Month October 2015

Month October 2015

Carver Policy Governance – It’s Only As Good As…

John Bauer October 15, 2015 blog, News No comments
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Interviews with nonprofit leaders, board chairs, and professional nonprofit association executives have reinforced my observation that board governance continues to be a problematic issue for many organizations. Numerous challenges have been cited: confusion about the role of directors, ineffective meetings, improper relationships with staff, conflicts between the board chair and the CEO, inability to recruit capable directors, lack of board evaluation, onerous committee structures, and infighting among factions. In spite of a plethora of resources available to organizations since Sarbanes-Oxley, many nonprofit boards continue to struggle.

Going back more than 25 years John and Miriam Carver addressed the challenges facing nonprofit boards, especially with respect to roles and responsibilities of the governing body in contradistinction to those of the executive management team. They called out the problems associated with older, traditional forms of governance that had contributed to the plagues of micro-management, confusion in roles and responsibilities, usurpation of authority in one domain or the other, and wasted time and energy in meetings. Through their program of Policy Governance®, boards and executives were trained in the development of policies that clearly articulated the limits of authority for both.

The contribution the Carvers have made to nonprofit governance cannot be underestimated. Numerous boards have used their model to greatly improve their performance and CEOs have had their leadership enhanced through clearly stated expectations and limits of authority. Boards have found greater relevance in their work and meetings are focused on the long range future of the organization instead of having to listen to mundane operational management reports.

Having experienced first-hand the effects of the Carver Policy Governance model in various nonprofit environments, I have come to my own conclusions about its application and have identified a number of factors that either support or hinder its effectiveness as a governance model. These contexts include private institutions of higher education, social service agencies, national professional associations, and denominational judicatories and foundations. The results have been mixed, to say the least.

When Carver Policy Governance Works

In those organizations where it works best, boards and executives exhibit a high level of understanding of the governance process. Generally, these boards are comprised of experienced, highly skilled professionals who are able to take the time needed to fully understand and utilize the rubrics associated with the model. There is also usually a very high level of trust between the board and the CEO and his/her staff. For example, when Merle Freitag was the CEO of the Lutheran Church Extension Fund of the Lutheran Church Missouri Synod, the Carver model was an ideal framework for effective governance. Board members would tell me how much they loved participation on the board, and how committed they were to supporting the leadership team because of the shared trust and confidence each had for the other.

When It Doesn’t

On the other hand, I served as a peer evaluator in the accreditation renewal process for several small liberal arts colleges in which the board had been talked into adopting the Carver model. Boards had been poorly trained, were comprised of well-intentioned but skill-deficient directors, and did not understand the nuances of crafting policy statements according to the model. In just about every case, I found that ineffective presidents used the model to withhold important information about the performance of the organization. Because the boards thought the president was operating within the policies they had established, they did not question critical areas such as financial viability, hiring practices, quality measures, and other factors that affected institutional reputation. I have observed similar adverse effects in social service organizations and denominational judicatories as well.

To Carver or Not to Carver?

What are the take-ways from two and a half decades of experience with the Carver Model? It seems to me that like any model, its effectiveness is only as good as the knowledge and skill of the people who are using it. Generally, in mature organizations with skilled boards of directors working with trusted and competent CEOs, the model can be an effective tool for keeping the focus of the board on mission-critical, long range issues.

On the other hand, when Policy Governance is adopted by inexperienced and unqualified boards of directors who lack the training and skills to craft appropriate policies and work within them, organizations put themselves at significant risk of violating their fiduciary and ethical responsibilities. And when CEOs push for adopting Policy Governance as a way to gain more freedom from the board, to withhold negative information from the board, or to somehow detach accountability for effective operational management from board review, trust in both the board and the CEO is compromised.

Unfortunately, it has been my experience that the investment of time and money it takes to sufficiently train a board and the management team in the development, implementation and effective execution of Policy Governance is formidable. On-going consulting contracts to ensure proper continuation of the model seem to be imperative. Even among organizations which claim to highly prize the model for its effectiveness, most do not follow exactly the patterns established by the Carvers and claim to use some “hybrid” type of the model. I have even heard debates among CEOs as to who is more “pure Carver” than others. I have yet to encounter a “pure” example.

The point of all this is that the form of governance can never become a substitute for the substance of governance. Boards need to be constantly vigilant in keeping clear the distinction between governance and management. But there are many different ways that objective can be achieved without having to adopt a sophisticated model that, in and of itself, can become the focus of board work as opposed to a means toward that end.

What are your thoughts?