GOVERNANCE AS STEWARDSHIP

1. GOVERNANCE AS STEWARDSHIP ACAC Workshop H. J. (Tom) Thompson January 25, 2008

2. What’s the Problem? Diagnosis Problem of Performance Classical Response Codify board’s role, clarify tasks. Objective Do the work better. Diagnosis Problem of purpose Reframed Response Enrich the job, engage the board. Objective Do better work.

3. Core Concepts • Change how we think about governance and how we think when we govern. • Board must think and work in 3 different modes • Each mode serves important purposes • The value added by a board increases as board: • Becomes more proficient in more modes; • Does more work in the third mode; • Chooses the appropriate mode(s) of work.

4. The Governance Triangle Strategic: Type II Generative: Type III Governance as Leadership Fiduciary: Type I

5. Type I: Fiduciary Mode • Board’s Central Purpose • Stewardship of tangible assets • Board’s principal role: • Sentinel • Board’s core work: • Ensure efficient & appropriate use of resources • Ensure legal compliance & fiscal accountability • Ensure accountability • Oversee operations • Select & evaluate CEO

6. Type II: Strategic Mode • Board’s central purpose: • Strategic partnership with senior management • Board’s principal role: • Strategist • Board’s core work: • Scan internal & external environments • Review & modify strategic plan • Monitor performance and competitive position via benchmarks, dashboards, vital signs

7. Why not just Types I & II? • Do Type I and II work. Do not become Type I or II board. • Type I and II work enable good governance. • Type III enables great governance. • Boards are often in wrong place at wrong time to govern at highest plateau.

8. Where Does Generative Thinking Occur? The Generative Curve Sense-making Problem-framing Strategies, Policies Plans, Tactics, Execution Time The opportunity to influence generative work declines as issues are framed and converted into strategies, plans and actions. Opportunity for Generative Work

9. Where Do Boards Participate? The Generative Dilemma Amount Generative Curve Typical Board Involvement Curve Time Trustee involvement is lowest where generative opportunity is greatest and increases as generative opportunity declines.

10. Generative Thinking • Invites prior questions and alternative hypotheses. • Produces sense making that spawns policy making and decision making. • Places perceived problems/opportunities in new light. • Perceives and frames “better” problems and opportunities. • Concerns values, beliefs, assumptions, ambiguities.

11. Generative Thinking is Not… • Pie in the Sky planning • Synonymous with bold innovation. • Normally about wholesale changes in core mission, or “bet-the-ranch” decisions. • Clever solutions to operational problems. • In lieu of fiduciary oversight and strategic thinking. • The answer to every question or crisis.

12. Catalytic Questions • What best explains recent successes/setbacks • What should we worry about? • What keeps the CEO awake at night? • What would we do differently as a for-profit? • What did we once know to be so that’s not? • What three words best describe this organization? • What will be this board’s legacy? • What would be gravest consequence to this organization if board ceased all operations for three years? • How would we respond to $10M challenge for best idea to be more valuable public asset?

13. Thinking Retrospectively • What best explains recent successes/setbacks? • If we are what we do, then who are we? • What did we once know to be so that no longer is? • How have we reconciled tradition and innovation? • What’s been the organization’s theory of change? • Where has there been resistance and why? • When did we overlook important generative work? • How are we smarter as a board? As an organization?

14. Working at the boundaries Where can we learn how others see things? Outside the organization: • Site visits to organizational peers and exemplars • Conversations with stakeholders • Discussions with other boards Inside the organization: • Volunteering • Staff-board dialogues • Multi-constituent work groups

15. New Covenant Between Board and CEO • Less micromanagement, more macro-engagement. • Fusion of thinking, not division of labor. • CEO escorts trustees upstream; board defers downstream. • CEO forthcoming, open-minded; board well-prepared, self-disciplined. • Both accept greater measure of success in exchange for lesser degree of control.

16. What Pol Gov Boards Look Like • Know who the owners are • Open and inclusive, but speak with one voice • Obsess about ends • Delegate “means” • Operate by policy • Have few broad policies in four categories • Future focus • Don’t look like “super CEOs” • Separate board and CEO jobs

17. Some Basic Principles • Board Job & Discipline • Systematic Delegation • Ends-Means Distinction • Expectations in Nested Sets • Evaluation & Monitoring • Board Meetings

18. Board Job & Discipline • “One voice” • Future oriented; visionary • Three jobs

19. Board Job #1 • Establish linkages with the “ownership” • Bridge between the community and the institution • Use information to contribute to ongoing ends development

20. Board Job #2 • Adopt governing policies • Express the “largest” values of the college • Four types of policies

21. Board Job #3 • Assure performance • Does not do the work, but assures it is done • Use policy goals and standards to evaluate performance

22. Ends Policies • Defines the results of the institution’s efforts • What good, for whom, and at what cost • Responsibility of the board to set

23. Ends Statements • Community Focus • Because of Your College the community will have an employable adult population with the work-force skills necessary for employment at a family-wage level. • Student Focus • Because of Your College students will obtain the knowledge, skills, and services needed to succeed in jobs and careers that meet the area workforce needs.

24. Board/Staff Relationship • Clear delegation to CEO • Clear accountability • CEO evaluation

25. Executive Limitations • Establish ethical, legal, prudent boundaries for college operations • Stated as prohibitions on behaviour • “Shall not” • CEO/staff can do whatever is not prohibited

27. Effective Boards • Ultimate test of board effectiveness is how effectively they ensure that the missions of their institutions are achieved. Cyril House, 1989

28. Evaluation & Monitoring • Job 3, Assure institutional performance • Assure executive performance • Does not do the work, but assures it is done • CEO is accountable for • Progress toward the ends policies • Adherence to the limits on means • Policy contains the standards

29. Thank You H.J. (Tom) Thompson President Olds College tthompson@oldscollege.ca (403) 556-8301