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Boards use many different titles to describe the top staff person in their organization. We have seen executive director, superintendent, general manager, president, executive vice president, and many more. The title used, however, does not tell us if the incumbent of the position is a CEO (even if "CEO" is used as the title). The CEO, if one exists, is the first person below the board of directors who, as an individual, has authority over the organization. He or she is accountable to the board that the organization meets its expectations. And accordingly, the CEO, to be a real CEO, must have authority over the operational organization. Many top staff positions are given only partial authority to make decisions, and therefore cannot be held accountable for the performance of the organization. It is, after all, not possible to hold people accountable for decisions and actions over which they have no authority.
No. It is true that if the operational or executive portion of an organization is headed by a CEO, governance is easier, for the board doesn't have to deal with division of labor and its accompanying multiple delegations. But the board can still use all of Policy Governance if it chooses not to create a CEO position. Without a CEO it is still true that the board should make clear the worth of expected results for intended beneficiaries. It is still true that the organization will produce more creatively and productively if the board stays out of the way except for setting prudence and ethics boundaries. So unambiguous delegation of specified authority and mandatory accountability still must occur, even though without the simplicity of single-person accountability the board job is more difficult.
The board's chief evaluative interest is whether the organization achieves the board's ends and operates within the board's executive limitations. If a board has a CEO, then it holds him or her personally accountable for that organizational performance. The board doesn't evaluate the CEO so much as it evaluates the organization and pins it on the CEO. The organization's performance is disclosed by a monitoring system that, on a continuing basis, provides the board with applicable data. The running revelation of that system is the CEO's evaluation. If the board wishes to punctuate that continual stream, it may do so, as in an annual evaluation, for example. But nothing can come up in the punctuation that wasn't already in the regular monitoring system, since that system is exhaustive.
Yes, but not without a conflict of interest. It is an imprudent practice and one that is entirely unnecessary inasmuch as whatever value it contributes can be achieved with other ways that do not have so obvious a downside. After all, the board has complete access to the CEO without his or her having a board seat. And if the reason for a board seat is to give the CEO greater prestige, the board has only itself to blame for not vesting great prestige in the CEO role itself. As an aside, if the CEO is given a board seat without a vote, we treat that as not being on the board.
Never. The conflict of interest is obvious on its face. The fact that many if not most corporate boards in North America operate in this fashion is demonstration that their practices are not good models for anyone, even for themselves. This practice is open admission that the integrity of governance as a link in the chain of moral authority from owners-to-operators is woefully overlooked in the field.
Policy Governance in itself doesn't give either more or less authority than traditional governance practices. But what it does give, it gives explicitly and traceably. It is common for boards not using Policy Governance to give their CEO a great deal of authority implicitly. (As just one example, for the CEO to be the main source of a board's agenda conceals a great deal of unnoticed authority.) Moreover, Policy Governance doesn't dictate how much authority a board should give or withhold. It sets out a framework in which each board makes unequivocal decisions about how much CEO authority there is to be.
The CEO position is the board's guarantor of organizational performance. Once the board has defined desired performance, the real work begins. Boards that value performance desire and deserve a powerful CEO. So it is to the board's advantage that the CEO has as much authority as the board can prudently grant him or her. And, of course, it is to the board's advantage that the CEO be successful. The amount of authority given to the CEO is only limited by the board's own need to be accountable to the ownership and before the law. But since it is the board deciding how much authority to give, setting the limits, and defining success, the CEO is always less powerful than the board.
A Policy Governance board sets out comprehensive expectations for organizational accomplishment, then demands credible performance data relevant to each expectation. The board can choose to receive these data from sources other than the CEO (e.g., an auditor). So Policy Governance does not require more trust than board practices in which expectations are less explicitly set and monitoring is less precisely targeted. It actually requires less. Frankly, the more substantial trust issue in organizations is for the CEO to be able to trust the board (e.g., never to evaluate on unstated criteria or never to leave the CEO to the mercy of individual board members). Consequently, Policy Governance not only addresses CEO trust issues, but requires board behavior that is trustworthy.
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