Board Room Fundamentals

This is the fourth in a series of articles that examines some of the analysis and solutions provided by the work of John Carver and his Policy Governance® model of board organization, applicable to business, government and non-profit organizations that want to increase their organizational effectiveness.

One of Carver’s essential insights involves the division of labor. Modern business and production is built upon the division of labor. Yet, too many boards either do staff work and/or CEO work, and ignore the actual work of the board. Most boards understand their responsibility as supervising staff or overseeing staff functions, neither of which provide the essential leadership that boards are charged to provide.

Carver poses a different model. “The objective is not to bring the board more knowledgeably into the ongoing administrative process, as if staff operations is the train to be caught. The point is to establish the board’s policy-making process as both preliminary and predominate. If boards are truly governing, then board members are not obliged to tag along behind management” (Carver).

Boards simply cannot take the lead if their work is derived from staff. While administrators often break their work down into categories like financial, personnel, service, data processing, etc., such a breakdown does not make such categories sensible for board work.

This common practice can be seen for what it is through an analogy. It’s like classifying a manager’s works on the basis of his executive assistant’s work. An administrative assistant’s job is composed of typing, filing, telephone answering, scheduling, etc. It is clearly ludicrous to categorize a manager’s work into administrative categories based on the work of an executive assistant. Such a manager would manage filing, manage telephone answering, manage typing, etc. It’s a silly model. Yet, boards that simply follow the classification of work done by staff and administration are doing this very kind of thing!

“This error is so routine that we fail to see there is another way. Thus is conventional governance subtly managed by management, a far cry from management governed by governance” (Carver).

Carver divides the responsibility for board policy development into four categories: 1) the ends to be achieved by the organization, 2) the means to those ends, 3) board-staff relationship, and 4) the process of governance.

Ends. The essential issue regarding ends concerns is who will benefit from the organization? What human needs will be satisfied, for whom, and at what cost? Focus here provides genuine leadership.

Means. By identifying and isolating all organizational values pertaining to ends, the only remaining values concern means. For instance, once we decide where we want to go, the only decisions left are about how we will get there. In addition, ends and means are easily and often confused. Such confusion encourages apathy and inefficiency.

There is another very important issue with regard to means and delegation (or supervision). Managers must distinguish between their own means and the means of others to whom they delegate work. When it comes to delegation, telling other people how to do their jobs is fraught with difficulty. People today don’t like to be told how to do their work. The insightful manager must communicate the desired results, and allow the creativity of the subordinate to flourish. (This perspective does not always hold with regard to labor, but has increasing application as you go up the employment hierarchy into supervision, management and executive levels.)

Initially, the board should only be concerned that the staff means are effective, prudent and ethical. You might think that this goes without saying, but the world today is awash in ineffective, imprudent and unethical practices at every level of society.

Relationship. The remaining area involves the board’s own means of accomplishing its work. Those means are readily divided into two groups: 1) how the board relates to the staff, and 2) how the board governs the organization. The first of these involves the board-staff relationship: How does the board relate to the staff? How does the board relate to the CEO? The second involves the organization: How does the board assess performance? Carver has a great deal to say about all of this that is very helpful.

Governance. The final area pertains to governing the organization. The first concern of governance is ownership because those who govern do so on behalf of the owners. Nonprofit and public boards govern on behalf of others who are often difficult to define and even harder to determine ownership values. Nonetheless, the owners of nonprofit and public boards are roughly equivalent to stockholders of equity boards. The function and purpose of governance is policy-making.