CEO’s Reasonable Interpretation — What is this?
A feature of Policy Governance is that the Board writes its policies, and then delegates all actions associated with ends and executive limitations to the organization’s CEO. In creating action plans and strategies to achieve the results required by the policies the CEO is granted the right to use any reasonable interpretation of the Board’s polices. There is sometimes difficulty knowing what this interpretation looks like, and how it should be worded in monitoring reports.
When working with boards, I instruct boards to pay a lot of attention to the CEO’s reasonable interpretation. When concluding the work of writing each policy the Chair, or the governance consultant, will ask the board, “Will you be satisfied with any reasonable interpretation of this policy?” If the answer is “Yes” then the work of the board in establishing this policy is done.
Now the work of the staff can proceed. Typically, this begins by the staff creating that reasonable interpretation. This is where I find some confusion about the process.
Why is this reasonable interpretation so important? I like to point out that the board’s policy likely describes the minimum that will be satisfactory to the board, and as policy, it does not have the detail of an action plan or a strategy. So, it is the CEO who decides what, exactly, will be delivered in response to the policy. The board writes the policy, but until the members read the reasonable interpretation in a monitoring report, they will not see what, specifically, will be delivered.
The confusion seems to arise as a result of the word, interpretation. Often I see that in the wording of the interpretation the CEO has rephrased the board’s policy using synonyms for the board’s words. While this may provide some information about how the staff has interpreted the policy, it does not make it clear to the reader exactly what is to be delivered.
In Policy Governance use of the word, interpretation does not mean, in other words. In the monitoring report, the part where the CEO provides the interpretation is actually a clear description of what the organization will deliver (or has delivered) in response to the board’s policy. In formulating this strategy, the CEO has been granted any reasonable interpretation of the board’s words.
The policy expresses what the board values on this subject. The interpretation in the monitoring report must be a clear description of how those values are to be realized by the organization.
In recent years advanced users of Policy Governance have added a significant new feature to this section of monitoring report: operational definitions. There is more discussion about this in the article, Express interpretations with operational definitions.
When the board members read the reasonable interpretation they should know how their policy was interpreted and what is or will be delivered. All they need to see now is the current accomplishment of that interpretation, and the data to support that, to know whether the organization is accomplishing what is should (or avoiding what is inappropriate).
© 2009 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.