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Introduction to Policies by David Esau – March 1995

People’s Food Co-op’s Board of Directors is moving to a Policy Governance framework for its decision making. This framework, originally developed by John Carver in his book, Boards That Make A Difference (San Francisco, CA: Jossey-Bass Inc., 1990), has been applied to PFC with the generous guidance of Ann Hoyt, Associate Professor at the University of Wisconsin Center for Cooperatives.

John Carver’s book identifies 14 goals of an effective model of governance (pp. 19-21). It should:

  1. Cradle vision.
  2. Explicitly address fundamental values.
  3. Force an external focus.
  4. Enable an outcome-driven organizing system.
  5. Separate large issues from small.
  6. Force forward thinking.
  7. Enable proactivity.
  8. Facilitate diversity and unity.
  9. Describe relationships to relevant constituencies.
  10. Define a common basis for discipline.
  11. Delineate the board’s role in common topics.
  12. Determine what information is needed.
  13. Balance overcontrol and undercontrol.
  14. Use Board time efficiently.

Of these, probably the most important and fundamental is the need to establish the organization’s fundamental values. Carver goes on to recommend six strategies to improve a Board’s performance under the Policy Governance model (summarized by 1994–95 Board President David Esau):

1. Be Obsessed with Effects for People

  • Don’t Ponder Ends, Attack Them: Effective Boards must be passionate about the results they are trying to see achieved for those to whom they are responsible.
  • Keep the Mission Out Front: The Mission Statement should be omnipresent and integral to everything the Board does.
  • Invigorate the Ends Debate: Encourage input from all sources to obtain diverse viewpoints from which to choose.
  • Drive an Ownership Ends Dialogue: Work with other boards who seek similar ends for similar owners.
  • Don’t Be Seduced by Cost Control: Focus on greater quality, and costs will decrease as a by-product. The reverse is not true (that is, cutting costs will not lead to an increase in quality).

3. Dare to Be Bigger than Yourself

  • Keep Trusteeship Up Front: Remember who you are responsible to.
  • Lead Leaders: Empower staff to make decisions, and even mistakes, instead of avoiding errors at all costs.

4. Respect Your Words

  • The Board’s main product is words (i.e. policies); use few of them, with minimal duplication, and observe them scrupulously. Relate all new policy ideas back to existing policies. Present them in an attractive way that highlights their importance.

5. Invest in Selection and Training

  • Recruit Those Who Will and Can Govern: look for potential Board members who can operate within the Board’s framework of policy writing and delegation, and who can think in the long term.
  • Prepare New Members: Acquaint them with the Board’s policies and approach.
  • Consider Knowledge an Investment: think of the cost of ignorance as well as the cost of training.

6. Surmount the Conventional Wisdom

  • Don’t be dragged back down into day-to-day operations by those who believe that’s what a Board should do.
  • Perpetually Redefine Quality
  • View the Past as Inspiration, Not Impediment. (See Carver quote on the title page).
  • Pursue Excellence More than Solve Problems: Be proactive in looking for areas to improve.
  • Realize that Good Begets Better: It’s easiest to improve policies when you already have a good relationship with the GM.
  • Remember that Excellence Begins in the Boardroom: Each Board member must participate, accept responsibility, and cherish diverse ideas and viewpoints.

Under the Policy Governance framework, the Board establishes general policies in several areas:

  1. The ends the organization is to achieve;
  2. The means by which those ends are to be achieved, to the extent (limited, it’s to be hoped) the Board feels it is necessary to specify means;
  3. Limitations on the means management can use to achieve the desired ends.
  4. Policies related to the Board’s internal activities.

The main intent of the Policy Governance framework is to clarify the limits of Board and Management authority. The Board establishes policies in those areas about which it cares strongly. Management is evaluated only on how well it fulfills those requirements, and is otherwise free to act as it sees fit. If the Board disagrees with an activity that is currently unregulated by policy it can establish a new policy for the future, but has no right to judge the activity in the past.

A second intent is to free the Board to concentrate on the future. The Board does not spend its meetings reviewing details of the financial statements or hearing lengthy descriptions of store activities. Monitoring is done primarily through scheduled reports from the GM and concentrates only on the few specifics it decides are important and has written policies about. Rather, the meetings are spent on planning future directions, and discussing new policies.

When fully implemented, the policy governance approach will make Board work less time-consuming, more interesting, and more attractive to potential Board members. It should also free management from some of the time-consuming work of preparing complicated statements for Board meetings, so that they can concentrate on operating PFC more efficiently and effectively for its Member/Owners.

Note: The following abbreviations are occasionally used in the policies:

PFC: People’s Food Cooperative
BoD: PFC’s Board of Directors
GM: General Manager
Management Team (MT): The GM, store managers and any other persons the GM designates as being of management level.

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