Boards that make a Difference
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Boards that make a Difference

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The Policy Governance® Model “Policy Governance® is an approach to the job of governing that emphasizes values, vision, empowerment of both board and staff, and the strategic ability to lead ...

The Policy Governance® Model “Policy Governance® is an approach to the job of governing that emphasizes values, vision, empowerment of both board and staff, and the strategic ability to lead leaders.” A new Paradigm of: Visionary Leadership Empowering Delegation Ironclad Accountability

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  • A new paradigm. A conceptually coherent operating system or theory of the board’s role, position, practice, and relationships. In its scientific sense it is a system of integrated, interacting parts. Like a clock, removing one wheel does not change the look, but changes its ability to tell time.
  • 1 Clear Purpose. 4 Foundational Principles. 3 Key Responsibilities.
  • The board exists to translate informed owners’ values into organizational performance. The board is the informed agent of the owners.
  • 1 st Foundational Principle.
  • The highly disciplined board will sustain and survive the most difficult situations that organizations face. Must maneuver crises situations and huge opportunities.
  • 1 st Key Responsibility.
  • 2 nd Foundational Principle. The board’s primary responsibility is to serve and represent Jesus and his Word. As informed trustee/stewards, we are to give Jesus, as our primary owner, the authoritative voice in our ministry. It is his values and perspectives that we must discern and translate into policy and organizational performance. The board leads the organization as it serves him and his universal church.
  • 2 nd Key Responsibility. 3 rd Foundational Principle.
  • The Policy Circle represents all the decisions regarding organizational ends, management means, and board means. The Board has made policies that cover everything in the organization. Board Policy will occupy the outer part of each quadrant, with varying degrees of detail below, depending on the board’s values. The more detailed levels are for the CEO or CGO to decide or delegate.
  • The Five Most Important Questions You Will Ever Ask About Your Organization, Peter Drucker.
  • Thousands of decisions are made daily in an organization. The Board must delegate, while maintaining its accountability to ownership.
  • 4 th Foundational Principle.
  • The 3 Key Responsibilities.
  • The Policy Circle represents all the decisions regarding organizational ends, management means, and board means. The Board has made policies that cover everything in the organization. Board Policy will occupy the outer part of each quadrant, with varying degrees of detail below, depending on the board’s values. The more detailed levels are for the CEO or CGO to decide or delegate.
  • 3 rd Key Responsibility.
  • Christian School Ends: to have students trained and prepared to be productive citizens with character and competence.

Boards that make a Difference Boards that make a Difference Presentation Transcript

  • Boards That Make a Difference Board of Directors Meeting April 27, 2013
  • Board Leadership is like aWhitewater Adventure …
  • It’s Exciting, unless……the whole team gets pitched!
  • It’s Exciting, unless……you endup on therocks and have torelaunch!
  • It’s Exciting, unless……the leader with the most important role loseshis place in the boat!
  • The Policy Governance® Model “Board leadership requires, above all, that the board provide vision. To do so, the board must first have an adequate vision of its own job. That role is best conceived neither as volunteer-helper nor as watchdog but as trustee-owner.” John Carver
  • The Policy Governance® Model “Policy Governance® is an approach to the job of governing that emphasizes values, vision, empowerment of both board and staff, and the strategic ability to lead leaders.” A new Paradigm of: Visionary Leadership Empowering Delegation Ironclad Accountability
  • The Policy Governance® Model The Board’s Purpose:The purpose of the Board, on behalf of JesusChrist and His Church, is to ensure that theorganization achieves appropriate results forappropriate persons at an appropriate cost andavoids unacceptable actions and situations.
  • The Policy Governance® Model “A responsible governing board should govern. As owner-representative, the board holds title to the most authoritative function in the organization, a function that is more authoritative than that of its CEO, its staff professionals, its legal counsel, its auditing firm, and its funding sources.”
  • The Policy Governance® Model“Accompanying this considerable authority is an equally considerable accountability: the board is accountable for everything the organization is, everything it does, and everything it achieves – or fails to achieve.”Foundational Principle - Accountability
  • River Ratings, Class III:Waves upto four feet;narrowpassages;exciting…
  • River Ratings, Class IV:Long, difficultrapids;turbulent water;requiresprecisemaneuvering…
  • River Ratings, Class V:Large,complex,gushingrapids;adrenalinerush…
  • River Ratings, Class VI:The ultimateextreme;only theexpert shouldattempt…
  • 3 Key Responsibilities1. Represent Ownership as a Trustee2. Create Explicit Governing Policies which address the board’s obligation to fulfill fiduciary responsibility, guard against undue risk, determine priorities, and generally direct organizational activity.3. Assure the CEO’s performance against explicit policies.
  • Represent Ownership as a Trustee  All organizations exist on someone’s behalf.  The board exists to act as the informed voice and agent of the owners.  All owners are stakeholders but not all stakeholders are owners, only those who are equivalent to shareholders.  The board is accountable to owners that the organization is successful.
  • Represent Ownership as a Trustee Board Policy Governance® Is Ownership one step down, not Management one step up.Foundational Principle – Servant Leadership
  • Ownership Moral Owners Governance Board Those with a Board The legal trusteesshareholder-like interest representing the interests in the organization. of the legal or Moral Owners CEO CEO MeansThe board’s primary agent Any decision orfor achieving the “Ends”. process, within defined Operational Staff limitations, the CEO and staff deem necessary to achieve Means the desired Ends. Ends The ultimate Ends Beneficiaries outcomes the …to meet the organization intends needs of those it to deliver… Beneficiaries intends to reach.
  • The Board Policy ManualObserving the principles of the PolicyGovernance® model, a board crafts its valuesinto policies of four types.Policies written this way enable the board tofocus its wisdom into one central, briefdocument. Foundational Principle Clarity of group values
  • The Policy Governance® Model The Policy Circle Board CEO Job Job Expectations Expectations Governance Policies Process Ends PoliciesInstructive to Instructivethe CGO and to the CEO Board Board-CEO Executive Delegation Limitations Board Relationship CEO to CEO Means
  • Ends The Purpose of the OrganizationEnds Defined1. The human needs the organization intends to meet2. Who is to be helped,3. and at what worth - cost and/or priorities.Key Questions• What is our Mission, (our calling)?• Who is our Customer?• What does the Customer Value?• What are our Results?• What is our Plan? Peter Drucker
  • EndsThe Purpose of the Organization Try describing the organization without mentioning its activities, methods, staff, or organizational design. Because ends describe the organization’s purpose in terms of outcomes, recipients, and worth, their accomplishment justifies the existence of the organization. Nothing else does. Boards must distinguish between ends and means.
  • EndsThe Purpose of the Organization The Black Box with Inputs and Outputs
  • EndsThe Purpose of the Organization The board’s greatest fiduciary responsibility is requiring that there is a favorable relationship between input and output. The board’s chief accountability is that the organization it governs produces enough of the right changes for enough of the right people to justify the resources consumed.
  • Executive Limitations Limitations on the CEOExecutive Limitations Defined• Those principles of prudence and ethics that limit the choice of CEO/staff means (practices, activities, methods).General Principles• Boundaries of acceptability• Control through proactive constraint• Eliminates board involvement in details• Addresses common board concerns about: – Personnel, financial condition, asset protection, compensation and benefits, budgeting
  • Executive Limitations Limitations on the CEOExecutive Limitations need to statewhat is not allowable “even if it works”.Foundational Principle - EmpowermentBoard approves means Proactive boundaries ofthat CEO brings – reactive, protection for CEO decisions.restrictive and unclear. Clear and empowering. No YesTraditional Board Process Policy Governance®
  • Board-CEO Delegation Relationship to the CEOBoard-CEO Delegation Defined• The Board clarifies the manner in which it delegates authority to the CEO as well as how it evaluates CEO performance on the Ends and Executive Limitations policies.General Principles• CEO is only accountable to the whole board• The board has only one “employee” (agent)• The CEO’s work is measured only by results against written expectations
  • Governance Process Board Job ExpectationsGovernance Process Defined• The board determines its philosophy, its accountability, and specifics of its own job.A Basic Job Description• Represent Ownership• Explicit Governing Policies• Assurance of Successful CEO/Organizational Performance on Ends and Limitations
  • The Policy Governance® Model The Policy Circle Board CEO Job Job Expectations Expectations Governance Policies Process Ends PoliciesInstructive to Instructivethe CGO and to the CEO Board Board-CEO Executive Delegation Limitations Board Relationship CEO to CEO Means
  • Assurance of CEO PerformanceProcess:• Establish criteria for CEO performance through policies on Ends and Executive Limitations• Establish method and frequency for monitoring the Ends and Executive Limitation policies – Frequency (monthly, quarterly, annually) – Responsible party (Board, CEO, outside agent)
  • Monitoring PerformancePolicy Method FrequencyEnds- Mission, Vision, and Values Internal AnnuallyFinancial Planning Internal AnnuallyFinancial Condition and Asset Protection Internal Quarterly External AnnuallyCompensation and Benefits Internal Annually External AnnuallyCommunication and Support Internal Annually Direct AnnuallyTreatment of Customers Internal AnnuallyTreatment of Staff Internal Annually
  • Evaluating the CEOProcess:• Monitoring = Evaluating!• The board evaluates the CEO’s interpretation, rationale for reasonableness, and the data demonstrating accomplishment.• CEO performance is directly connected to organizational performance related to Ends and Executive Limitations• Plan annual discussion of cumulative monitoring data
  • Responsibilities Hands On!!! Examples of What the Board Should Do Hands On Set the board’s work plan and agenda for the year and for each meeting Determine board training and development needs Attend to discipline in board attendance, following bylaws and other self - imposed rules Become expert in governance Meet with and gather wisdom from the ownership
  • Responsibilities Hands On!!! Examples of What the Board Should Do Hands On Establish the limits of the CEO’s authority to budget, administer finances and compensation, establish programs, and otherwise manage the organization Establish the results, recipients, and acceptable costs of those results that justify the organization’s existence Examine monitoring data and determine whether the CEO has used a reasonable interpretation of board – stated criteria and has performed accordingly.
  • Responsibilities Hands Off!!! Examples of What the Board Should Keep Hands Off Establish services, programs, curricula, or budgets Approve the CEO’s personnel, program, and budgetary plans Render any judgments or assessments of staff activity where no previous board expectations have been stated Determine staff development needs, terminations, or promotions (except for the CEO)
  • Responsibilities Hands Off!!! Examples of What the Board Should Keep Hands Off Design staff jobs or instruct any staff member subordinate to the CEO (except when the CEO has assigned a staff member to some board function) Decide on the table of organization and staffing requirements
  • Great GovernanceA Covenant RelationshipCovenants in Scripture are solemnagreements, negotiated or unilaterallyimposed, that bind the parties to eachother in permanent definedrelationships, with specific promises,claims, and obligations on both sides.
  • Great GovernanceA Covenant Relationship • Ownership, Authority • Agreement, Contract, Bond • Purpose, Mission • Roles • Obligations, Responsibilities, Expectations • Sanctions, Limitations • Benefits, Blessings • Reciprocity
  • Three Ways to Operate -Paddle Boat:Noexperiencenecessary …
  • Three Ways to Operate –Piloted Boat:CEO directsand everyoneelse has theirown idea ofbest practice.
  • Three Ways to Operate -Professional Boat:The oars arein the handsof an expertCEO andBoard…
  • The Difference• Focus on Results – Mission accomplished• Clear Chain of Command• Written Expectations of CEO and Board• Proactive Problem Prevention - Limitations• Accountability - monitoring• Empowerment of CEO and Board• Gain Owners and Stakeholders Trust