D. Maurice Kreis
Why I'm sick of Policy Governance
This blog post publicly proclaims the end of my 17-year intimate relationship with John Carver.
Okay, okay. I've never actually met John Carver, nor have I even been in touch with him. The Atlanta-based governance consultant isn't my type. Plus my relationship with him is intimate in only the following, limited sense.
Carver is the inventor and avatar of Policy Governance, which is a comprehensive model for how boards of directors (and boards of trustees) should do their work. And, for what I believe is pretty much every day of the last 17 years, I have either been serving on, or seeking election to, a board that uses Policy Governance.
It was so exhilarating for so much of those 17 years. I threw myself into Policy Governance with gusto, devouring every word of the model's ur-text, Carver's Boards that Make a Difference. (I recommend the third edition, published in 2006; it's way better than the first two.) The model seemed especially compelling to me in light of my legal training.
Policy Governance essentially turns every board into a mini-legislature, and the lawyer me loves to write statutes and rules. The idea is that boards should exercise their authority by promulgating written policies, rather than via the ad-hoc decisionmaking or the raised eyebrows that characterize so much of what passes for governance in the nonprofit or cooperative sectors.
Carver's model also demands the cultivation of a clear distinction between ends and means, and nudges the attention of boards toward the former. How awesome! It is both exhilarating and impactful to focus one's intense attention on ends, in quest of clarity about exactly what effect a particular organization seeks to have on the world. Playing a key role in drafting the ends policies of the Hanover Consumer Cooperative Society some 15 years ago remains one of the most rewarding things I've ever done. And I still think what we came up with were among the best ends policies in the business.
A board that is truly employing Policy Governance is a board that vests as much discretion as possible in the organization's chief executive (at a nonprofit, the executive director and at a co-op, typically, the general manager), based on the eminently sensible idea that a board doesn't really know how to do what its chief executive does. For example, how the heck could a bunch of volunteers, elected by the members of the local food cooperative, possibly know how one actually runs a grocery store? Everyone complains about board "micro-management;" Policy Governance does something about it.
Here's what Policy Governance does about micro-management. It tells the board to develop ends policies and then hold the chief executive responsible for making measurable progress toward achieving them. At the same time, it tells the board to adopt so-called "executive limitation" policies; basically, guard-rails that limit the means the chief executive employ while explicitly authorizing her to do anything reasonable as long as she stays within those guard rails. (Examples of executive limitations: Don't do anything illegal. Don't subject the co-op's capital to undue risk. Don't be mean or unfair to employees.)
So, I didn't just like reading, and re-reading, Boards that Make a Difference. I liked, and still like, being a member of boards that really are striving to make a difference -- as distinct from wallowing in minutia or spinning the wheels or playing arbitrary games.
But there are a bunch of things that I have never liked about Policy Governance, and those things have finally become too much for me to remain a public supporter of the model.
My first problem is that every board using Policy Governance seems to need a professional governance consultant to help it use the model with any degree of effectiveness. This is especially problematic at co-ops because the governance consultants inevitably end up usurping authority that really ought to remain vested in the board members who have been elected to their fiduciary posts by the membership. Call me old-fashioned but I think boards of any type should be able to, and should be allowed to, govern themselves (and then be held accountable, if elected). Call me a victim of my lawyerly training, but I don't buy the idea of a bright-line distinction between procedure (supposedly the province of the consultants and hired facilitators) and substance (supposedly still consigned to the good judgment of the actual board members).
An even bigger problem is the reality that most Policy Governance boards and even most Policy Governance consultants don't really understand the model. My favorite example is actually my very first encounter with Policy Governance, dating to when I was merely a candidate for election to the Hanover Co-op Board. The Co-op provided an opportunity for members to ask questions of candidates, and one member popped up to ask us whether we favored the extension of the Co-op's health benefits to the same-gender partners of Co-op employees. (This was years before the U.S. Supreme Court's Obergefell decision, securing the constitutional right of same-gender couples to marry.)
Before I could answer, the Co-op's education director interrupted to say something to the effect of: The candidates can't answer that question! It's a matter of operations, and under Policy Governance decisions about operations belong to the general manager!
Wrong. Wrong, wrong, wrongitty wrong. Policy Governance does not declare that certain aspects of an organization are "operations" and thus off-limits to the board. What Policy Governance does teach is, as I have already said, that boards should vest as much discretion as they can in management -- particularly as to questions that are so operationally focused that they are not worth the board's time. It's often the case that a significant governance question can and should be teased out of an issue that might, in some respects, look too "operational" to require board attention.
The question about health benefits was a classic example of that. Needless to say, I did not allow myself to be silenced in my capacity as a board candidate back in '03. I told the inquiring member, in no uncertain terms, that of course I favored the extension of health coverage to the same-gender partners of the Co-op's employees.
A more subtle but ultimately an even worse problem with Policy Governance is that using the model correctly requires courage -- and that's something that even John Carver cannot manufacture. I refer to the central task of the Policy Governance board: policy monitoring.
Here's what's supposed to happen. The board adopts a policy and, on an annual basis, requires the chief executive to submit a so-called "monitoring report" that explains how she interprets the policy and then provides evidence of her compliance. Does the report contain a reasonable interpretation of the policy? Is there adequate evidence of compliance? Then the board accepts the report "as in compliance" and the chief executive is another step closer to a favorable annual evaluation (since, under Policy Governance, the chief executive is the only employee who reports directly to the board, which treats organizational performance as the equivalent of the chief executive's performance).
But what happens when there's a problem? Maybe the general manager's interpretation is not reasonable. Perhaps she has offered little or no evidence of compliance. This would be an especially regrettable situation when it comes to the ends policies. But every single Policy Governance board I have ever served on or even observed lacks the gonads to conduct this monitoring exercise forthrightly -- out of fear, I am convinced, of annoying or angering the executive. Boards never seem to understand that policy non-compliance need not always lead to adverse consequences for the executive; as often as not, non-compliance is a sign that the Board should revise the policy to make it more reasonable and realistic.
So the important and impactful conversation about whether something is wrong, with either the policies or compliance with them, doesn't happen. Then, inevitably, the executive's annual evaluation comes around and board members are shocked to discover that the executive is automatically entitled to a favorable review because the board has approved, in rote and unthinking fashion, all or substantially all monitoring reports as in compliance. Anger often ensues as board members are reminded that their endemic impulse to conduct a traditional HR-type annual evaluation is not appropriate for an executive serving a co-op or nonprofit with a Policy Governance board.
Finally, the biggest problem of all with Policy Governance is the way the model is chronically weaponized. Time and again, Policy Governance is used to silence, to disempower, and to marginalize individual board members. It is an issue with respect to both actions within board deliberations and beyond, when individual board members want or need to communicate about their board work with constituents.
The chief culprit is the Policy Governance concept known as "speaking with one voice." The idea that a board should speak with one voice becomes an excuse to muzzle individual board members with controversial views or concerns. The claim is that if individual board members say things that deviate from the official board position, it will sow confusion and become a pretext for directors wielding authority indvidually that is properly exercised only by the board collectively.
Here's the definition of "speaking with one voice," from page 377 of Boards that Make a Difference: "Although boards should entertain and even seek as much diversity of opinion as practical, the only authoritative voice is that of the full board's decision. The board can change or abandon its official position, but individual board members cannot."
In an organization with a Policy Governance board, the "speaking with one voice" principle actually ought to free up individual board members to speak their minds rather than silencing them. That's because everyone in the organization should know that comments from individual board members are not binding. There should be more speech from individual board members, both during board meetings and beyond -- not less. But it never seems to work out that way.
Good governance is a great idea. Ditching Policy Governance is a perilous step if it leaves a void. But I can no longer ignore the apparent lack of evidence in the social science literature that Policy Governance actually works. Absent such evidence, Policy Governance starts to look like a recipe, however well-intentioned, for governance futility. I want out of this relationship.