The frame makes the picture
It’s amazing what a good mat and frame can do for a piece of art. Choosing those things is an art in itself. The same applies to board policies.
In this practical guidance for board governance series, I have thus far considered why and how the board must own its responsibility for good governance and suggested some practical ways by which the board may exercise its responsibilities. I suggested that boards must learn to frame their issues, craft their policies, and limit their solutions in terms of ends rather than means. In my last post, I offered two questions that are useful for filtering and framing matters that may arise:
- Is this matter really a board issue?
- How can we resolve this issue in terms of ends rather than means?
The power of parameters
I have already asserted that good boards will engage issues in terms of policy rather than enacting a one-off decision that sets up the board to re-visit a matter year after year. But good boards go even further. They work with the administration to craft policies that differentiate between enduring board parameters and the specific, sometimes changing provisions that flow from those parameters. In so doing, they grant the administration discretion to amend derivative provisions as appropriate provided the changes fall within with the overall parameters the board has set.
A further means by which to ensure that the board works in terms of parameters is to develop the habit of stating policies in terms of proscription rather than permission. Some governance experts employ the term, executive limitations.
Look once again at the issue of faculty compensation I introduced in my last post: The president reports that faculty members are expressing escalating concern about their compensation. Several board members have also heard about faculty compensation dissatisfaction. The president requests a board discussion concerning how to respond.
How to frame policies
Applying the use of parameters and proscription [aka, executive limitations] to the matter of faculty compensation might result in a set of board policy statements that look something like this:
- The president must not permit faculty compensation levels to be incongruent with the institution’s core value of caring community.
- The administration will designate for board approval an appropriate external benchmark by which to gauge faculty compensation levels and criteria.
- The president may not present an annual budget for board approval that fails to include evidence of consideration of, and explicit rationale with respect to, faculty compensation increases.
- Absent explicit extraordinary rationale, budgeted faculty compensation must not deviate more than 5% above or below the board-approved external benchmark.
- The president may not fail to conduct valid periodic organizational climate assessments that encompass, among other things, employee satisfaction with compensation.
The specific parameters and proscriptions in the above proposals may not at all be the right ones for you, but you get the idea. Well-crafted policies will ensure that the board will rarely be required to revisit them. The president and administration have great latitude for discretion within such policies. They need not consult the board about the details. They don’t require permission when they act demonstrably within parameters.
The problem with policy vacuums
On the other hand, the absence or insufficiency of applicable board policies OR the over-prescriptiveness of board policies often drags upon and derails effective governance. Boards that learn to speak the language of parameters and executive limitations will contribute to institutional thriving.
In my next post, I will offer more specifics as to how boards can exercise healthy and effective supervision of the CEO.
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