Board action after receiving a monitoring report

A monitoring report (from the CEO, a consultant, or a committee of the board) has been received. If you are following the advice in this series of articles on monitoring, each board member will have thoughtfully reviewed the monitoring report, and during the board meeting the report was entered into the boards minutes by a resolution. If, while reading the report, board members found some concerns or issues, how do they proceed? [The rest of this article is in the next pane. If you cannot see it, please click on the title.]

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If the board finds that indeed the CEO is reporting compliance and further finds that compliance with the policy is satisfactory, no further action is required.

If the results are not what the policy demanded (in other words, the staff reports a violation of the policy), the board must ask when the staff will demonstrate accomplishment of the interpretation. If the answer to that question is satisfactory, then we recommend that the policy should be amended to include the new timeline.

Note that in the case of a violation the only appropriate question from the board to the CEO is, “When will you be in compliance?” For example, an Executive Limitations policy may say that the CEO will not cause or allow the organization to be in debt. The organization may have incurred debts prior to the adoption of this policy and the CEO has noted that debt will not be satisfied until some point in the future, possibly several years. The board needs to know when the CEO expects the organization to be in compliance.

If the board is not satisfied with the report, any action the board takes should be subsequent to and separate from receiving the report.

Boards often have a different hope or expectation for the interpretation of policy even though the interpretation is reasonable. The board may find that the CEO accomplished the expected results in view of the interpretation, but the interpretation is not okay with the board. Or, the board may have given too broad a range for the interpretation. In all cases, the wording of the policy is flawed and the board’s action will be to schedule its own time to rewrite it.

If the issue is that the data do not demonstrate accomplishment of the interpretation, the board must express this, and the report must be scheduled for re-submission with appropriate data. Remember that with PG the board can demand a report at any time.

Non-Policy Governance boards are often satisfied with verbal clarifications to written reports during meetings. Your CEO may want to give you an explanation when the issues are raised; but that verbal report does not make an inadequately written report satisfactory. It must be re-written, signed and re-submitted with new and satisfactory data which completes the board’s job of diligence.

It is at the time of the presentation of monitoring reports that the board discover whether their words are really producing the required results. No one expects perfection, and there will be a time while the staff learns how to respond to the board’s policy statements. Nevertheless, repeated incidents of inappropriate policy interpretation or inadequate supportive data may be indicators of poor operational performance. If board expectations of performance are continually unmet, then CEOs should be aware that non-compliance may lead to dismissal as a legitimate business decision. We have yet to experience this situation; but we do want to underscore the significance of the board’s words in policy.

Parts of this article include small but significant changes to the process associated with receiving monitoring reports that is described in the text book by John and Miriam Carver, Reinventing Your Board. The point here is that while the PG model may not demand this level of detail, it is, consistent with the model. As part of the practice of PG, we consider it to be necessary.

This article is part of a series of articles exploring better ways of providing monitoring in a Policy Governance environment. I am grateful to have been able to collaborate with Sherry Jennings for all aspects of this project.

© 2008 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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