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Policy Governance®
Annotated Glossary
One of the difficulties with adopting Policy Governance is the need to
understand the meaning of the underlying concepts, both in their specific
meaning and their difference from traditional usage. Most theories and
their associated models will have their own nomenclature. Obviously,
to just speak "Policy Governance" is not enough, but better and more accurate
usage of Policy Governance language will strengthen the use of the theory and
model.
This Glossary makes references
to specific publications where possible. Definitional
contrasts have been provided as well as questions about application and usage
within the model. This Glossary is meant to help individuals gain a deeper
understanding into Policy Governance, its strengths, some of its limitations,
and most importantly its ability to be applied in a broad range of settings.
There is a glossary provided in the appendix of Corporate Boards that
Create Value, by John Carver and Caroline Oliver. It too is a helpful
resource for defining the language and terms used in Policy Governance.
*The
following abbreviations for publications are being used: Boards that Make
a Difference (BMD);
Reinventing Your Board (RYB);
The Policy Governance Fieldbook (PGF);
On Board Leadership (OBL);
Corporate Boards That Create Value (CBCV);
The highest level of authority
and accountability in an
organization. (BMD, p. 2); The job of the
governing Board. (CBCV, p. 124*).
The first definition differentiates
what the Board does from what the executive does based on authority, not on
activity, function, or focus. Therefore, Boards govern by definition,
because they are the highest authority within an organization. Governance
simply becomes synonymous with the what the Board does, with Policy Governance
being a special subset or type of Governance.
The first definition however,
leaves some confusion about the meaning for organizations that have a higher authority than the
Board, such as an organization that is made up of members and has an annual
membership meeting? In this type of organization, do Members govern and
the Board manages? In contrast to Policy Governance's
use of the word, there are other ways to define Governance. Peter
Block defines Governance in his book "Stewardship" as how authority is assigned
and distributed within an organization. Maybe the confusion isn't with the
word Governance, but the need to rethink what Management means in light of the
theory and model of Policy Governance.
A value or perspective that underlies action. (CBCV, p.
125); Written Board value statements expressed as Ends, Board Means, and
Constraints on the Executive (). One of the
challenges of traditional governance has been to try to provide a definition of
Policies. Most have an almost exclusive focus on the Executive and
internal procedures, little about Board values, and are probably founded on the
belief that Boards are to write Policies and Executives are to carry them out.
Policy Governance expands on the definition of
Policies to include why the organization exists, all board behavior and output,
and guidance to the Executive through Limitations rather than specific
directives. In Policy Governance, when one
speaks of Policies it could mean any of four categories of Board values, not
just policies focused on the Executive.
The
Board's identification, through their Ends Policies, of the beneficiaries, the
benefits they receive, and the relative importance or acceptable cost of those
benefits that the organization is to achieve (). Not
all beneficiaries and the benefits that the organization achieves for them are
Ends. Good things may happen to a lot of people because of the existence
of an organization and none of them may be Ends. Ends have the requirement
that the Board has identified them as Ends in the Ends Policies.
Everything else is a Means, even if it looks like an End by having beneficiaries
and benefits.
Although customer or
consumer are often used instead of beneficiary in how Ends are defined, those relationships don't apply
to all settings. One of the reasons for this is that they imply a
participation by the receiver of the benefit and therefore confuse how we think
about Ends. A customer decides to purchase or use a product or service,
while a consumer uses a product or service. Neither of these may occur for
a beneficiary. A beneficiary can benefit from the existence of the
organization without purchasing or using any of its products or services.
For example trade associations often provide legislative lobbying from which
members benefit without a direct customer connection, in fact non-members may be
identified beneficiaries of this activity. Part of the confusion comes
from the fact that a relationship that is defined as a customer or consumer
relationship has a number of components that are Executive means, whereas
beneficiary is almost exclusively tied to Ends and can stand independently from
Executive organizational actions and results. The use of beneficiary
rather than customer also helps when making the transition from non-profits to
for-profit organizations. Most for-profit organizations will identify the
beneficiary not as a customer, but as the stockholder.
Any organizational issues that
are not Ends (RYB p. 18). This sounds a little
simple, but the power of the theory is derived by clearly separating Ends from
Means. Defining Ends this way provides great clarity. With delegation to the Executive being done by constraints rather
than permission, it is important to have a definition of Means that is broad and
all inclusive. It is also important to note that Means can be divided into
Board Means and Staff Means, with Staff Means being further divided into
acceptable Staff Means and unacceptable Staff Means.
Board Means: Linkage to the Owners, Establishing Board Policies,
and Assuring Organizational and Executive Performance.
Not all Means belong to the Executive, the Board has actions and results for
which it is responsible and which contribute to the assurance of performance.
Staff Means: Any organizational issues that are not an End or a Board Means.
Anything that the Board has not specifically identified as
an End or a Board Means, automatically falls into the category of Staff Means.
This is important to recognize when considering relationships with external
entities that could connect with either the Board or the Executive. Staff
Means are divided into Acceptable and Unacceptable Staff Means, with the
boundary between them defined by the values of the Board and articulated in the
Executive Limitation Policies. Staff Means does not refer to the actual
processes and results that the Executive employs, but refers to all the possible
processes and results that the Executive might employ.
The right to make a decision.
In classical management literature, authority is often
divided into five levels: (1) Those decisions that can be made without
informing your supervisor, (2) those that can be made but your supervisor must be
informed, (3) those that need supervisor approval, (4) those that are a recommendation
to your supervisor, and (5) those that are information only. Policy Governance
eliminates this complicated continuum of authority between the Executive and the
Board. The Board's Executive Limitations give the Executive either
complete authority to make a decision or not at all, without needing to define
authority levels to any further degree.
There are two approaches or philosophies to
delegating authority: (1) an individual has complete authority to do what ever
is needed to achieve the Ends except for what is constrained or limited or (2)
an individual has no authority except what is explicitly stated or identified.
Although the first approach would seem to fit Policy Governance, this is an
implication and has not been specifically stated in any Policy Governance
literature. One position that can be taken is that it is
unnecessary to state Policy Governance's position because of a proof
called "reverse logic." For more information about "reverse logic" see the
Board Guide,
"Writing Limitations in the Positive." The down-side of not stating
the position is that boards find this neutrality difficult to maintain,
and will tend to gravitate to the position of there being no authority
except when the board has specifically stated it, and to compound this, even
executives will gravitate to this position when the approach to authority is
unclear.
An argument could be made that Policy
Governance actually take the position of giving no authority except for what is
explicitly stated, it just does it in a way that maximizes the authority given.
If this is true, and although it is significantly better than traditional
delegation, it still has the taste of subordination and a lack of freedom.
This approach would seem to work
against individual initiative. At best, it is a mixed message to the
executive.
Specific decisions or actions that need to be made or carried out or
specific results that need to be achieved. The
difference between responsibility and accountability is not clearly spelled out
in Policy Governance literature. They are often
used interchangeably within Policy Governance,
although there seems to be an preference for the use of accountability.
In
management literature, sometimes responsibility defines the task or results to
be achieved, while accountability is to whom someone must "account" for
completing those tasks or achieving those results.
An assurance of
performance. The difference between responsibility
and accountability is not clearly spelled out in Policy Governance
literature. They are often used interchangeably within Policy Governance,
although there seems to be an preference for the use of accountability.
Other management literature defines accountability as being responsible to
someone to carry out a task or to create a specific results. This means
there are two elements that have to be identified for accountability to
exist, to "whom" is one accountable and for "what." It
is useful to recognize that in Policy Governance that groups may be accountable
as well as individuals. For instance, the board is accountable to the
owners. If the board succeeds or fails in achieving the ends, they do so
as a group rather than individuals. In Policy
Governance, accountability is assured through monitoring. If there is no
monitoring, then there is no accountability.
The assignment of responsibility and authority to a
group or individual. Delegation to the executive of
means to achieve the ends is done through constraints. Certain
responsibilities may be identified as constraints, but further
responsibilities will be self-defined by the executive. Delegation of
authority is defined cleanly by the Limitation Policies; the executive may
decided anything that does not exceed a Limitation. Delegation to the
chair or chief governance officer (CGO), or board committees is done through affirmative statements.
Delegation does not assure accountability. Only monitoring can assure
accountability.
There may be too much emphasis placed on the delegation of
responsibility and authority in Policy Governance. Depending on the underlying
philosophy or approach that a board or board member's assume, to think in terms
of delegation may inhibit the freedom that Policy Governance provides to
executives to accomplish the ends. It is more important to put the
emphasis on accountability and monitoring which assures performance and is more
reflective of the relationship that Policy Governance is trying to establish
between the board and the executive. Read the section on
Authority for additional discussion on this point.
The effect that actions have on an individual or group of people.
Ends are a special set of Outcomes. Ends apply only
to the organization and identify the beneficiaries of the organization's
activities, whereas Outcomes could apply to subsets or subunits of the
organizations with the beneficiaries being other units within the organization.
There are
two types of performance in Policy Governance: achievement of Ends and
compliance with the Limitations on means (CBCV).
This separation is one of the strengths of Policy
Governance. It acknowledges that there are minimum levels of acceptable
performance necessary on a number of means but that performance beyond
those levels should only be sought if it achieves more of the Ends.
Model
A model is a collection of principles and
concepts that make sense as a whole. A model is internally consistent and
has external utility (PGF p. XV). Policy Governance
is presented as a model of governance, and in fact presented as the only known
model of governance. The case for this is more intuitive than specifically
stated. Policy Governance does make sense as a whole, appears to be
internally consistent, and has external utility, but the principles and concepts
are not well defined past such things as Ends, Means, and delegation through
Limitations.
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