Policy Governance

Description

David Boyle:

"Under this approach, boards don’t try to control managers as if they were an occupying army, but respect their expertise and lets them use it. The board here doesn’t fight with the management over power, but carves out a clear and sovereign role for itself that managers can’t ever take.

Policy governance is permissive rather than restrictive. Instead of checking that the actions of management were acceptable, it wishes to know only two things. Firstly, will the actions of management take the organisation closer to its goals as the democratically elected board have defined them, and secondly whether the board have stepped outside the framework laid down or not.

Policy governance gives managers targets that look like what success should look like. If an organisation has targets which are ultimately unmeasurable, then the board cannot say whether the money they’ve spent to achieve them has actually made an appreciable difference, in which case, why bother? It also defines what would be unacceptable in achieving those goals within the bounds of what board consider beyond the pale. There are lots of benefits to this approach, but I want to quickly outline just four which, taken together seem to address some of our movement’s fundamental issues.

Firstly, a permissive approach means no nitpicking. When managers seek board approval, it moves focus away from the strategic (what are we here to do?) to the operational (is the height of shelving in our stores right?). I’ve been involved in boards in co-ops and outside of co-ops all my adult life, and the curse of the micro-managing committee members isn’t an aberration or an occasional hazard. It’s a structural flaw we’ve singularly failed to deal within 150 years of democratic governance, and we’ve tolerated poor governance as a result. In software terms, it’s not a bug but a feature.

This flows into the second benefit. A policy governance board doesn’t need directors with the understanding of a lifetime in retail or banking. Their expertise comes from their position as a representative of members and their skill is deployed not in second guessing expert managers, but in listening to what ordinary members want and need from their co-operative.

As board members aren’t scrutinising executives, they’ll not be judged against an unattainable level of executive oversight. So, instead of pretending democracy’s failure to elect the right people is the problem – a toxic idea which undermines the very notion at the heart of co-operation – we use democracy to do something very important and meaningful, which is to place the most important decision of all, of why and how and whether an enterprise should exist in the hands of the people who democratically own it. That creates a third benefit for members. A policy governance board, freed from needing to keep pace and keep up, can stop and look around, and ask members what they want. It stops being a disconnected elite with long-career paths, all bound by a confidentiality clause, which prevents any of the people responsible for holding them to account.

Policy governance boards do not need to adhere to collective responsibility for all decisions. People understand different people can have different views, and that on big strategic questions, it’s rarely about the right answer as it is about the right process to get an answer. Members have the freedom to agree to disagree, as long as they all agree the process by which they came to any conclusion was fair and as it was supposed to be. And if the process wasn’t fair as it should be, then they should be telling members about it.

Policy governance boards tend to be more open and transparent as a result, since discussions about big bright futures need to take place in public with the people whose assets are at issue. It’s an approach that feels much more comfortable with the open-source world we live in rather than the command-and-control one which we used to.

That gives us the final benefit, that if the threshold for meaningful involvement gets lowered for directors, it gets lowered for members too. They can have a genuine role in this process above and beyond being one of the frankly appallingly low number who vote; I’d bet more than three per cent might be more interesting in participating in meaningful discussions in a variety of ways about what the point of a co-operative is and what goals might be set. A bigger bank, or get out of banking because it’s low margin and expensive? More pharmacies, or more housing instead?" (http://daveboyle.net/coops/coops-and-policy-governance/)