How to Keep Your Board's Policy Framework Alive and Well!
Many boards have made an initial investment in the development of a comprehensive policy framework only to see it fail to take hold and deliver benefit. Assuming the original intent was sound this is usually because, after the initial burst of effort, the novelty, and the 'follow-up', falls off.
Even board members involved in the initial creation of a policy framework or board charter, may not retain sufficient familiarity and understanding of, it. The challenge of keeping the policies 'front and centre' becomes greater as longer serving members leave and new members join the board. The same is true of the chief executive and other key staff changes. Boards should ensure a new chief executive understands and is able to assist the board apply implement its policies.
Governance policies, if they are to be effective in the long-term, therefore require on-going attention and effort in their implementation. Some of the steps that will support this are listed below.
- Effective induction. Make sure that all board members are familiar with the policies and the principles on which they are based. This requires an effective induction process whether for new board members or a new chief executive. The induction process should involve the whole board not just new members. That way there a collective consciousness of what the policies are and what they are intended to achieve. New board members are assisted to gain the necessary understanding of the policies. Longer serving board members do not have to admit that they are a bit rusty on the policies and how they are applied. A new chief executive gains an immediate understanding of how the policies frame their own job and how he/she will need, for example, to report to the board on policy compliance.
- Make the policies accessible. Each board member should have a set of the board's governance policies and related documents. This should form part of a 'director's handbook' that is able to be referred to easily in the course of meeting preparation and accompany each board member to the board meeting. Cognitive access is as important as physical access. To aid this, the policies should be written in plain English and be well-laid out and easily navigated even by a board neophyte. If your board has migrated to electronic storage of board documents this should make access even easier.
- Regularly practice their application. In the same way that sports people are constantly practicing and honing their skills, there is a parallel in the boardroom. On-going practice in the application of the policies and occasional refresher courses is a governance equivalent. One very effective way to do this is to brainstorm a range of scenarios that might test the leadership of the board. A useful resource to assist in this process comes from the Policy Governance stable (1) and will also help you see how well (or not) your current policy framework provides guidance or even a prescription for dealing with different scenarios.
- Ensure the board meeting agenda content is policy-related. With few exceptions agenda items for board meetings should have a demonstrable policy dimension (making, applying, monitoring, reviewing, etc). If anything that supposedly warrants board attention cannot be linked back to the board's policies, it is arguable that it is unrelated to the board's job. Checking for a policy connection is a great source of self-discipline for a board that is inclined to divert its attention to whatever is currently 'top of mind'.
- Establish the policy context of every document the board gets. The chief executive can assist the board by ensuring that every document that goes to the board has a cover note or an introduction that describes the board policy that gives context to and makes sense of that document. This is not only a sensible starting point for the board's deliberations but it keeps the policies alive. The practical intent of the policies (to frame and guide action) is achieved by kicking off board papers in this way. At the same time the board is able to see the policies at work and to build its familiarity with them.
- Facilitate the board meeting with policy in mind. The same goes for the reports prepared by management. Preparation should start with the question: 'what is the board's policy in relation to this?' Each proposal or report should have an explicit policy reference to confirm the relevance of the document to the board and create a context for the material it contains.
- Report policy compliance. Most of a board's policies should have a compliance reporting schedule. This will require that the chief executive reports as often as the board determines on his/her achievement of policy objectives and, where there is a risk management or control element, on policy compliance.
- Ensure board policies are 'operationalised'. It is in the nature of governance policies that they are intended to guide and at times direct, all actions and behaviour in the organisation. It is important, therefore, that those parts of the governance policy framework that are intended to exercise control over the organisation are converted into operational policies, protocols and procedures by the chief executive. For example, a high level financial delegation to the chief executive must be converted into a myriad of sub-delegations. The board should seek appropriate assurances (including, for example, from its auditors) that its policies are functioning in the way they were intended.
- Routine policy review. Each policy should have a review cycle so that the board revisits each policy at appropriate intervals to ensure that it is still relevant and effective. Not only does this keep policies up to date but it is another effective way of ensuring that the board has a high level of familiarity with each policy.
If these steps are taken (and practiced regularly) the board's policies will be doing their job and the board's ability to govern effectively will be considerably enhanced.
(1) A useful resource for this is exercise is a book specially developed for this purpose: Miriam Carver and Bill Charney (2004) The Board Member's Playbook: Using Policy Governance to Solve Problems, Make Decisions and Build a Stronger Board. Even though this is built around the Carver Policy Governance policy framework boards that do not use this formulation will also find this book of great value.
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