Corporate Boards That Create Value
Governing Company Performance from the Boardroom

A Book by John Carver, creator of the Policy Governance model
and Caroline Oliver, Policy Governance consultant
San Francisco: Jossey-Bass, July 2002

"One of the most striking observations about corporate governance is that we can say it with a straight face."

 

The governance of equity corporations has never been exemplary. But recent events have exposed the fecklessness of boards of directors, their underdeveloped methods, their inability to control management appropriately, and the futility of piecemeal solutions to defective board leadership.

Investor confidence has plummeted; some boardrooms have become bunkers. Post-Enron, WorldCom, and other debacles, Congress and pundits jumped eagerly into the fray. There have been intensified calls for greater independence, separation of CEO and chair roles, rigorous audit committees, and accountable accounting. Almost without exception, all suggestions involve enhancing this or that feature of boards as we know them. These well-intended efforts illustrate that 'the more things change, the more they stay the same.'

Corporate governance has advanced as medicine would have, if there had been no biochemistry, germ theory, and other conceptual models to put single issues in perspective. Advances would have been limited to trying this herb, bleeding with better leeches, and exorcising a few demons. Governance has been handicapped because it has no sound basis in theory. Improvement is a matter of one "best practice" following another.

But pieces of wisdom never spur excellence like building from a coherent model or paradigm. Absent such a foundation, boards see their work as an upward extension of management, a group form of the managing process. That perspective brings confusion of roles, conflict between strong board and strong management, and often the pre-empting of board authority by managers. A bizarre inversion occurs in the chain of command: In most corporations, management governs governance instead of governance governing management. Proper governance is not management one step up at all, but ownership one step down.

With an unspoken and therefore unexamined point of departure, conventional improvements can only nip and tuck around the edges of an unworkable scenario-arguing how many inside directors are too many, whether the CEO should be chair, skirting the edge of believability about what constitutes independence, and so on.

John Carver's Policy Governance model began not from these superficial issues, but from a search for universal principles about the nature of governance. It yields a board accountability system that is shareholder-focused, but board- and management-empowering at the same time. Sir Adrian Cadbury recognized the model as the first and thus far only "theory of governance." It is widely known internationally in NGO and in some governmental settings, but so far relatively unknown in corporate boardrooms. Corporate Boards That Create Value will make this unique board "operating system" more available to business leadership.

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Corporate Boards That Create Value has received encouraging endorsements by leaders in corporate governance:

"We have waited long for a book which analyzes the role of boards from first principles. The Policy Governance model fills that bill and thereby makes a fundamental contribution. For the first time, we are offered a fully integrated and coherent system of governance, a significant advance in management thinking, as near a universal theory of governance as we at present have."

"Corporate Boards That Create Value fills a large need. This book sets forth a clear, convincing and comprehensive framework for corporate governance. It is well written and leaves the reader with that most rewarding sensation -"I've got it, I understand it, It's right". People today need to be concerned about corporate power. Corporate Boards That Create Value is a must read."

"Dr. Carver's ideas-his Policy Governance model-on how boards should work makes an unparalleled contribution to this essential subject."

"Corporate Boards That Create Value is a hugely significant and timely edition to current thinking about governance systems for corporations. Carver and Oliver effectively reposition the board in relation to corporate owners and in relation to management and enhance our understanding of the distinction between governance and management. Corporate boards would be well advised to engage in the discipline of testing the Policy Governance model developed in this book against their existing systems of governance."

"John Carver and Caroline Oliver put forth a powerful and compelling process for board governance that indeed challenges our paradigms in today's environment. As board members, we would do well to heed the principles of this process. The absence of a governance model as described in this book is a significant failing of the boards of directors as a body."

"The message of John Carver's and Caroline Oliver's book is clear - governance is the job of the board. It must be the key focus of the board and under its direction and control. By actively implementing the roadmap provided by the authors, progressive boards will be able to demonstrate that they are committed to promoting a culture of good corporate governance."

"In this post Enron era, directors will be forced to review their governance process and to search for alternative ways to better represent owners. Corporate Boards That Create Value by John Carver and Caroline Oliver is a must read for those dedicated directors. Carver's Policy Governance model focuses our directors on developing the ends for which our organization exists, while holding the CEO accountable through written policies for their accomplishment."

"In Corporate Boards That Create Value, Carver and Oliver offer totally new insights into an old topic. This rare and remarkable book provides a logical framework for governing in an efficient, accountable manner. The authors' easily understood and brilliantly explained methodology shows how directors can provide complete accountability to shareholders and also empower the management of the enterprise."

 

"Carver and Oliver give us a clear, practical, and effective model for governance. This is a model that enables boards to fully grasp their role as trustees and yet frees management to achieve the "ends" the ownership wants and deserves. Must reading for board members and executives."

"Carver and Oliver provide a unique and innovative model for corporate governance. What's even more remarkable is that the structure of the model allows corporate governance policy to be crafted to tackle the real life day-to-day issues facing both boards and management. In so doing, the model provides all stakeholders the comfort of knowing that a rationally structured approach exists for addressing corporate governance and, thereby, fiduciary responsibilities."

"Corporate Boards That Create Value is a veritable tour de force in the area of corporate governance, a major breakthrough in board leadership. In my opinion, the title Chief Governance Officer and the special illumination of the role and responsibility of those who would serve in that position are the greatest furtherance of servant leadership since Robert K. Greenleaf wrote his original essay, 'The Servant as Leader.'"

"Carver and Oliver will challenge your most fundamental beliefs about corporate governance -- a true breakthrough in thinking. Investors, directors, and executives should heed their message."

For books and other commercially available publications about the Carver Policy Governance model, go to Publications. For a complete listing of all John Carver publications on governance and management, go to Bibliographies: John Carver.