Boundary Management

An Extensive Policy GovernanceĀ® Resource for Boards of Directors

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Featured Question: Do you have any ideas about how Policy Governance concepts might be useful to a Board in selecting a new Executive?

Answer: There are direct applications to executive selection through Policy Governance, specifically through Ends and Limitation policies. It does take a rethinking about selection, but that shift is identical to Policy Governance's shift in delegation to the Executive. Instead of constructing a list of characteristics that a new Executive should possess, the Board focuses on identifying what would constitute failure for an Executive and what would constitute success. In the same way that Limitations focus on the boundary, Boards need to be clear about the boundary between what they identify as a failure and the criteria for success.

If your Board has implemented Policy Governance, the Limitation policies should be pretty close to the list for failure. For example, candidates should be able to manage the financial condition well enough, as defined by the policies. Without much effort, a Board should be able to put together a list to identify candidates that are likely to fail. Using the same logic that Policy Governance uses to identify delegated authority, all candidates that don't have a likelihood of failing must have a likelihood of succeeding or will at least produce neutral results. This simple technique will dramatically improve a Board's chances of selecting a candidate that will succeed.

There is one caveat to using only the Limitations as the basis for this list. There may be areas for concern that are not clarified enough. These concerns are covered within the Mega-Limitation of ethics and prudence but not further defined in further policies. For example, it would be unethical for the Executive to lie to the Board, and not necessary to identify this behavior in the Board's governance of the organization. However, it would be better to specifically identify these types of behavior before selecting a new Executive.

The next question to answer is how a board can determine whether a candidate can perform at an acceptable level. One of the best ways is to use past performance or past behavior. What is needed to manage an organization with 3000 employees is significantly different from what is needed to manage one that only has 30, so the type of past performance required will be different.

Just as in Policy Governance, where the Ends differ from the Limitations, the criteria used to select candidates that will succeed are different from the criteria used to remove candidates with a strong likelihood of failing. To help illustrate this point, the conditions that usually cause an Executive to be terminated are not that he or she didn't achieve the established goals or Ends but that he or she misled the Board, mistreated staff, or failed to take the initiative correct problems early.

Boards should look for candidates that commit to the Ends. Policy Governance will work better if Executives are internally motivated to accomplish the Ends rather than externally motivated by compensation, benefits, or status. Boards should look for candidates who have measured themselves and their organizations based on Ends-type criteria. Policy Governance is still not widely used, and therefore many candidates may not have had an opportunity to prove themselves under an Ends-driven organization. However, many Executives are already self-motivated to accomplish the Ends.

This is a pretty simple system. From the pool of applicants, use Limitations to eliminate those likely to fail. From those left, select the candidate with the greatest proven commitment to and achievement of the organization's Ends.

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