Policy Governance®

What is Policy Governance®?

Principles of Policy Governance®

Implementing Policy Governance®

Policy Governance®, also known as Carver Governance, was developed by Dr. John Carver and is a leading-edge integrated operating system for boards that incorporates the following key elements:  

  • Accountability of the governing board to those key stakeholders on whose behalf the board governs, that is, shareholders or those in a position equivalent to shareholders of a for-profit corporation
  • Setting of organizational purpose and performance expectations
  • Delegation that empowers management to operate within boundaries clearly established by the board, and
  • Monitoring of organizational performance to ensure that the board's expectations are being met.

The 10 powerful principles of the Policy Governance® model promote the following: 

  • A results-driven organization with clarity of organizational purpose
  • A system for effective ongoing monitoring and evaluation of CEO performance
  • Clarity of roles, authority and accountability: board, individual board members, board officers, CEO, and staff
  • Clarity of relationship between CEO and board chair
  • Empowerment of CEO and staff within clearly defined boundaries
  • Effective organizational control without board micromanagement
  • Board committees supporting the work of the board
  • Board meetings that focus on the really important governance matters. 

Not surprisingly, within Policy Governance®, board policies occupy a central place.  Board policies define the expectations of the board for itself and for management.  There are four categories of policies: 

Ends Policies.  These policies define the impact or results the organization intends to produce, for which people and at what cost or worth.   The board’s thinking about Ends is informed by its ongoing interaction with the organization’s “owners” – those persons on whose behalf the board governs and to whom it is accountable. 

Executive Limitations Policies.  These policies provide the boundaries within which the CEO is empowered to operate the organization.  Such policies specify situations and activities that are not permissible and are to be avoided in such areas as treatment of customers, personnel, finance, asset management, and communication and support for the board.  

Governance Process Policies.  These policies specify expectations regarding the board’s own structure and process and may include policies such as the board job description, board code of conduct, board officers, board committees, and board agenda development. 

Board-Management Delegation Policies.  Such policies define the relationship between the board and management and may include policies such as delegation to management, accountability and evaluation of the CEO, and CEO recruitment. 

With clear policies in place, the Board delegates operational authority to the CEO and holds the CEO accountable for the achievement of Ends and for the avoidance of unacceptable situations and activities.  Comprehensive ongoing monitoring is in place to ensure compliance with the board’s expectations.

The following document was produced by Govern for Impact in consultation with John Carver and Miriam Carver.

 

POLICY GOVERNANCE® SOURCE DOCUMENT

Why a Source Document? 

A “source” is a point of origin. A source document is a “fundamental document or record on which subsequent writings, compositions, opinions, beliefs, or practices are based.” (Websters)

Without a simply expressed clear point of source, interpretations, opinions, writings and implementations may intentionally or unintentionally diverge from the originating intent and ultimately be undifferentiated.   The point of source (“authoritative source”) is John Carver, the creator of Policy Governance, with Miriam Carver his fellow master teacher.

Without a simply expressed clear source document, Policy Governance is not reliably grounded and not transferable as a paradigm of governance.  It is left vulnerable to interpretation, adaptation and impotence.  This document has been produced by the International Policy Governance Association and approved by John and Miriam Carver as being true to source.

What is Policy Governance?

Policy Governance is a comprehensive set of integrated principles that, when consistently applied, allows governing boards to realize owner-accountable organizations.  Starting with recognition of the fundamental reasons that boards exist and the nature of board authority, Policy Governance integrates a number of unique principles designed to enable accountable board leadership.

 

What Policy Governance is NOT! 

  1. Policy Governance is not a specific board structure. It does not dictate board size, specific officers, or require a CEO. While it gives rise to principles for committees, it does not prohibit committees nor require specific committees.
  2. Policy Governance is not a set of individual “best practices” or tips for piecemeal improvement.
  3. Policy Governance does not dictate what a board should do or say about group dynamics, methods of needs assessment, basic problem solving, fund raising, managing change.
  4. Policy Governance does not limit human interaction or stifle collective or individual thinking.

 

 

Transitioning to Policy Governance® involves steps such as the following.  While the following sequence is common, the sequence and timing of the implementation of model components can certainly be customized for your board.

  1. Your board members become knowledgeable about Policy Governance®. Consultant provides a half to full-day didactic and experiential review of the powerful principles of the Policy Governance® board operating system.  This session is customized to your board and provides sufficient information for your board to decide if it wishes to proceed to implement the Policy Governance® system.  A board self-assessment survey is recommended and assists with customizing the session to your individual board.

  1. Your board develops its policy manual. A consultant-guided session enables your board to develop a core policy manual.  This session generally lasts one day and focuses on development of Executive Limitations policies, Governance Process policies, and Board-Management Delegation policies.  If the session lasts more than one day, your board may begin development of its Ends policies.

  1. Your board approves its new policy manual and sets a date for its transition to Policy Governance®. When your board is satisfied with its core policy manual, your board sets an effective date for implementation of its policies and for its transition to Policy Governance®.

  1. Your board bylaws are revised to be consistent with your board’s new policy manual. Consultant assistance is available to assist your board in its review and revision of its bylaws.

  1. Your CEO begins development of measurable interpretations of board policies. Off-site and on-site coaching and a workshop session are available to assist your CEO and staff in developing operational definitions of your board’s policies.  Operational definitions define specific measurable criteria to be used by your board in assessing compliance with its policies.  While these definitions are developed by the CEO they must be accepted by your board as reasonable interpretations of board policies.

  1. Your board begins monitoring of CEO and organizational performance. Your board implements an annual schedule for its monitoring of Executive Limitations policies.  Once Ends policies are developed, monitoring of these is included in your board’s annual monitoring schedule.   Consultation assistance is available to help your CEO and staff develop monitoring reports and to help your board in its review of these reports.

  2. Your board develops and implements its board self-evaluation plan.  Off site coaching is available to assist your board in the development and implementation of its self-evaluation plan.  Self-evaluation includes an ongoing review of its compliance with its Governance Process and Board-Management Delegation policies.  Other self-evaluation methods might include a process review at the end of each board meeting, a brief survey questionnaire completed by each board member after board meetings, assignment of specific policies to individual board members who become expert in those policies, etc.

  3. Your board develops its initial Ends policies. Consultation assistance including a workshop session is available to help your board develop its Ends policies.  Generally, this occurs a couple months or so after your board’s transition to Policy Governance® (unless these policies were developed in the Policy Development Session in conjunction with your board’s other policies).  Ongoing development and refinement of Ends policies is a central focus of your board’s deliberation and is informed by your board’s knowledge of and interaction with its “owners” – those people on whose behalf your board governs and to whom it is accountable.

  4. Your board develops and implements its initial Ownership Linkage plan.  Consultation assistance including a workshop session is available to help your board develop its plan for ongoing conversation with its "owners."  Your plan may be a multi-year plan that identifies various segments of your "ownership" and methods to be used to communicate with them.

  5. Your board continues to fine-tune its practice of the Policy Governance® model and its engagement in creative future-focused boardroom dialogue. Consultation assistance is available to help your board in its ongoing assessment of its fidelity to the Policy Governance® model and in its continuous improvement of its performance as an “on course” board committed to future-focused boardroom dialogue.

Principles of Policy Governance 

  1. 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.

  2. Position of Board: The board is accountable to owners that the organization is successful. As such it is not advisory to staff but an active link in the chain of command. All authority in the staff organization and in components of the board flows from the board.
         
  3. Board Holism: The authority of the board is held and used as a body. The board speaks with one voice in that instructions are expressed by the board as a whole.  Individual board members have no authority to instruct staff.
         
  4. Ends Policies: The board defines in writing its expectations about the intended effects to be produced, the intended recipients of those effects, and the intended worth (cost-benefit or priority) of the effects. These are Ends policies. All decisions made about effects, recipients, and worth are Ends decisions. All decisions about issues that do not fit the definition of Ends are means decisions. Hence, in Policy Governance, means are simply not Ends.

  5. Board Means Policies: The board defines in writing the job results, practices, delegation style, and discipline that make up its own job. These are board means decisions, categorized as Governance Process policies and Board-Management Delegation policies.

  6. Executive Limitations Policies: The board defines in writing its expectations about the means of the operational organization. However, rather than prescribing board-chosen means - which would enable the CEO to escape accountability for attaining Ends, these policies define limits on operational means, thereby placing boundaries on the authority granted to the CEO. In effect, the board describes those means that would be unacceptable even if they were to work. These are Executive Limitations policies.
       
  7. Policy Sizes: The board's decides its policies in each category first at the broadest, most inclusive level. It further defines each policy in descending levels of detail until reaching the level of detail at which it is willing to accept any reasonable interpretation by the applicable delegatee of its words thus far. Ends, Executive Limitations, Governance Process, and Board-Management Delegation policies are exhaustive in that they establish control over the entire organization, both board and staff. They replace, at the board level, more traditional documents such as mission statements, strategic plans and budgets.

  8. Clarity and Coherence of Delegation: The identification of any delegate must be unambiguous as to authority and responsibility. No subparts of the board, such as committees or officers, can be given jobs that interfere with, duplicate, or obscure the job given to the CEO.
         
  9. Any Reasonable Interpretation: More detailed decisions about Ends and operational means are delegated to the CEO if there is one. If there is no CEO, the board must delegate to two or more delegatees, avoiding overlapping expectations or causing confusion about the authority of various managers. In the case of board means, delegation is to the CGO unless part of the delegation is explicitly directed elsewhere, for example, to a committee. The delegatee has the right to use any reasonable interpretation of the applicable board policies.
         
  10. Monitoring: The board must monitor organizational performance against previously stated Ends policies and Executive Limitations policies. Monitoring is for the purpose of discovering if the organization achieved a reasonable interpretation of these board policies. The board must therefore judge the CEO's interpretation for its reasonableness, and the data demonstrating the accomplishment of the interpretation. The ongoing monitoring of board's Ends and Executive Limitations policies constitutes the CEO's performance evaluation.           

 

All other practices, documents, and disciplines must be consistent with the above principles. For example, if an outside authority demands board actions inconsistent with Policy Governance, the board should use a 'required approvals agenda' or other device to be lawful without compromising governance.

Policy Governance is a precision system that promises excellence in governance only if used with precision. These governance principles form a seamless paradigm or model. As with a clock, removing one wheel may not spoil its looks but will seriously damage its ability to tell time. So in Policy Governance, all the above pieces must be in place for Policy Governance to be effective. When all are brought into play, they allow for a governing board to realize owner accountability. When they are not used completely, true owner accountability is not available.    

 

Policy Governance boards live these principles in everything they are, do and say. 

Produced by Govern for Impact in consultation with John and Miriam Carver, 2005-2007-2011-2015-Feb 2021 

Policy Governance® is a registered service mark of John Carver. Used with permission. 

Copying permitted if attributed to source. If referenced as source document, must reference entire document and, if copied, be copied in its entirety.  

Policy Governance® is an internationally registered service mark of 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.

Reference: Carver Guides, 2nd Edition, 2009.