principles and model consistency framework june 2016… · policy governance® principles and model...

PolicyGovernance®PrinciplesandModelConsistencyFrameworkdocument

PURPOSEANDDESIREDOUTCOMESOFTHISDOCUMENTIn 2012 an operational task force working for the IPGA CEO was charged with developing a system for objective review which could be used to ensure, as much as possible, that IPGA presentations and publications were model consistent. It was estimated that the Principles had to be the foundation but that something more than just the Principles would be needed to conduct an objective review. It was determined to look at the further writings by the Authoritative Source, as well as surveying leading consultants to ascertain probable lower level definitions of the Principles. These would then be extensions of, or logical expectations, given the Principles themselves. In order to apply this set of Principles and lower level definitions of the Principles, it would be necessary to create observed criteria by which to judge whether or not they were being followed and were not being contradicted. This led to the proposed "Potential Criteria for Judging Consistency of materials" which can be found below. It also seemed to make sense while looking at this to define "Potential Criteria for Judging Consistency of board behavior" which are also below.

These are not thought of as exhaustive further definitions or observable criteria to judge their application. It is expected that over time as more writings are considered and as more people use the tool they will likely expand. The goal was not to say all that could be but to say enough to achieve the desired outcome of having a way for IPGA to objectively assess model consistency.

In preparation for IPGA Conference 2013 a survey to gather the input of those who presented at the IPGA Conference 2012 was conducted as to their input concerning the contents of the Framework. These comments were drafted into a revised set of Definitions and Criteria which were then reviewed by the Authoritative Source. Responses from John and Miriam have now been incorporated into this new version.

PRINCIPLESBACKGROUNDANDCONTEXT§ Principles taken from Carver Policy Governance® Guides, revised and updated, © 2009 “Policy Governance® in a Nutshell” § Definition of a Principle: A fundamental truth or proposition that serves as the foundation for a system of belief or behavior or for a chain of

reasoning. § Applying the principles – what would you expect to see or do as a natural and required conclusion when the principle is followed.

PROCESSFORDEVELOPINGTHEPOTENTIALCRITERIA§ Developing the possible lower level definitions and the potential implications for how one would judge both presented and published

materials and board behavior for consistency was done by: § Identifying apparent expectations in the most recent Carver Policy Governance Guides. § Surveying several of the most regarded and experienced consultants who were Academy participants. § Using the operational task force (consisting of Richard Biery, Jannice Moore, Caroline Oliver, and Eric Craymer) to synthesize the above

information in order to identify expected observable criteria for filtering model consistency of presentations and publications by IPGA and of boards which were attempting to use Policy Governance.

§ These proposed criteria were checked against the current Carver Policy Governance Guides as well as the previous edition's "Your Role and Responsibility as a Board Member"

§ Any criteria which could not be confirmed as aligning with the writings was either edited or deleted. § Any criteria from the writings which had not already been identified were added.

©2012-2016,InternationalPolicyGovernanceAssociation. TheoriginalcollaboratorsareEricCraymer,CarolineOliver,JanniceMooreandRichardBierywithreviewbytheAuthoritativeSource.Thisdocumentisavailableforgeneralusewithproperattribution.Variationsonorextensionsofthisdocumentarepermitted,however,anyexpansionmademustbeidentifiedasnotoriginal.TheoriginaldocumentmaybeviewedontheIPGAwebsiteundertheresourcetab.

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©2012-2014,InternationalPolicyGovernanceAssociation,CurrentversionrevisedasofJune2016

Principle Potential Lower Level Definitions Potential Criteria for Judging Consistency of Materials

Potential Criteria for Judging Consistency of Board Behaviors

1.Ownership: Theboardexiststoactastheinformedvoiceandagentoftheowners,whethertheyareownersinalegalormoralsense. Allownersarestakeholders,butnotallstakeholdersareowners,onlythosewhosepositioninrelationtoanorganizationisequivalent tothepositionof shareholdersinafor-profit-corporation.

Thisincludesatleast: Theboardclearlyidentifiesitsmoralownership.• Theboarddistinguishesitsaccountabilityto

ownersfromitsaccountabilitiestootherstakeholders.

Recognizingitsaccountabilitytoowners,theboarddevelopsandexecutesadeliberateplanforregular,consistentandon-goingtwo-waycommunicationwithowners.• ConnectionwithownersisprimarilyaroundEnds-

relatedissuesbutalsopotentiallyunacceptablemeans,notaround“currentcustomerissues”.

• Methodschosenforownershiplinkageare

designedtoobtaininputrepresentativeoftheentireownership,ratherthanrelyingonself-selectedvoices.

Thisimpliesthatthefollowingshouldbeobserved:

Referencestoownersareclearlynotconfusedwithcustomersorotherstakeholders.

Referencestoownershiplinkageorlinkageplansarerelatedtotheboard'scurrentorpotentialpolicies,particularlyEnds,andnotrelatedto“customer”typequestions.

Thereisrecognitionthatownershiplinkageshouldberepresentative(eventhoughitmaytakeseveralyearstogainacompletelyrepresentativepicture).


Boardhasapolicystatingwhoitsmoralownersareand itsmoralaccountabilitytothem.

Boarddevelopsandimplementsadeliberate,ongoingplanforregular,two-waycommunicationwitharepresentativeselectionofownersaroundboardpolicies,particularlyEnds-relatedissues.

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2.PositionofBoard: Theboardisaccountabletoownersthattheorganizationissuccessful. Assuchitisnotadvisorytostaffbutanactivelinkinthechainofcommand. Allauthorityinthestafforganizationandincomponentsoftheboardflowsfromtheboard.

Thisincludesatleast: Theboard’sprimaryrelationshipiswithowners,ratherthanstaff.

Theboardhasanobligationtoactonbehalfofowners.

Endspoliciesaredevelopedbasedonanunderstandingofowners’perspectives,values,wantsandneeds.

Iftheboardbelievesadecisionisinthebestinterestsofowners,butitisnotconsistentwithowners’wishes,theboardmayengageownersindialoguetohelpthemunderstandbroaderimplications–tobemore“responsibleowners”.

TheboardhasclearwrittenEndsandExecutiveLimitationsfortheCEOtoensurethatthereisclarityofexpectations.[cross-refwithPrinciples3&6]

Theboardmonitorsanyareathathasbeendelegated(totheCEOortoaboardcommitteeorindividualmember)toensurethattheaccountabilitylinkismaintained.[cross-refwithPrinciple10]

TheboarddoesnotinterfereinareasithasdelegatedtotheCEO.

• TheboarddoesnotexpecttheCEOtofollowthe“advice”ofanyboardmember.


Referencestoboard’srelationshiparerelatedtoownersandrecognizetheboard’saccountabilitytothem.

Itisclearthattheboard,nottheCEO,initiatesthedevelopmentofthebroadestEndsandthendelegatesfurtherdefinitionstotheCEOafteritcanacceptanyreasonableinterpretationofwhatithaswritten.

IfEndsarebeingdiscussed,thereisevidencethattheyhavebeendevelopedbasedonanunderstandingoftheowners’perspectives.


Board’sagendacycleincludessignificanttimedevotedtoownershiplinkage.

BoardhasclearEndsinplaceandthereisevidencethatownershiplinkagehasbeencloselyconnectedtotheEndsdevelopmentprocess.

BoardmonitorsEndsachievementregularly.

Boardleadershipdoesnotconsistof“approval”ofmanagementplans.

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3.BoardHolism: Theauthorityoftheboardisheldandusedasabody.Theboardspeakswithonevoiceinthatinstructionsareexpressedbytheboardasawhole. Individualboardmembershavenoauthoritytoinstructstaff.

Thisincludesatleast: Alldecisionsoftheboardarespokenwith“onevoice”whichisarrivedatafterappropriatedeliberation.• Theboard’s“onevoice”takestheformof

writtenpolicy,orinthecaseofdecisionswhichhaveonlyaone-timeactionassociatedwiththem,aminutedboarddecision.

• Boardmembersrecognizetheycanrespectively

disagreeindividually,butmusthonorandnotsabotageordisruptfulfillmentbyothersofBoardexpectations.

Nomemberorsubsetoftheboard,officersandcommitteesincluded,exercisesanyauthorityunlessgrantedbythefullboard.• NeithertheChairnoranyothermemberor

subsetoftheboardsupervisesordirectstheCEO.

• NoboardmemberevaluatestheCEO.

• Noboardmemberinstructsorevaluates any

staffreportingtotheCEO. • BoardCommitteesarenotassignedto“help”in

areasdelegatedtotheCEO. • TheChairhasnoauthorityovertheboarditself

otherthanauthoritygrantedbytheboard.


Referencestoboardinstructionsareclearlyreferringtotheonevoiceoftheboardasawhole.

Referencestoboardcommitteesareconsistentwiththerequirementthattheyareonlytohelptheboarddoitsownwork.

ThereisnoreferencetotheCEObeingaccountabletotheChair.Board committees are rarely, if ever, given authority to act as if they were the board


Boardminutesdonotshow“directions”totheCEOapartfromboardmotions.

Boardmotionstaketheformofamendmentstopolicyunlessadecisionhasonlyaone-timeactionassociatedwithit.

Theboardhasandenforcespolicystating itsexpectations thatboardmembershonourboarddecisions.

TheboardhasandenforcespolicythatpreventsindividualboardmembersfromdirectingorevaluatingtheCEOandstaff.

Committeeshavespecificcharters/termsofreferencefromtheboardspecifyingexpectedresultsandscopeofauthority.

TheboarddoesnotassignboardmemberstooperationalcommitteesformedbytheCEO.Board committees do not act with the authority of the board unless they are specifically granted that authority by the board for a limited purpose.

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Principle Potential Lower Level Definitions Potential Criteria for

Judging Consistency of Materials


3.BoardHolismcont’d Thisincludesatleast: Officersandcommitteesexisttohelpthefullboardaccomplishitswork,nevertohelptheCEOand/orstaff.[OverlapwithPrinciple8]

Topreserveboardholism,delegationofboardauthorityattheboardlevelshouldbeaccompaniedbyappropriatelimitsonthatauthority(similar to the way that the board delegates and limits authority to the CEO but these may be stated in either the prescriptive or proscriptive manner rather than only in a proscriptive one).• Theboarddoesnotallowindividualboard

memberstospeakfortheboardwithoutauthorizationofthefullboard.

CEOisexpectedtodealwiththeboardasawhole• CEOisexpectedtocommunicatetotheboardas

awholeandavoidlobbyingindividualboardmembers/groups.

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4.EndsPolicies: Theboarddefinesinwritingitsexpectationsabouttheintendedeffectstobeproduced,theintendedrecipientsofthoseeffects,andtheintendedworth(cost-benefitorpriority)oftheeffects.TheseareEndspolicies.Alldecisionsmadeabouteffects,recipients,andworthareEndsdecisions.AlldecisionsaboutissuesthatdonotfitthedefinitionofEndsaremeansdecisions.HenceinPolicyGovernance,meansaresimplynotEnds.

Thisincludesatleast:

1. EndspoliciesatthebroadestlevelcontainallthreeelementsofEnds.

2. Endspoliciesareclearlyseparatedfrom

meanspolicies.

3. Endsmustbebroadenoughtocapturethefullnessoftheboard’sintentbutrealisticallyachievableoverthelongtermorthetermspecified.

4. Givenprinciples1and2,becauseEnds

defineorganizationalpurposethelinktoowners’intentmustbeclear.


1.DorelevantreferencestoEnds

mention all three elements ofEnds?

2.AreEndsandmeansaccurately

separatedinrelevantreferences? 3.DorelevantreferencestoEnds

refertofullnessofintentandwithintheorganization’sabilitytoachieve?

4.Istheimportanceofdiscerning

owners’ intent as theprimary,though not necessarily only,basis for Ends developmentclear?Thatis,doesit illustratethat the owners’ intent isknown and weighed with anyother pertinent information intheformationofEnds.


1.Dotheboard’sEndspoliciescontain

allthreeelementsofEnds,atleastatthebroadestpolicylevel?

2.Dotheboard’spoliciesseparateEnds

frommeans? 3.Cantheboardevidencethatithas

considereddo-ability? 4.CantheboardevidencethatitsEnds

andEndsrevisionsreflectawisesummationofowners’intent?a.Cantheboardevidenceregular

dialoguewiththeownersonEnds(statistical,personalorattitudinal)?

b.Cantheboardevidenceotherinput

fromCEO,otherstakeholders,expertsetal.inordertoinformitsEndsjudgments?

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4.EndsPoliciescont’d 5.Istheboardspendingasignificant

amountofitstimeformulating/revisingitsEnds,talkingtoitsownersabouttheEndsandassessingtheimpactoforganizationalachievementofEnds(whichisclearlyforthecollectionofdecisioninformation,notmonitoringorincidentalinformation)?

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5.BoardMeansPolicies: Theboarddefinesinwritingthejobresults,practices,delegationstyle,anddisciplinethatmakeupitsownjob.Theseareboardmeansdecisions,categorizedasGovernanceProcesspoliciesandBoard-ManagementDelegationpolicies.


1. Theboardisaccountableforitselfandmustsystematicallyandcomprehensivelyestablish,andreviewitsadherenceto,boardmeanspolicies.a.Theboardwilldelineateexpectations

untilitcanacceptanyreasonableinterpretationandthendelegatefurtherdefinitionsanddecisionstotheChairorotherofficialbodiesoftheboard.

2. Boardmembersrecognizetheirobligation

tobringtotheboard’sattentionanythinginboardmemberorfullboardconductthatisinconsistentwithGovernanceProcessandBoard-ManagementDelegation(orequivalentlynamed)policies.

3. Theboardhasclearwrittenpolicies

outliningitsownprocesses,andregularlyevaluatesitselftoensureitisaccountabletoowners.


AremattersofboardmeansaddressedseparatelyfromEndsandmattersofstaffmeans?

Arethecoreelementsoftheboard’sjobdescriptionclear?1. ConnectionwithOwners?2. DeterminationofEnds,

ExecutiveLimitationsandboardmeanspolicies?

3. AssuranceofOperationalPerformance?


Theboardhaspoliciesthatsetoutallitsexpectationsrelatingtoitsownjobresultsandconduct.Itsjobresultscoveritsconnectiontoitsownersaswellasthedevelopmentofandmonitoringofgoverningpolicies. Itsconductincludestheconductandsupportofitsmeetings,thefulfillmentofitslegalandfiduciaryduties(includingaboardmembercodeofconduct)throughpolicysettingandmonitoring,aswellasitsdelegationandaccountabilityrelationshipwithitsofficers,committeesandexecutive.

Theboardoperatesinaccordancewiththeseexpectations.

Theboardhasanannualworkplanthatenablesittofulfillitsexpectations.

Theboardhasaprocesstoevaluateitsowncompliancewiththesepoliciestoassureitsaccountabilitytoowners.(Seealsoprinciple2).

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6.ExecutiveLimitationsPolicies:

Theboarddefinesinwritingitsexpectationsaboutthemeansoftheoperationalorganization.However,ratherthanprescribingboard-chosenmeans--whichwouldenabletheCEOtoescapeaccountabilityforattainingEnds,thesepoliciesdefinelimitsonoperationalmeans,therebyplacingboundariesontheauthoritygrantedtotheCEO.Ineffect,theboarddescribesthosemeansthatwouldbeunacceptableeveniftheyweretowork.TheseareExecutiveLimitationspolicies.

Thisincludesatleast: 1. Theboardmustcontrolbutalsoempower

operationaldecisionswhilemaintainingaccountabilityforthosedecisions.

2. Thisisideallytoasinglepointofdelegationand

isdonebybeingprescriptiveabouttheEnds(definingoutcomes,recipientsandworth)butproscriptiveabouteverythingelse(allofthemeans,includinghowtheoutcomesmaybeoperationallyachieved).

3. Mustcoverallunacceptableactionsand

situations,notjustsome. 4. Mustgotoalevelofdetailthatboardcan

acceptanyreasonableinterpretation. 5. ExecutiveLimitationsareboard’svaluesabout

operationalmeanswhichwouldbeunethical,unlawfulorimprudentwhichareclearlyputofflimitswiththeLimitations.

6. SothatitgovernsallstaffmeansinaresponsiblemannerbutdoesnotexcusetheCEOfromaccountabilityforachievingEnds,theboardmustsystematicallyandcomprehensivelyestablish,andreviewadherenceto,policiesthatproscribestaffmeansthattheboarddeterminesonbehalfofitsowners,tobeunacceptableeven if they worked for achievement of Ends or organizational capability to achieve Ends


• Istheneedfornegative

languagesetoutclearly? • Istheneedfor

encompassmentclear? • Istherelationshiptoriskclear?

• Istheneedtostopatthe

levelwhereanyreasonableinterpretationcanbeacceptedclear?

• IstheCEO’sfreedomclear?


Theboarddisciplinesitselftoitscommitmenttoacceptanyreasonableinterpretationofitspoliciesasstated.

TheCEOlistenspolitelytoindividualboardmembersbutonlyactsonthefullboard'spassedpolicies.

TheCEOchoosesthemostappropriatemeanstoachieveEndswithoutaskingboard’sapproval.

TheboardplacesnolimitsdirectlyonanystaffotherthantheCEO.

Theboardcanarticulatetothird-partieswhichexpectextensive“approvals”howthelimitationsapproachsimultaneouslyenhancesbothproductivityandaccountability.

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Potential Criteria for Judging Consistency of Board

Behaviors 6.ExecutiveLimitationsPoliciescont’d

a.Such“ExecutiveLimitations”mustcoverallofthepossibleoperationalmeansthattheboardconsidersunethicalorunlawfulorimprudentandthereforelikelytojeopardizetheorganization.

b. TellingtheCEOhowtodothejobwhileusing

‘negative’language,ismerelyanotherformofprescription.Limitationsshouldnotprescribepreferredmeansorattempttoprovidemanagementconsultancy,(forexampleusingtheoutdated"shallnotfailto"doublenegativeorthe"shallnot....withoutboardapproval").

c.Theboardsays(inpolicyandotherwise)allit

MUST,notallitCAN. 7. TheCEOisfreetochoose(i.e.theboardhaspre-

approved)anymeansthatdoesnotbreachthesepolicies.

8. TheCEOdoesnotviolateprovisionsofanyof

theExecutiveLimitations,givenanyreasonableinterpretationofthosepolicieshe/shechooses.

9. When the CEO is required by an outside

authority to gain board approval for action already granted through the board’s policies, the board shall approve those decisions for which there is evidence of compliance with reasonable interpretations of the relevant board policy for which there is evidence of compliance with reasonable interpretations of the relevant board policy.

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7.PolicySizes:Theboarddecidesitspoliciesineachcategoryfirstatthebroadest,mostinclusivelevel.Itfurtherdefineseachpolicyindescendinglevelsofdetailuntilreachingthelevelofdetailatwhichitiswillingtoacceptanyreasonableinterpretationbytheapplicabledelegateeofitswordsthusfar.Ends,ExecutiveLimitations,GovernanceProcess,andBoard-ManagementDelegationpolicesareexhaustiveinthattheyestablishcontrolovertheentireorganization,bothboardandstaff.Theyreplace,attheboardlevel,moretraditionaldocumentssuchasmissionstatements,strategicplansandbudgets.

Thisincludesatleast:1. Thebroadestpolicyinacategoryshouldbe

carefullyexpressed(written)tocaptureallcontingenciesthattheboardcanthinkofthatwouldbeencompassedunderthispolicycategoryandexpressesthevaluescoveredbythispolicycategory.

2. Themorespecificpoliciesbeneath,must

logicallyfallwithinthescopeoftheone“above”it.

3. Theboarddoesthis“untilreachingthelevelof

detail,i.e.,specificity,“atwhichitiswillingtoacceptanyreasonableinterpretationofitswordsbythedelegateetowhomthepolicyisaddressed,(seeprinciple9).”1

4. Subordinatepolicies,takentogether,donot

need,norshouldbeexpected,tocomprehensivelydefinethesuperiorpolicyunderwhichtheyfall.

5. Thesedocuments,takentogether,are

exhaustive,eliminatingsuchotherseparateboardexpressionsasmission,vision,philosophy,values2,strategy,andbudget.

6. Theyarecalledpoliciesintheterminologyof

PolicyGovernancebutcanbecalledbywhatevernameaboardchooses,aslongastheconceptisstrictlypreserved.


Architectureandprocessforpolicydevelopmentareaccuratelydescribed(value,category,level,increasingdefinitionwithlowerlevelsstopwhenanyreasonableinterpretationwouldbeacceptable).

Illustrationsofpoliciesindicatetheneedforcontainment(nothingbelowwhichisnotabove;sizeandbreadth).

Policydevelopmentshouldbedescribedasstoppingattheearliestlevelofdetailneededfortheboardtoacceptanyreasonableinterpretationoftherequirementsaswritten,allowingthefreedomofinterpretationbeyondthatlevel.

InExecutiveLimitations,thepolicyshouldalwaysstopshortofbeingbackdoorprescriptionorreachingthelevelofpreferredmethods(managementconsulting).


Boardmeetingsandpolicydevelopmentfollowthearchitectureandprocess(identifyvalue,sharedinterest,category,level,increasingdefinitionwithlowerlevelsstopwhenanyreasonableinterpretationwouldbeacceptable).

EachdirectionfromtheBoardiscapturedbyanddelegatedwithinpolicy.

Boardrefrainsfromgoingintoanymoredetailofdefinitioninpolicythanitneedstoreachacceptabilityofanyreasonableinterpretation.

Whentheboardisconsideringapotentialpolicydevelopmentitusestheconceptofpolicysizesandanyreasonableinterpretationindeterminingwhetherornotapolicyisneededand,ifso,atwhatlevelandplace.

Theboardexhibitsdisciplineinthisarea,identifyingandcorrectingthetimesortopicswheretheymaygoastray.

1 Carver Policy Governance Guide, latest ed. 2 Items such as core values, philosophy, statement of faith, etc., can be encompassed with the policies, generally under Governance Process policies.

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7.PolicySizescont’d

7. Itispossiblethataboardissueorconcerncould

fallundertwodifferentpolicies;theboardmustconsiderwherethebestpolicy“location”isfortheissueandplaceitappropriately.However,ifthedeliberationleadstothediscoverythattherearereallytwoormoreverydifferentvaluesorissuesthenthereisnothingwronginexpressingthosedifferentconcernsindifferentpolicylocationsorasseparatepoliciesinthesamelocation,oneforeachofthedifferentvalues.

8. EndspoliciesonlyrefertoEndstopics.Any

furtherdefinitionofthebroadestpolicybytheboard,nomatterhowspecific,isstillanEndspolicy.

Allboarddirectionisencompassedwithinthepolicies(broadtonarrow,allfourcategories)sotherearenodirectionsoutsideofpolicy.

Theboardisdisciplinedtoallowanyreasonableinterpretation,nottheirfavorite,ownorexpectedinterpretation.TheboarddoesnotgetinvolvedwithmattersorinterpretationsdelegatedtotheCEOinpolicyunlesstheyaredulynotedinpolicyandusedintheinterestofprotectingthatdelegation(suchastheuseofaRequiredApprovalsAgenda,boardissuedhonorariumsorrecognitionsdefinedasthepartoftheboard’sroleorwhentheyhavereservedtothemselvesthejoboftakingapublicpositiononanissueorissuesintheirjobdescription).

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8.ClarityandCoherenceofDelegation:

Theidentificationofanydelegateemustbeunambiguousastoauthorityandresponsibility.Nosubpartsoftheboard,suchascommitteesorofficers,canbegivenjobsthatinterferewith,duplicate,orobscurethejobgiventotheCEO.

Thisincludesatleast:1. Theboard’sexpectationinpolicycoveringthe

domainbeingdelegatedmustbeclearconcerningtowhomthepolicyisdirected.

2. Nosubpartsoftheboard,suchascommitteesorofficers, (aspositionsoftheboard),canbegivenjobsthatduplicate,interfere,obscure,oroverlapthejobofanotherdelegatee,suchastheCEO.

3. WithinthePolicyGovernanceframeworkEndsandELpoliciesaredirectedattheCEO,ifthereisone.GovernanceProcessandBoard-ManagementDelegationpoliciesaredirectedattheboard,itsofficers,membersandcommittees(thoughtheymayalsobeusedasinformativetothirdparties,suchastheownership).

4. Boardinstrumentssuchascommittees,aredelegatedworkthatpertainsonlytoboardresponsibilities,notoperationalormeansworkdelegatedtotheCEO.

5. Thedelegateeismonitoredaccordingonlytothosepoliciesdirectedtothem.Forexample,theCEOmustnotbemonitoredforsomeoneelse’sassignedaccountabilitiesfromtheboard.


Theneedforanidentifiedpointofdelegation(authorityandaccountability)shouldbeclear(beitsinglyinidealormultiplepointsorateam).

Descriptionsordepictionsshouldindicatethatspecificexpectationsshouldbestatedusingthepolicyarchitecture,theimportanceofputtingthedelegateeonnoticeofwhatisbeingdelegatedandhowtheywillbeheldaccountable,andthattheyareallowedanyreasonableinterpretation.

Alldelegationisdonebytheboardasawholeandinpolicy.

Noaction,behavior,process,orstructureoftheboardwillunderminethedelegationofthefullboard.

Depictsthattheboarddoesnotdirect,evaluate,ordictatetoanyindividualsorareaswhichhavebeendelegatedelsewhere.


Alldirectionsoftheboardarestatedinpolicyandclearlyassignedforfurtherdefinitiontosomepointotherthantheboard,(CEO,group,boardofficer,boardcommittee,etc.).

Neithertheboardnoranysubsetofitdirectsorevaluatesanypartyotherthanthedelegateeforthetopicunderconsideration.

Therearenoinstancesorindicationsofanypersonorbodyoutsideoftheboardoradulyappointedagentoftheboardmakingorevaluatingthedelegation.

Allexpectationsoftheboardarefullydefinedwithinitspolicies,nopersonorbodyisheldaccountableforexpectationswhicharenotfoundinpolicyorthatfallbelowtheanyreasonableinterpretationlevel.

Boardcommitteesandboardofficersworktosupporttheworkoftheboardanddonotexerciseanydirectauthorityoutsideofit(withotherpartsoftheboard,theCEOorstaff).

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8.ClarityandCoherence

ofDelegationcont’d

6. Theboardshouldnotdelegatetoasubordinate

personthrough,oraround,theaccountabledelegatee,suchasdelegatinganassignmentdirectlytoastaffpersonbeneaththeCEO.

a.WhenrequiredbylawornecessitytodelegatetoapartywhosefunctionsmightbenormallyunderthepurviewoftheCEO,theboardwillstillensurethatthedelegationsandaccountabilitiesareapportioneduniquelybetweenthatpartyandtheCEO.

7. TheboardholdstheCEOfullyaccountableforall

functionsbeneathhimorherandaccordstheCEOtheconcordantauthoritythatgoeswiththeaccountability.4

Indicatesthatdelegationmustbeclearlyapportionedsothatthereisnevermorethanonedelegatee(singleorgroup)foranygivendelegatedexpectation.

Theboardmustevaluatewhetherornottheexpectationhasbeenmet.ThisistruebeitdelegatedtotheCEO,agroup,theboard,oraboardofficerorcommittee.

Alloftheaboveshouldbedescribedaspertainingtobothoperationaldirections(EndsandExecutiveLimitations)aswellasboardmeans(GovernanceProcessandBoardManagementConnection).

Theboardhonorsitsdelegationsinwordanddeed.

Theboardneverdelegatesthesameexpectationtomorethanonedelegatee.

Theboardrecognizesthatanythingitdoesnotdelegate,itasabodyremainsresponsibleandaccountablefor.

3 Should this be necessary due to law, for example, (e.g., a professional in the organization such as a medical chief of staff), the same principles pertain. Two people must not be responsible for the same thing unless assigned it as team and jointly held accountable. 4 There is frequently confusion between accountability and responsibility. Accountability as used here is the collective or aggregate subordinate responsibilities throughout the organization for everything concordant with the scope of the authority granted. Accountability cannot be given away as can responsibilities, which are generally related to assigned or expected duties related to an individual.

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9.AnyReasonableinterpretation:MoredetaileddecisionsaboutEndsandoperationalmeansaredelegatedtotheCEOifthereisone.IfthereisnoCEO,theboardmustdelegatetotwoormoredelegatees,avoidingoverlappingexpectationsorcausingconfusionabouttheauthorityofvariousmanagers.Inthecaseofboardmeans,delegationistotheCGOunlesspartofthedelegationisexplicitlydirectedelsewhere,forexample,toacommittee.Thedelegateehastherighttouseanyreasonableinterpretationoftheapplicableboardpolicies.

Thisincludesatleast:1.InthecaseofEndsandExecutiveLimitation

policies(whenaCEOexists),thatdelegateeistheCEOwhohastherightto,andresponsibilityfor,areasonableinterpretation.

2.InthecaseofGovernanceProcesspoliciesandBoard-Managementdelegation,thedelegateeistypicallythechairman(CGO)exceptwhenexplicitlystatedotherwise,whohastherightto,andresponsibilityfor,areasonableinterpretation.

3.Aninterpretationisdeemedtobereasonablewhenitprovidesanoperationaldefinitionwhichincludesdefensiblemeasuresandstandardsagainstwhichpolicyachievementcanbeassessed.a.Thetermusedtodescribetheinterpretation

isunimportantaslongastheconceptisapplied.(Someofthecurrentlyusedvariationsinclude"reasonableinterpretation","operationaldefinition","reasonableoperationaldefinition"andpossiblyothers.)

4.Defensiblemeasuresandstandardsarethose

that:a.Areobjectivelyverifiable(e.g.,through

research,testing,and/orcredibleconfirmationofobservablephenomena.

b.Arerelevantandconceptuallyalignedwiththepolicycriteriaandtheboard’spolicyset.

c.Representanappropriateleveloffulfillmentwithinthescopeofthepolicy.


Thereisnostandardformeasuringareportoractionmeetingexpectationsexceptbasedonanyreasonableinterpretation.

Theauthoritytouseanyreasonableinterpretationisclear.

Itdepictsthattheboardasabody,notindividuals,judgethereasonablenessoftheinterpretation.

Itdepictsthattheinterpretationalwaysbelongstothedelegateeregardlessthemannerofmonitoring.

Itsuggeststhatincaseswheretheinterpretationisreasonablebutdoesnotmeettheexpectationsoftheboardthenitisstillacceptableforthedelegateetouse,(thoughtheboardmaythenadjustitsownpolicytoaddresstheissue).

Itdepictsthat ifthe interpretationisjudgednotreasonablethenthedatacannotbevalidorrelevant.

Ajustificationorrationalefortheinterpretationisseenasprovidingassistancetotheboard'sabilitytoevaluateitsreasonableness.


Thefullboardactivelydeterminesthereasonablenessoftheinterpretation.

Nodelegateeisheldaccountableforanythingbutareasonableinterpretation.

Whentheboardfindsaninterpretationthatisreasonablebutnotwhatitactuallyexpectsitisaddressedinthepolicydevelopmentprocess.

Theboarddoesnotfoistitsownorpreferredinterpretationsonthedelegatee.

Whenconductingmonitoring,establishingthereasonablenessoftheinterpretationisdonebeforeconsideringthedata.

Theboarddoesnotwaiverfromitsdutytoevaluatewhetherornotareasonableinterpretationhasbeendefinedandusedandwilltaketheactionitdeemsappropriateifithasnotbeenachieved.

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9.AnyReasonableinterpretationcont’d

5.Whentheboardexaminesthedelegatee’sreasonableinterpretation,andsubsequentlyisconvincedthattheextent,depth,andreasonablenessofinterpretationareobjectivelyjustified,acceptableandsufficientlyaddressesthepolicy,theboardshouldacceptitasreasonable.

6.Iftheinterpretationisreasonablebutnot

acceptable–doesn’taccomplishwhattheboardwanted,theboardmustsubsequentlyaddfurtherspecificitytoitspoliciestofurtherclarifyitsintent.

7.TheCEOisallowedanyreasonableinterpretation

atanytime,eveniftheyhaveprovidedtheboardwithanearlierinterpretation,anynewone(evenatthepointofmonitoring)isvalidaslongasitisreasonable

Anyprocessforevaluationofreasonablenessisdefinedinawaythatmeetstheabovecriteria.

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Principle Potential Lower Level Definitions Potential Criteria for Judging Consistency of materials

Potential Criteria for Judging Consistency of board behaviors

10.Monitoring: TheboardmustmonitororganizationalperformanceagainstpreviouslystatedEndspoliciesandExecutiveLimitationspolicies.Monitoringisforthepurposeofdiscoveringiftheorganizationachievedareasonableinterpretationoftheseboardpolicies.TheboardmustthereforejudgetheCEO'sinterpretationforitsreasonableness,andthedatademonstratingtheaccomplishmentoftheinterpretation.Theongoingmonitoringofboard'sEndsandExecutiveLimitationspoliciesconstitutestheCEO'sperformanceevaluation.


1. Monitoringrequirestwoacceptablethings;areasonableinterpretationanddatashowingevidencethattheinterpretationisbeingmet.a. Sincedatapointstointerpretation,

interpretationmustbefoundreasonablefirst.

2. Monitoringissimplycomparingdataagainstareasonableinterpretationofthecriteriastatedinthepolicy.a. CEOcanuseanyreasonableinterpretation

• CEO'sinterpretationisthefirststepnomatterwhatmethodofmonitoringisused.

b. Informationprovidedmustberelevantandsufficient.

c.Extraneousinformationistobeavoidedand/orignored.

3. Boardcontrols monitoringprocess,generallyavoidingsurprisesbyusingaschedulethatdetailsexpectationsoftheprocessa. Boardselectsfromthreedifferentformsof

monitoring(internal,externalanddirect),b. Boardselectsfrequencyofmonitoringfor

eachpolicydelegated,c. Boardselectsdateatwhichitrequires

reporttobeprovided,(orthedateissetbytheCGOiftheboardhasnotdoneso),and

d. Boardcanrequiremonitoringoutsideofthescheduleasisagreedtobytheboardasawhole


Whendescribingmonitoringitshouldalwaysindicatethetworequirementsforsuccess(areasonableinterpretationanddatashowingaccomplishmentofit)andnothingelse.

Itshouldnotsuggestlookingatorworryingaboutdataormetricspriortojudginginterpretation.

Anyformsorprocessesshouldconform.

CEOinterpretationisstartingpointformonitoring,canbechangedatanytime.

MonitoringprocessmuststartwithCEOinterpretation.

Extraneousdataorcriteriaarenotincludedasvalidorinformingtheboard'sassessment.

Boardshouldbedeliberateandproactiveinitsmonitoring,notreactive.

Nodescriptionofmonitoringorproposedprocessforconductingitconflictswiththesedefinitions.


Doestheboardappropriatelyassessthereport;

• Interpretationjudgedreasonable

• Dataevidencesinterpretation• Onlyrelevantcriteriaanddata

considered • Processisrecordedasboardact

Hastheboarddevelopedanddoesitfollowascheduleofmonitoringdesignedtofulfillitsaccountabilitytoowners?

Doestheboardinsistonandonlyassessrelevantinformationconcerningbothinterpretationanddatatoevidenceit?

Doestheboardinsistonthestandardoffindinginterpretationreasonableanddatasufficient

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Principle Potential Lower Level Definitions Potential Criteria for Judging

Consistency of materials Potential Criteria for Judging Consistency of board behaviors

10.Monitoringcont’d 4. MonitoringgivestheBoardtheconfidencethat

itisassuredofowneraccountableperformance.

5. Thedefinitionandprocessofmonitoringare

consistentwiththisprincipleandtheselowerleveldefinitions.

6. Newissuesthatarisewhichareoutsideofthe

existingsystemareundefinedcriteriaandnotrelevanttomonitoring.

7. BecauseEndsarestatementsofthe

organizationalpurposetobeachieved,thelinkoftheEndsinterpretationtoorganizationalimplementationmustbeclear.

Any"offschedule"monitoringshouldbeclearlyadecisionofthefullboard,notasinglememberorsubsetoftheboard.

Referencestoanymonitoringcriteriaordataoutsideofthosefoundinthepoliciesarenotedasnotmeetingstandardsofmonitoring.

Anymethodof"overseeing"managementshouldincludeanyreasonableinterpretation,data,andacomparisonofactualagainstexpectedbasedontheanyreasonableinterpretation.

IftheboardbecomesawareofinformationthatwouldcauseachangeincriteriaoriftheydiscoverthatareasonableinterpretationofthepolicyaswrittenisunacceptabletheydonotholdtheCEOaccountableforit,theydeveloppolicytoshiftthecriteria.

Doestheboardrequirethatmonitoringbeginwithareasonableinterpretationregardlessofthemethod?

Doestheboardtakeappropriateandofficialactionfornon-compliance(e.g.settingadeadlineforcompliance)?

Doestheboardchangeitsmonitoringschedulebyavoteoftheboard?Issuchavoteincorporatedintothepolicy?

Doestheboardprovidecommunicationtotheownersitrepresentsastoacceptableperformancewithinacceptableparametersofoperationalmeans

NojudgmentbytheboardoramemberofitliesoutsideofthemonitoringprocessandneverfocusesonanypositionbuttheCEO's.

Whentheboarddiscoversthepotentialneedfornewcriteriadoesithaveamechanismtoaddressitinpolicydevelopment?Ifso,doesitactuallyusethatmechanism?

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Principle Potential Lower Level Definitions Potential Criteria for Judging

Consistency of materials Potential Criteria for Judging Consistency of board behaviors

10.Monitoringcont’d Themonitoringprocessingeneralisdescribedasincludingthefollowingsteps:

1.Theboardbecomesawareoforascertainsdesiredcriteria.

2.Theboarddevelopspolicydefiningthecriteria.

3.Themonitoringisconductedagainstthedefinedcriteria.

4.Theboardrequiresbothareasonableinterpretationandactualdatashowingthatthereasonableinterpretationisaccomplished.

5.Incaseswherethereisnotareasonableinterpretationorwherethedatadoesnotshowaccomplishmentoftheboardassignsadeadline

DoesitmaintainthedisciplineofonlyholdingtheCEOaccountableforcriteriaasstatedtodateintheboard'sofficialpolicy,disallowinganyjudgmentonthingsnotstated?Istheboard’sprocessforassessingtheCEO’sperformanceofareasonableinterpretationofEndsbeingconductedinanappropriatemannerandtimeframe?

principles and model consistency framework june 2016… · policy governance® principles and model...

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