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<br />The Policy Governance@ Model
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<br />Page 13 of 16
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<br />meets the board's expectations, there is and nothing less to evaluate when essing
<br />the CEO Thus, the board's evaluation of organizational pe ormanee IS e same as board
<br />< evaluation of CEO performance (Carver. 1997a). Monitoring the evaluative data. as we shall see, is .
<br />an ongoing activity-perhaps as frequently as monthly-and the board may wish to have a formal
<br />evaluation of the CEO once each year. However. the CEO's formal evaluation is only a summary of
<br />the accumulated monitoring data, not something in addition,
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<br />But let us consider the monitoring or evaluative information itself. Not all information is useful in
<br />monitoring performance, Two types of information are useful for other purposes, but not for
<br />monitoring: information for board decisions and information simply for board member interest. To
<br />examine evaluation or monitoring, we must first separate out these two types of information do not
<br />qualify as monitoring against pre-established criteria,
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<br />First, jnformation for board decisions is needed in order for the to make wise oli
<br />...Qlac<>, To create policies that are both rea IS IC an emanding, boards require information from a
<br />variety of sources. These sources include staff, owners, experts, associations to which the board
<br />may belong, and others. This information is required for the board's own decision-making and does
<br />not judge staff accomplishment. Boards should invest a great deal of energy in gathering wisdom,
<br />spending perhaps half their time in becoming educated. So information for board decisions is
<br />essential for board performance, but not for monitoring staff performance.
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<br />Second, information for board interest is infor
<br />. not useful or board deeision-makino but is of political. social or technic,,1 inlprpqlln hnard
<br />_ memb~ This information does not include data that directly measure the degree of staff
<br />pertormanee on board expectations, for that would qualify it to be called true monitoring information.
<br />This kind of information is incidental to the board's job of monitoring, but comprises most of what
<br />most traditional boards receive. There is nothing wrong with boards getting all the incidental
<br />information they want, but there is something very wrong with the delusion that they are at that time
<br />doing their job, In traditional governance, most staff reports. including most financial reports and
<br />reports that purport to be "evaluation" are incidental information simply because they are not data
<br />compared with previously stated board criteria.
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<br />Monitoring or evaluative information must speak directly to whether board expectations are being
<br />fulfilled. Consequently, it is always related to expectations set by the board in its Ends and
<br />Executive Limitations policies. This discipline not only makes it unnecessary for the board to trudge
<br />through the mountains of data staff are able to assemble, but it keeps evaluation fair. After all, it is
<br />only right that the CEO should know ahead of time the criteria on which he or she will be judged.
<br />Since monitoring information is only that information that describes actual performance compared to
<br />expected performance, it is evident that most reports collected. examined and approved by
<br />traditional boards constitute interesting information, but cannot be said to be effective monitoring
<br />reports. For example, boards that gravely approve (or accept) financial statements thinking they
<br />have thereby exercised fiduciary responsibility are simply engaging in a meaningless ritual. for
<br />without criteria they don't even know what in those reports would have been disapprovable.
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<br />When monitoring is defined as we have done here, reports tend to be straightforward and
<br />transparent. Each board member can follow the link from board criteria to management data, for the
<br />report is not cluttered with incidental information. Monitoring is not nearly as difficult or time-
<br />consuming when boards know what performance they are expecting to see proven. Monitoring is
<br />thus more exact and, simultaneously, requires negligible board meeting time, In fact, we
<br />recommend that monitoring data be mailed to board members, thereby preserving valuable meeting
<br />time for board education and deliberation. Getting monitoring largely out of board meetings allows
<br />those meetings to focus on creating the future rather than reviewing the past. because inspection of
<br />the past is now safely routinized, For each Ends and each Executive Limitations policy, the board
<br />will have set a frequency and a method of monitoring, after which the process runs automatically,
<br />The choice of method will be a report from the CEO, judgment by a disinterested party (for example,
<br />an auditor). or-less frequently-direct board inspection of organizational practices or
<br />circumstances. It turns out to be rare that monitoring needs to be discussed in the board meeting,
<br />except for board members to affirm that they have received and read the mailed reports,
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<br />http://www.carvergovernanee.eom/model.htm
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<br />6/12/2002
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