Published in the ECHO Journal, January 2014
Policy in this context is a written statement that causes others to take action in the attainment of a stated expectation. Governance is made up of all the things that people, in this case the members and the board, put into writing. These writings state the association’s expectations, limits and values.
Policy Governance: What Is It and Who Needs It?
Who needs policy governance? Boards who want to make a positive contribution. Other directors who are interested in self-promotion and personal glory will wish to continue doing business in the traditional way. The present model follows a pattern of when things don’t work out, look for someone to blame. The present model is reminiscent of politics of unaccountability. It is a game of holding the administration responsible for the lack of leadership by the membership’s representatives. The model of policy governance provides a discipline, a plan to attain a goal, values and a technology that will help you maintain the course. The following is a brief outline of the principles embodied in the concepts of policy governance. The primary contributor in contemporary literature is John Carver, PhD.1 Those with a view of history and the American experiment of government will recognize that the concepts parallel the ideals of a number of authorities: John Locke, John Calvin, James Madison, Thomas Jefferson and many more.
What is different from the way we have managed our associations and the policy governance model? In short, it works; the “old” method is not working. Outside observers are focusing on the tragedies of character and fairness of actions that represent our management style. Our association governments are under attack from courts and legislatures. Much is because the anecdotal information paints a dismal picture on our ability to govern ourselves. The old method was built on the architecture of the 1962 FHA, Form 1400 CC&Rs. Its concept was based on a total authority residing in a board as officers whose duties were both policy2 and executive3 in nature. There was little emphasis on the policy and significant ink was wasted on defining processes and procedures.
This old model persists in modern CC&Rs and bylaws. Most governing documents fail to define the role of the directors as the keepers of values and the leaders who translate the membership’s needs into coherent (written) plans. Rather, the model that controls our industry is the hands-on boards. While active involvement is necessary, the allure for boards to skip from issue to issue without a consistent vision and direction is the practice. Boards that act in an executive capacity are misguided. Boards are not in a position to monitor themselves or other directors objectively.
The old management model focuses boards on the urgent issues rather than the important and long-term issues. If a board is blessed with directors who have had executive experience, then the process may work satisfactorily. However, in most cases, due to the urgencies, the practices of board will be less than satisfactory. The role of the board as the people’s representatives to oversee is seriously conflicted with the need to oversee oneself, a function of which none of us are capable. The policy governance model depends upon the principles of the separation of powers and checks and balances between the board and management. Policy governance defines the roles or functions of the board, its committees and the management.
Some boards which exemplify a great relationship between the members are known as “trustees.” The role of the board /trustees is to own the organization on behalf of the individual homeowner. In this relationship, the board/ trustees act as a body, not as individuals. Acting as a body, their products are policies rather than procedures. The execution of various programs is not the role of the board. It is the function of those whom the board has reason to believe are qualified to carry out the association’s policies. The board/trustees’ duty is one of oversight, which means evaluating the results of policies rather than directing the means. The manager determines the means.
The benefit of policy governance is the legacy it leaves for future leaders to build on. Policy governance directs the board / trustees to deal with long-term and important results and leaves the urgent and details to those qualified. One rule followed is that all policies are in writing and the board /trustees speak with a single voice or not at all. In the absence of written policies,4 the manager is obligated to exercise judgment in dealing with issues. This rule is the keystone of having proactive management.
You have heard that associations should be run like a business. The problem is that associations are not like ordinary businesses with a goal of providing a service or goods and making a profit.
This lack of “obvious economic purpose” in associations allows leaders to forget the reason for the organization. It is necessary to build controls that direct the directors/trustees and their efforts. A way to focus the efforts of the leadership is to agree on the purpose or vision for which the organization exits. There is a board acceptance that the purpose of the association is to “protect the property values.” Beginning with that as the “end” for which the association exists will guide and translate competing views/values/objectives into a coherent written set of policies. A vision statement provides a compass for the board/trustees to develop policies that establish expectations and control results.
A Board/Trustees Need to Organize Policy Making into Groupings
In the policy governance model, the board/trustees lead by putting into writing their expectations. Some of the following are good guidelines.
Boards should consider the following:
- Does this issue concern protecting, maintenance or enhancement of the homes? If the issue cannot be connected to the vision statement, then this is not an issue for the association.
- Is this a board/trustees or policy issue or is it an operations issue? If it is an operation s issue then it belongs to management.
- If the issue is a board /trustees issue, what has been said about this issue before and how will this issue impact other policies of the association?
This article is written with the hope that this will stimulate the reader to make further investigation into the concepts of policy governance as a means of improving your associations.
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1Boards That Make Difference: A New Design for Leadership in Nonprofit and Public Organizations, John Carver – Copyright © 1990 by: Jossey-Bass Inc., Publishers, 350 Sansome Street, San Francisco, CA 94104
2A policy is a written statement which guides/describes to others the desired results, outcomes, or ends. In this case, the board’s policy statements define the results, limits and values.
3Executive, in this context, are the actions taken by management to “execute” the procedures and to devise strategies and tactics to attain the results, avoid the prohibited limits and safeguard the values. The Executive Branch of the organization is the management and is not the Policy Branch. The Policy Branch is the board, the membership and occasionally the laws.
4Written policies are defined above but come not only from resolutions of the board but from the association’s governing documents (Articles of Incorporation, Declaration of Covenants, Conditions and Restrictions, and Rules and Regulations as defined in Civil Code 1351).
Douglas Christison, PCAM, works for Christison Company, Inc. in Livermore, Calif. He can be reached at (925) 371-5700 or dougchristison@chiristisoncompany.com.