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The Pitfalls of Policy Based Leadership

Guest post by: Tim Schneider

Article Overview: In a nutshell, policy based governance is based on separating organizational purpose from all other organizational issues. Dr. Carver calls this “ends” versus “means.” A board of directors is responsible for the large scale, purpose functions while the chief executive, president or other company officer is responsible for all tactical and operational issues. Dr. Carver proposes that duplicity is reduced and lines of accountability are made much clearer.

The Pitfalls of Policy Based Leadership

One of the most interesting management science debates centers around the use and appropriate application of policy based governance for non-profits, the public sector and even, private business entities. This debate has raged for since the widened use of this board and executive management model.

Dr. John Carver is the credited author of the policy based governance model and has authored several key books on the subject. He currently works, with his wife, as the leading consultant for policy governance in the world. His seminars on the subject are packed and he is in great demand for his insight and strategy.

In a nutshell, policy based governance is based on separating organizational purpose from all other organizational issues. Dr. Carver calls this “ends” versus “means.” A board of directors is responsible for the large scale, purpose functions while the chief executive, president or other company officer is responsible for all tactical and operational issues. Dr. Carver proposes that duplicity is reduced and lines of accountability are made much clearer. The ability to assess performance is based on meeting the expectations set by the governing board and board members are instructed to stay away from operational issues. The board will represent all the interests of owners and stakeholders while company officers execute the policies that are set.

This is not new science. The original ends separated from but supported by means guy was Machiavelli. A little more recent than the Prince was the highly proliferated “Management by Objective” model. This leadership practice was built on the hierarchy of tasks supporting objectives and that, through achieving the key objectives, an organization would succeed.

Many organizations have adopted degrees of policy based governance models with the most successful being reported in the non-profit sector. Still other organizations have backed away from policy based governance after a trial period and encountering serious problems. Those problems reported include a lack of nimbleness in organizational direction, confusion with policy versus operating procedures, lack of initiative from key organization leaders, lack of ownership from team members and a lack of meaningful participation.

Without completely crippling this horse, policy based governance is an easy escape with potentially debilitating consequences. Policy based governance can stifle ingenuity, build a corporate culture of complacency and completely eliminate the need to hire good people. Don’t drink this Kool-Aid.

A more effective approach for most organizations is the VOS model. In this management model of governance, “V” represents vision and mission. The governing board is responsible to seek input, establish and frequently revisit the organization’s vision and mission. The accountability for insuring that all activities support the vision and mission rest with controlling board.

The “O” in this model is for objectives. The governing board sets critical performance objectives with the input from organizational leadership and stakeholders. The governing board must insure that the key objectives support the vision and mission and hold key executives and leaders accountable for achievement of these quantifiable results.

The final letter in this model is “S” which represents systems, including human, process and technical. The governing board’s responsibilities in systems include that the systems are in place to achieve objectives and, in turn, support the vision and mission. This will always insure that there is a connection of reasonableness between key objectives and the resources needed to achieve them. Maximum latitude and flexibility is needed in these systems and changes to systems should be encouraged.

By no means is the VOS model a panacea for organizations but early returns would indicate a higher performance level and greater team member satisfaction for this model compared to policy based governance. This appears to be especially true when combining VOS governance with a service based culture. Combine that with great people working within the systems, and you may have a winner on your hands.

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Article Tags: business entities, duplicity, executive president, governance model, governance models, governing board, john carver, key books, key objectives, leadership practice, machiavelli, management model, management science, new science, operational issues, organizational purpose, policy governance, proble, profit sector, purpose functions



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