Diligence in monitoring with Policy Governance

With Policy Governance (PG) the board will receive monitoring reports on a schedule that it specifies. How does the board attend to these reports? This discussion refers only to the reports that are demanded of the head-of-staff but the principles are the same as used with the other forms of monitoring.

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PG is differs from traditional governance because the PG board has articulated policies that instruct the staff as to what must be achieved, and what behaviors in achieving the necessary results are unacceptable. Monitoring reports, then, address only these policies.

Monitoring does not mean hearing about the gossip of what is going on in and with the organization. For board members who are new to PG, one of the shocking differences is that the usual staff show-and-tell, and the approval of the financial statements, are no longer part of board meetings. Since this form of oversight is not available, the board must be diligent in using the monitoring techniques provided by PG. PG actually provides greater rigor than the traditional style, but only if the board truly attends to the reports.

For readers who are new to these concepts: PG boards have written policies that address everything that the board has to say to instruct the staff. Many boards have created some policies, but those are not a consistent and coherent statement of everything that needs to be said.

The area that gives many board members the most discomfort in this regard is the matter of financial prudence. They will say, “If I cannot see the financial statements, how will I really know what is going on in that organization.” The answer is that the board has described in policy exactly what the financial conditions must be, so if those conditions are met, there is nothing else the board needs to know. Over the years, John and Miriam Carver have established a series of templates to guide boards in writing policies for the first time. Usually, the templates will provide for much greater diligence and prudence in governing than counting on the eagle eyes of board members scanning staff financial statements. You may read the templates in the Carver’s book, Reinventing Your Board.

A monitoring report by the head-of-staff is not a casual opinion. This will be a statement that is in writing and is signed.

A written monitoring report by the head-of-staff always has the following elements.

  • For easy reference, the policy wording is quoted.
  • There is a statement of how the policy has been interpreted by the staff (the staff has been granted any reasonable interpretation of the board’s policies).
  • The current situation with regard to the policy is explained. Here is the discussion that would probably be presented as anecdotes in old-style board meeting. In this case, it must address the board’s policy.
  • Data that illustrate or confirm the current situation is provided. These data must not be just interesting, they must specifically address the policy. Assembling this is sometimes difficult for staff because the internal systems may have to be modified to provide the information needed to report to the board. It is not always possible to extract the data from the existing management reports. The board must be able to tell, just by reading this report, how well the staff is attending to its policy.
  • Based on the foregoing, the head-of-staff reports that the organization is in compliance or in violation of the board’s policy.
  • This statement of compliance or violation is signed by the author of the report.

Monitoring reports are provided in advance of the board meeting where they are to be considered. Board members are expected to have studied them before the meeting.

Here is what happens during a board meeting. The chair polls the board members to determine who has read and understood the monitoring reports. The minutes show who did read and who did not read the monitoring reports. The minutes will also include the monitoring reports.

That’s it. The monitoring took less than two minutes of the board’s time during the meeting. Actually, since each board member probably spent considerable time reviewing the written material in advance, there was lots of time spent on this task. However, it did not take of the valuable time of the assembly.

Consider how this system of governing works.

  • The board says, in policy, how it must be (what must be achieved by the organization, and what behavior is not acceptable in achieving the required results)
  • For every policy relating to the required results (Ends), and for what behavior is unacceptable (Executive Limitations), the board receives a written report of compliance or violation of the policy plus the data and description of situation.
  • The minutes confirm that the members of the board are aware of the contents of the monitoring reports.

All of this is contained in the minutes.

Compare this process to the events at typical board meetings. The head-of-staff reports, usually in an anecdotal manner about the current activities. Then a financial report, along with other indicators is distributed. After some discussion, the board may make this report their own by approving it. Since the board was not the author, and the explanations of the details were usually verbal discussion in the room (I call it ‘hot air’ because it may or may not turn up in the minutes), how can the board have confidence in owning this material?

PG provides for greater integrity in governing, but the board needs to write meaningful policies in the first place, then it has to truly attend to its monitoring. When the monitoring shows that the situation is not satisfactory, the board needs to act appropriately.

In a future articles, I’ll talk about how the board behaves when it has not satisfied with a monitoring report.

© 2007 R. Ballantyne. All rights reserved. This is for your use at your computer screen. For reproduction of any kind you will need the written permission of the author.

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