Tip #58 Ten Principles for Effective Board Governance

Posted on: July 1, 2020
Tags: Tips for effective boards

Over the next several Tips for Effective Boards, we will be reviewing the ten powerful principles of the Policy Governance® model of board operations.  While it is true that in order to derive the full benefit and full power of the model, it is critically important to implement all ten interrelated synergistic principles, it is also true that each principle contains the potential for improving board performance.  Accordingly, boards can decide to implement all ten principles of the Policy Governance® model.  Or they can select one or more of the principles to incorporate into their current governance style with the possibility of moving towards implementation of the full model at some future date. 

The first principle of the Policy Governance® model is:   “Ownership:  The board exists to act as the informed voice and agent of the owners, whether they are owners in a legal or moral sense.  All owners are stakeholders, but not all stakeholders are owners, only those whose position in relation to an organization is equivalent to the position of shareholders in a for-profit corporation.”  (“Policy Governance® Source Document” produced by the International Policy Governance Association in consultation with John Carver and Miriam Carver, 2011: https://www.BoardsOnCourse.com/policy-governance.)  In other words, an organization’s owners or key stakeholders are those people on whose behalf the board governs and to whom it is accountable, those key people who provide legitimacy to a board’s authority and serve as the “source for the organization’s purpose and values.”  (British Standards Institution, Code of Practice for Delivering Effective Governance of Organizations, 2013, page 13)

Implementing Principle #1 Ownership involves the following: 

  1. Identify Your Organization’s Owners/Key Stakeholders

Sometimes this is relatively easy to do.  Publicly traded companies are owned by shareholders.  Members own such organizations as associations and labor unions.  Public or governmental organizations are owned by the general public residing in the districts these organizations serve.  At other times, it may be harder to identify an organization’s owners/key stakeholders.   Who are the owners or key stakeholders of community non-profit organizations such as hospitals, social service agencies or counseling centers?  A couple concepts may be helpful here:  geography and community of interest.  (Ends and the Ownership, The Carver Policy Governance Guide Series, Jossey-Bass, 2009, pages 26-27)  A non-profit organization may define its ownership as being limited by certain geographical boundaries – a neighborhood, city, county, state, etc.  It may also define its ownership in terms of people who are concerned about and supportive of their organization’s mission or purpose. 

  1. Communicate With Your Organization’s Owners/Key Stakeholders

Once you have identified your organization’s owners/key stakeholders, it is important to identify subsets or categories of ownership since different ownership subgroups may have differing perspectives.  Then decide how you plan to dialogue with and gain input from the ownership as a whole and various owner subgroups.  For example, you may wish to do a telephone survey of a random sample of the overall ownership and focus groups in different geographic areas served by your organization.  You may decide to do community meetings in different neighborhoods to reach members of different racial, ethnic, religious, and income groups.  You may decide to hold meetings at churches or senior centers.  You may invite representatives of key groups to your board meetings for dialogue, etc.

So what do you talk about with your owners?  Primarily, you talk about your organization’s purpose, your organization’s reason for existence.  What positive differences should your organization be making in people’s lives?  In other words, who should your organization’s customers or beneficiaries be and what benefits should they be receiving from your organization?  What should your organization’s priorities be regarding benefits to be produced and people to be benefited?

For additional information about this principle, please check out Tips for Effective Boards #19, #20, and #21: https://www.BoardsOnCourse.com/blog

To see all ten principles of the Policy Governance® model, please click https://www.BoardsOnCourse.com/policy-governance and then click The Principles of Policy Governance® on the left-side menu.

Policy Governance® is the registered service mark of Dr. John Carver. Registration is only to ensure accurate description of the model rather than for financial gain. The model is available free to all with no royalties or license fees for its use. The authoritative website for Policy Governance is www.carvergovernance.com.