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What is Board Governance?

What is Board Governance?. It is a Management Model that was developed by Dr. John Carver in the 1970’s. It was first published in his book “Board’s that make a difference”. Board Governance has been spotlighted on CNN, Credit Union Times and CU Journal. What does it accomplish?.

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What is Board Governance?

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  1. What is Board Governance? • It is a Management Model that was developed by Dr. John Carver in the 1970’s. • It was first published in his book “Board’s that make a difference”. • Board Governance has been spotlighted on CNN, Credit Union Times and CU Journal.

  2. What does it accomplish? • It makes good credit unions great! • It makes great credit unions better! • It benefits the MEMBER! • MEMBERship…….

  3. What does it accomplish? • It allows Board Members to be the contributors they want to be. • The focus is on future success and not second-guessing the past. • It saves time: Board, CEO and Staff. • No micro-managing or rubber-stamping. • Real Goals are set and reviewed often. • The purpose of the credit union is impressively fulfilled .

  4. Why does our Credit Union need it? • The Board of Directors benefit! • The CEO and Management team benefit! • The Staff benefit! • The MEMBERship…receives the most benefit! • Today the Carver Board Governance Model is in use by Credit Union’s all over the country and internationally

  5. Who has promoted the Model? • NCUA approved! • CUNA • Michigan League & other CU Leagues • CUES • Credit Union Times • CU Journal • Other Credit Union supporters….

  6. When do we use Governance? • We’re doing a good job, but you could be performing better. • Your credit union doesn’t need to be experiencing problems to implement. • Credit Unions with challenges will improve quicker using the Model. • With a seasoned Board or CEO. • When your Board or CEO experience frequent turnover. • The economy demands that we improve!

  7. Where is the Carver Model being used? • At Michigan First, NuUnion, E&A, Community Financial Members, etc. • At United Nations FCU, America 1st CU and other Billion Dollar credit unions! • At Credit Unions around the Country! • On 6 of the 7 Continents! • By non-profits, Fortune 500 companies, charities, municipalities, schools and other companies internationally.

  8. How does Board Governance work? • Policies are re-written to detail the roles of the Board and CEO. • The purpose of the credit union is defined. • The Member’s benefit is outlined and constant grading of success is implemented. • The Board Meeting is ran by the Board. • The CEO can be empowered by the Board, in the areas the Board deems appropriate. • Liability is decreased for Board and CEO.

  9. What issues are fixed? • More focus and benefit is realized for the Membership. • Board Meeting times are reduced. • The CEO’s role and abilities are clearly defined so they can work more efficiently. • Board Member’s spend more time with members and receiving education. • “Renegade” activities are prohibited. • The staff receives more time & attention.

  10. Focus of Carver Model: • Nonprofit and Public Organization Boards • Boards can be “forward-thinking” • Most boards are trapped in an inadequate design of their jobs • Board members mean well! • A Positive Prescription for Success • The Role of the Executive • The Problem is Process, Not People

  11. The Carver Outline… • Leadership by Governing Boards: A Vision of Group Accountability • Policy as a Leadership Tool: The Force of Explicit Values • Designing Policies That Make a Difference: Governing by Values • Focusing on Results: The Power of Purpose • Controlling Ethics and Prudence: What’s Not OK, Even if it Works • Strong Boards Need Strong Executives

  12. The Carver Outline… • Officers and Committees: The Chief Governance Officer and Other Divisions of Board Labor • Policy Development by Levels: Adding Details Judiciously • Making Meetings Meaningful: Creating the Future More Than Reviewing the Past • Maintaining Board Leadership: Staying on Track and Institutionalizing Excellence • Maintaining Board Leadership: Staying on Track and Institutionalizing Excellence

  13. What Can Go Wrong? • Time spent on the trivial • Reading reams of documents • Long-running meetings that accomplish little • Committees that are window dressing for what staff want to do • Meddling in administration • Staff in control of board agendas • Reactivity vs. Proactivity • Executive committee as de facto Board • Confusing about what is going on • Rubber stamping or Meddling • No incisive way to evaluate the Executive

  14. Broad Assessment • “Most of what the majority of boards do either does not need to be done or is a waste of time when done by the Board. Conversely, most of what boards need to do for strategic leadership is not done.”

  15. What is Governance? • “Reduced to its minimum, the purpose of governance is to ensure, usually on behalf of others, that an organization (credit union) achieves what it should achieve while avoiding those behaviors and situations that should be avoided.”

  16. What Should Boards Do? • Hire, evaluate and retain a good CEO • Provide strategic direction to the CEO • Establish, maintain and operate within governance policies • Provide fiduciary stewardship for and on behalf of the member-ownersGOVERNANCE POLICIES HELP WITH, BUT DO NOT REPLACE THESE DUTIES

  17. Does Your Board Need This? • Carver model is for the best of today’s boards, not just for dysfunctional ones. • Why is it particularly relevant to credit unions? • What is unique about not-for-profit (nonprofit) boards vs. for-profit or government boards? • How is success defined? • Producing What Owners Want

  18. What Can Go Wrong? • Short-term bias • Reactive stance • Reviewing, rehashing, redoing • Leaky accountability (meddling) • Unclear boundaries of authority • Complete overload

  19. Moving Toward Solutions • Framing the Governance Challenge • Inadequate Prescriptions • More involvement • Less involvement • Board as staff watchdog • Board as cheerleader • Proper Prescriptions • Board as manager (of the CEO) • Board as planner (with the CEO) • Board as adviser (for the CEO) • Board as fundraiser (for the CU) • Board as communicator (with the CEO) • Board as Trustees (for the members) • Board Holism (for the CEO)

  20. Effective Governance Will… • “Cradle” vision • Explicitly address fundamental values • Force an external focus • Enable an outcome-driven organizing system • Separate large issues from small ones • Force forward, proactive thinking • Facility diversity and unity • Describe relationships to relevant constituencies • Define a “self-discipline” role • Determine what information is needed • Balance over control and under control • Use board time efficiently • Use power appropriately

  21. Designing Policies • Get Rid of Unnecessary and Outdated Detail While Being Comprehensive • Make Policies Visible, Explicit, Literal, Active, Properly Classified, Centrally Available and Brief • Move Broad to Specific and Large to Small (Prioritize) • Set Board Policy, not Staff Policy • Hold CEO Accountable for Staff Policies

  22. Decision Levels Within Organizational Topics

  23. The Board Policy Circle

  24. Board Policymaking

  25. Focusing on Results: • The Power of Purpose

  26. Focusing on Results • Define Mission & Purpose • Resist the Captivating Allure of Organizational Events/Issues • Stay Outward Focused • Transaction With the Environment • If not “Ends”, it is “Means” • The Mask of Commendable Activities, Conditions, Structure, Technology, Etc.

  27. Controlling Ethics and Prudence • Manage between Rubber-stamping and Meddling • Avoid the Enticement of Operations • The Board’s Interest: Effectiveness, Approvability, Legitimate Control of Means, Focus on Prudence & Ethics • This Category is Executive Limitations Policies • Board Prescription of Means is “Anti-Innovative” and “Stultifying” • Start Broad-to-specific and Large-to-small • Transform Worries Into Policies • Limitation, Not Empowerment

  28. Policy Control of Target and Barriers

  29. Strong Boards Need Strong Executives • The Most Important Task of the Board • Defining a CEO • Nonprofits vest Chairman and CEO separately, unlike for-profits • Board Holism – Accountability • The Board Has Only One Employee • The CEO’s Work is Immaterial • Board Members and CEO are Colleagues

  30. Monitoring CEO Performance • Types of Information • Decision Information (Helps Board make decisions) • Monitoring Information (Goal attainment) • Incidental Information (Less important) • Methods of Monitoring • Annual Evaluation • Regular Reports • Criteria for Monitoring • Stay focused: Save board/staff time • Have clear criteria • Two-step: Compare results to policy.

  31. Hands-On vs. Hands-Off Board Tasks

  32. Additional Resources • HR Value Group Consulting • CUcorp’s “Policy Pro” Governance Module • John Carver’s “Boards That Make a Difference” • CU commitment to Board training with MCUL, CUNA and Others

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