Policy Governance is a model developed by John Carver. The model essentially outlines an approach to governance that has a board largely hands-off but informed based on parameters (aka policies) it sets in-place to let an exec know what is expected and how all will be evaluated/measured. For many, policy governance model building requires a great deal of sophistication by a board that is basically front-end loading its fiduciary duties. Policy governance is especially helpful in really big organizations where there a a lot of moving parts and governance effectiveness is measured by governance efficiency. Bottom line, if you give clear and plentiful enough guidelines, what can go wrong. And bottom line, policy governance is particularly favored by execs who perceive they are left to do their own will versus a board's bidding. And yes, this is how I see it.
Now, policy governance is not a new concept. It rears its head as a model periodically. In this case, a Caroline Oliver has written, I presume, a translation of the model that appears to be endorsed by the model's originator, John Carver. Why a new book and not by the originator? I don't know. Why the need to even talk about the model - also a mystery. But if your curious about experimenting with a model that for sure makes an exec's life if not the board's easier, check-it out here. But here's an overview from the promo:
Caroline Oliver discusses this in her book Getting Started with Policy Governance. Oliver defines policy governance as a complete system through which boards can conceptualize, organize and fulfill their mandate. The components of policy governance are:
- Define the difference your owners want you to make. It starts from the overall perspective in which the organization is merely a vehicle for delivering the benefit that the owners seek.
- Assign responsibility for making that difference. The board must determine who it is going to make responsible for achieving its ends.
- Limit the authority that goes with the responsibility as minimally as you can. The CEO needs to be free to take the quickest route available at any time, unless doing so would put the organization in legal or ethical jeopardy.
- Put everything in a comprehensive yet concise written policy.
- Delegate within “Any reasonable interpretation.” This means that delegates must always must be in a position to prove that they are operating within a reasonable interpretation of the board’s policies.
- Be sure you are making the difference your owners want. Policies must be used, and that can’t be known unless they are monitored.