process, you have not affirmed, encouraged, or helped Johnny in his ability to make his own decisions, within your limitations. Nor is progress made in developing a trusting relationship between you and Johnny. These are all much worse results than the first approach to his “governance.” These are often the same results of traditional boards that have not embraced Policy Governance®.
A Leadership Analogy: Healthy Leadership vs. Micro-Management
Another analogy is what studies have identified as “best practices” in leadership. Poor leaders tell their employees exactly what to do, and how to do it. They reason, "He is my employee, so I can tell him to do whatever I want." But good leaders know it is much better to limit their directives to clear goals they expect the employee accomplish (Ends), and the boundaries the employee must stay within (limitations)—budget, time, legal constraints, etc. The employee is then free to choose any means he or she deems most useful to reach the objective, as long as it is within the boundaries set by his supervisor.
Concerns arise for the leader only if the employee’s interpretation of the goal is not a reasonable understanding of what he meant, or if the boundaries are violated. Otherwise, the leader is happy, the employee experiences affirmation, the employer-employee relationship is strengthened, and the organization achieves its goal. In the process, the leader creates a much more healthy culture in the department, division or company.
Much of the literature concerning leadership principles contains hundreds of examples illustrating how leaders who adopt these principles are more successful in reaching their objectives. The same is true when boards adopt Carver Policy Governance®.
“But Is It Biblical?”
The theme of my blog is thinking “Christianly.” By this, I mean evaluating all ideas in light of the truth of God’s revelation. I do not know John and Miriam Carver’s theological convictions. But I do believe the model they have developed is deeply consistent with biblical principles. I’ve asked Dr. Liam Atchison, a colleague of mine who thinks a great deal about theological implications to “guest-blog” on this next week.
Until then, grace and peace.
To read more on Carver Policy Governance® I suggest John and Miriam Carver, “Carver's Policy Governance® Model in Nonprofit Organizations” and “A Theory of Corporate Governance: Finding a New Balance for Boards and Their CEOs.”