Tip #93 How Many Board Policies Should a Board of Directors Have?
In my consulting work with boards of directors, I have worked with boards that have few to no board policies and with boards that have over 400 board policies. Imagine being on a board with over 400 policies. Can you be familiar with all of them? Can you ensure that they are all being complied with?
Before looking at numbers of board policies, let’s take a step back and talk about what board policies are and how they can be used.
Board policies state the values of boards expressed as expectations (what should or should not be done). It is important to differentiate these from operations policies. Such a separation allows for helpful detailed operational policies while enabling board governance to be manageable, effective, and efficient.
Properly constructed, a relatively small number of board policies can provide a context for the development of operational policies and leverage for ensuring compliance of such operational policies with the values expressed in broader board policies.
Policy Governance has what seems to be a helpful categorization of board policies. There are two basic types of board policy: 1) policies that state the board’s expectations for management and the operational organization, and 2) polices that state the board’s expectations for itself. These two basic types of board policy are further divided into two subtypes of each. Board expectations for management include 1) policies that articulate the organization’s purpose and 2) policies that state board expectations for operations (treatment of staff, treatment of clients/customers, budgeting, financial performance, etc.). Board policies that state the board’s expectations for itself include 1) policies that state expectations for internal operations of the board (style of governance, conflict of interest, board officers, board committees, agenda development, etc.) and 2) policies that state the board’s expectations of itself in its relationship with management (delegation to management, accountability of management, performance monitoring, etc.) A complete Policy Governance board policy manual may have about 20 to 25 board policies.
Before the board of directors that I reported to transitioned to Policy Governance, our organization had a policy manual of well over a hundred policies all of which had to be approved by the board. After the transition to Policy Governance, we had two policy manuals: a board policy manual of about 25 policies and an administrative manual (operations manual) still well over 100 policies that I as chief executive used to manage operations. The board’s policy manual provided context for the administrative manual. The board policies that provided operational direction to the chief executive established the boundaries within which the chief executive was empowered to act. Administrative manual policies provided for the efficient management of operations compliant with the board expectations expressed in the board level policies.
While our board policy manual had one personnel policy, the administrative policy manual had numerous detailed personnel policies. While the board policy manual had three policies dealing with financial matters (budgeting, financial performance, and management of assets), the administrative policy manual had numerous detailed policies on financial matters.
Certainly, a board can’t be expected to be familiar with several hundred policies and ensure that they are being complied with, but it can be familiar with about a dozen policies that provide direction to management about organizational purpose (one policy) and day to day operations (about 10 to 12 policies) and can monitor organizational performance to make sure that these dozen or so policies are complied with. (The Policy Governance board may have another dozen policies or so that state its expectations for itself.)
So how many board policies should a board have? First of all, it should have any policies required by external authorities and regulators. It should have enough policies to carry out its job of providing effective direction and protection for the organization but not so many policies as to make policy-driven oversight of the organization unmanageable. As mentioned above, boards embracing the Policy Governance model may have around 20 to 25 board policies.
Examples of Policy Governance policies can be found in John Carver and Miriam Carver, Reinventing Your Board. San Francisco, California: Jossey-Bass, 2006. Consultants who have completed the Policy Governance® Academysm are authorized by the Carvers to use the latest version of the Carver template policies with their client organizations. Such consultants can be identified through Govern for Impact (www.governforimpact.org).
If you would like samples of board policies that do not follow the Policy Governance model, you may want to check out the appendix of BoardSource’s The Handbook of Nonprofit Governance. San Francisco, California: Jossey-Bass, 2010 and the Non-Profit Policy Sampler available through BoardSource: https://boardsource.org/product/nonprofit-policy-sampler/.
To learn more about the Policy Governance® model, please click https://www.BoardsOnCourse.com/policy-governance.