Here's the question I've drafted for Board decisions.
Which statement most closely describes the level of decision-making your Board engages in most of the time?
(a) Most of our Board’s decisions are about our ends – the outcomes that our organization will achieve.
(b) Most of our Board’s decisions are about our means – the tactics that our organization will pursue to achieve our ends.
(c) Our Board’s decisions are about equally divided between our ends and our means.
(d) Most of our Board’s decisions are about something else besides our ends or our means.
The "right" answer, of course, depends on the specifics of your own situation, but I plan to make the case that, for high-functioning Boards, the correct answer is either (a) or (c). Boards interested in increasing their effectiveness should be sure that most of the decisions they make are about the ends, or outcomes, that their organization will achieve.
For my own association, the answer is (a). Inspired by the Carver Policy Governance Model used by one of our former Board chairs with his corporate Board, my association's Board drafted a clear Governance Policy for our organization that, like Policy Governance, clearly separates responsibility for ends and means determination.
The two most relevant points of our Governance Policy are:
“Ends” determination is a pivotal duty of the Board. The Board will determine what results are to be achieved, for whom, and at what cost, and clearly express these “ends” in the mission, strategic priorities, ends statements, success indicators, and budget of the association.
Tactical responsibility is delegated to the CEO. The “means” employed to achieve the association’s “ends” are the responsibility of the CEO and the staff members and association volunteers he or she assigns and recruits to assist him or her. In providing needed direction to the CEO, the Board will only describe the “means” that are unacceptable, and will neither approve nor micromanage staff-level activity. The Board will rigorously monitor the performance of the CEO, but only to the degree that identified “ends” are being achieved without violating the unacceptable “means.”
In practice we've found the need to split the traditional strategic planning process used by many associations into two discrete segments. The first segment is called the Strategy Agenda, it is a work product of the Board, and it contains the following elements:
Mission: This is the overall purpose of our organization, our highest possible "end," the goal towards which all of our activities should lead. It's what the organization is here to do. Specifically, for us, it is to strengthen the fluid power industry.
Ends Statements: These are the high-level outcomes that we will achieve for our members. They all support achievement of our mission, of course, but they also deal with the specific benefits that will accrue to our members if our subsequent programs are successful. In previous blog posts, I have sometimes referred to our ends statements as the "business units" of my association, because they define broad areas of activity and service delivery. At our Board table, we frequently ask the question, "What business are we in?" The ends statements are the answers to that question. They describe how we will fulfill our mission. We currently have five ends statements. To give an example, we refer to one as "Effective Forum." It says that our association will provide an effective forum for fluid power manufacturers, distributors and suppliers to advance their collective interests.
Success Indicators: These are the metrics by which we'll know that we are achieving our ends statements. In determining success indicators, the Board has to carefully review the capabilities of the organization, because in order to be a true success indicator, not only does it have to reflect advancement towards the ends statement, it also has to be something that the organization can affect, and can measure. Frequently in our environment, metrics are chosen based on only one or two of these conditions. It takes real work, often including experimental activities in the marketplace, to identify metrics that meet all three conditions: the organization can measure it, the organization can affect its movement, and its movement reflects advancement towards the outcome described by the ends statement. To continue my example, in my association, our "Effective Forum" ends statement has four success indicators associated with it: (1) Is the membership growing? (2) Are members generally participating in our activities? (3) Are members engaged in our leadership functions? and (4) Are members attending our networking events?
One final point, for each of the success indicators, our Board determines something we're beginning to call our Idealized State, by which we mean the level of success that equates with fulfillment of the ends statement. Building an effective forum for our industry is an important objective, but we've found that all of the success indicators associated with that ends statement are susceptible to the law of diminishing returns. Sure, you'd like to have 100% of your members attending your networking event, for example, but is that really worth the investment of resources it would take to make such a result come about? Can not the effective forum you're looking to build come into existence with "only" 90% of your members in attendance at the event? What about 80%? 70%? Finding the line between what is needed for optimal performance in one area, while reserving resources to tackle all the other areas defined by our Board has been one of the most challenging discussions my Board has engaged in.
And that's it. Believe it or not, the vast majority of decisions made by our Board fall into one of these four categories. What is our mission? What are the ends we must pursue if we are to fulfill that mission? What are the metrics we should track if we are to know that we are achieving our ends? And what level of success within each metric is required if we are to declare victory? It is the way the Board decides to answer those questions that we call our Strategy Agenda.
All other decisions -- including answers to questions like what goals should we set this year to move us closer to our idealized states, which programs should we conduct in order to achieve those goals, and how should each of the programs be managed -- are part of what we call our Operational Plan, and they are the purview of me, the association CEO, and my staff. As reflected in our Governance Policy, the Board may advise (and frequently their advice is helpful), but the only decisions in this sphere that they can make are ones that define unacceptable methods for pursuing our idealized states.
Following the presentation of this material, I plan to ask the participants to discuss some of these concepts at their tables. What are their organization’s ends and success indicators – the outcomes they will achieve, and the metrics that show they are being achieved? How might their organizations start discussing and defining their ends and success indicators?
Knowing that every association faces a different situation, I fully expect the most practical learning to come out of these table discussions, and the brief report-outs that I will facilitate at their conclusion. I can set the stage and provide some examples, but if their experience is anything like mine, finding their own specific way forward is something only they can do.
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This post first appeared on Eric Lanke's blog, an association executive and author. You can follow him on Twitter @ericlanke or contact him at eric.lanke@gmail.com.
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