Practicing Policy Governance
From #106, May-June 2003
Practicing Policy Governance
One Board Member's PerspectiveB Y A N N W A T E R H O U S E
When I was elected to the board of Willy Street Co-op nearly three years ago, I knew that the co-op had approved a system of Policy Governance. I was interested in learning more about this system of governance from a "real life" perspective. I had studied Policy Governance with John Carver (its originator) when I lived in Minneapolis several years earlier and had read books about it, but had not found an opportunity to put it into practice.
At our first board training session after I was elected, we focused on our system of Policy Governance and learned that we needed to set up a monitoring system in order to put it into practice. Willy Street board had adopted a model set of policies (excluding Ends policies) nearly 20 years prior and had never adopted a monitoring plan.
How could something like this have happened? Hindsight suggests to me that the culture of the East Side of Madison, where Willy Street Co-op is located, was perhaps stronger than the initial commitment to implement Policy Governance. While the board had the best interests of Willy Street in mind in adopting this system of governance, it also needed to balance the interests of the local community...in short, how things had always been done. This new system no doubt seemed cumbersome and most likely a bit irrelevant to the then current system.
My first year on the board, I was part of a four-member task group that was charged with reviewing the policies for consistency and duplication and recommending a monitoring system. After studying the policies for several meetings, we decided to minimize our recommendations about actually changing policies and only suggest changes to reduce redundancies. The main part of our recommendations were to set up a monitoring system: how and how often policies would be monitored and by whom.
The board adopted our recommendations, and we began monitoring. I remember the first time we realized that some of the policies concerned board processes and that we as board members would be responsible for writing those monitoring reports. Reality set in.
Monitoring went pretty well that first year, identifying what we needed to know and what we didn't need to know. However, we quickly realized that the policies themselves were not consistent with current board operations. We were frequently "out of compliance" or not meeting the goals of our policies-and for good reason: the policies were out of date.
About this time the board established the Policy Governance Committee. First on our agenda was a thorough review of our policies in relation to a more current "model" set of policies prepared by CDS consultant, Marilyn Scholl. We also thought critically about our policies and how they compared with reality. Four committee members (three directors and one member-volunteer) worked during a 10-month period to bring our policies up to date; the general manager and board president also participated from time to time, and in June of 2002 we recommended our policy changes to the board. All recommendations were approved, including the monitoring plan.
We also began using a policy monitoring check sheet that listed each of the policies, who was to prepare the monitoring report, the type and frequency of the report, the due date, along with the date received, compliance, and board action or comment.
After a few months of monitoring our new policies it became painfully obvious to everyone that we were missing: Ends statements. Ends policies should answer the questions, "what ends," "for whom," and "at what cost." These are the policies that really distinguish Willy Street Co-op from any other co-op. These are the "outcomes" that the board is willing to be held accountable for achieving, as trustees acting on behalf of the membership. Our winter board retreat held in March of 2002 focused on developing Ends policies, with the help of CDS consultant Linda Stier.
The outcomes of that day included a recommitment to Policy Governance as our way of governing, an outline of the role of the board, an evaluation of how we were currently operating as a board, a clear understanding about the difference between Ends and goals, and notes about what makes Willy Street unique as a natural foods cooperative. We did not come to agreement about our Ends policies at that meeting. It wasn't until three months later at another Policy Governance Committee meeting that we began actually drafting Ends policies. They were recommended to the board in July and approved in October 2002. The final result was a culmination of three days of board planning sessions and interim work by the Policy Governance Committee.
The board recently requested that the Policy Governance Committee review the Ends policies for consistency with the goals stated in our bylaws. From that review, two new Ends policies were adopted by the board at its most recent meeting. The mission statement from our bylaws forms the global statement supporting the Ends policies that follow.
Our primary purpose in adopting Ends policies was to give our general manager enough long-range direction so that she could proceed, with other managers of the co-op, to develop annual plans that reflect this longer range direction. The board has stated that it will review the Ends policies at each board meeting and will receive a monitoring report from the GM annually. I fully expect that the Ends policies will continue to take shape over the next year as we discuss and refine our long-range ideas about the co-op.
For the past few months, the Policy Governance Committee has been the place where all ideas for how to improve our current set of policies are referred. For example, at our December board meeting we began the process of evaluating our GM. At that time we realized that our policies about how we evaluate our GM were not consistent with our process. These inconsistencies were referred to the Policy Governance Committee to draft policy changes that more closely reflected reality. Those changes have now been approved by the board and constitute a new policy regarding the GM evaluation process.
The evaluation of the general manager under Policy Governance should be based solely on the results of monitoring reports. However, at Willy Street we get information used to evaluate our GM from many other sources including: our auditors, the Finance Committee, the Personnel Committee, a survey of the entire staff, and, next year, a survey of vendors and others with whom our GM interacts during the course of the year. Our process is, therefore, not consistent with Policy Governance, and I do not foresee that it will change in the near future.
Another recent area of work for the committee has been to develop ways to implement the board's code of conduct policy. We have approved two forms, a code of conduct statement to be reviewed and signed annually and a conflict of interest statement of disclosure to be filled out annually. These forms are collected and filed by the board secretary. A new policy recently approved requests that each board member state any conflicts of interest relative to agenda topics prior to the beginning of each meeting or as soon thereafter as possible, based on the conflict of interest form that was filled out.
We currently have 31 pages of policies including a contents page and the two forms mentioned above. I anticipate that we will continue to update and strengthen these policies as we monitor and work with them over the coming years. Policy development is an ongoing process.
There are also some ways of working with Policy Governance that may need strengthening at Willy Street. In a Policy Governance system, for example, each agenda topic should relate to a board-approved policy. We currently do not match up agenda topics with policies. While many of our agenda topics do pertain to policies, we do not have a systematic way of monitoring the work of the board to assure that it relates completely to approved policies.
Our Ends policies are relatively new, and we are only just beginning to work with them and to assess what impact they will have on future directions of the co-op. I have learned that it takes a lot of time and paper to utilize Policy Governance well. Often I have thought that the committee process we use at Willy Street may be too time-consuming when it might make just as much sense to have one person draft a policy or a recommended change. But then I witness how three people working together come up with a much better product than one person could do alone and strengthen inter-personal relationships in the process. I am grateful that Willy Street Co-op is so well-managed that we can take the time to draft our policies with care. It would not be possible to manage a crisis and develop a complete set of policies simultaneously.
It is also important to have at least two people managing the actual policy changes in the computer. It is easy to make little mistakes that can change the meaning of a policy or leave something out altogether. One person should draft the changes as approved by the board and one person should append those changes into the complete set of policies. This check and balance strengthens the product, as there are two people reviewing everything. At Willy Street the policy changes are managed by myself, as chair of the Policy Governance Committee, and the board secretary, who prepares the final policy document for the board.
Policies do not invent themselves over night. Sometimes it takes months or even years to get a policy drafted, reviewed, and approved. While such a process may seem frustrating at times, there are many lessons to be learned in the process if one stays awake. Speaking for myself, I have learned to be patient with board process, to listen very clearly to what each person is saying and to not take anything for granted. I appreciate the different personalities on our board and the unique qualities that each person adds to the discussions. I have learned that it is important for me to think about important agenda items ahead of time and even to write down my own perspectives for personal reference, which sometimes get lost when I am in the board meeting and listening to all the other viewpoints.
In the final analysis I feel Policy Governance is worth the time it takes to do it well. It has kept our board out of day-to-day operations and focused on the important trusteeship role of the board. It gives the board good information with which to assess the overall direction of the cooperative. The policies clearly state what is expected of board members and how we are to operate. We have ways of holding ourselves accountable to act in the best interests of our cooperative. And the policies free us up to enjoy life as a board member!
Ann Waterhouse is the Policy Governance committee chair at Williamson Street Grocery Cooperative and a consultant with Cooperative Development Services (Eagleforth@aol.com).
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