It is surprising how few boards seem to fully understand and apply the influence, achieve the impact, and obtain the benefits, available to them through their policy making function. It’s almost as if this governance superpower is a secret weapon available and capable of being used by only a few. In this White Paper we will explain why boards should understand and make better use of their policy making potential.
Why do boards need to make better use of policy?
The reasons are simple. It is a constitutional reality that the ‘buck’ for organisational performance and wellbeing stops with the board. To fulfil this crucial stewardship responsibility a board must be able to provide effective direction and control to its organisation.
An increasing number of boards are recognising that their job is to lead, not to wait passively and then respond to what their executives want them to do. Saying that is not intended to diminish the importance of an effective executive team. It is just to recognise that in most organisations any authority their chief executives have, is delegated to them by their boards. This can be done deliberately and transparently, or by abrogation. If the latter is the case, it is unlikely that the board is discharging its legal and moral responsibility to ‘direct and control’.
For a board to be an effective delegator it must first express its expectations as to how that authority will, and will not, be exercised. And that is a core task of the policy making function.
The importance of board policy making is underlined by the practical reality that that while boards have full time accountability they are typically only convened occasionally and for comparatively short periods. Most executives spend more time at work in a week than their board members spend together in a whole year.
Because, therefore, boards are time poor they need the equivalent of a remote control system. The board’s policy framework is the tool by which the board directs and controls the organisation when it is not in session. A comprehensive, integrated policy framework allows the board to be fully accountable for the organisation’s well-being and performance while, at the same time, letting its chief executive and staff ‘get on with the job’.