not all bad….. - governforimpact · 9th ipga 2012 conference out of the book & into the...

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9 th IPGA 2012 Conference Out of the Book & Into the Streets IT’S NOT ALL BAD…. 6/12/2012 Meridian Edge Management & Governance Consulting Tel: 519-439-7503 www.meridianedgeconsulting.com 1 IT’S NOT ALL BAD….. Understanding and Handling NonCompliance with Executive Boundaries and/or Lack of Achievement of Ends Policies Out of the Book and Into the Streets www.meridianedgeconsulting.com PRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS Workshop for IPGA – June 2012 Detroit Michigan Presented by: Karen Fryday-Field, Meridian Edge Management & Governance Consulting Kathy Wilkie, Registrar & Executive Director College of Medical Laboratory Technologists of Ontario When a Board and a CEO reach a point in their business cycle where the CEO reports achievement of Ends which are less than desired and/or being out of compliance with Executive Limitation policy, it can stimulate a crisis in governance how should the IT’S NOT ALL BAD….. www.meridianedgeconsulting.com PRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS stimulate a crisis in governancehow should the Board respond? It can also put significant strain on the Board/CEO relationship. But, is lack of compliance all bad? And, how should both the Board and CEO respond to these situations? The more you look at the world, the more you recognize that what one person values may be different to the next. Ref: www.hsbc.com Different Points of View http://thefinancialbrand.com/6361/hsbc-brand/

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Page 1: NOT ALL BAD….. - GovernforImpact · 9th IPGA 2012 Conference Out of the Book & Into the Streets IT’S NOT ALL BAD…. 6/12/2012 Meridian Edge Management & Governance Consulting

9th IPGA 2012 ConferenceOut of the Book & Into the StreetsIT’S NOT ALL BAD….

6/12/2012

Meridian Edge Management & Governance ConsultingTel: 519-439-7503 www.meridianedgeconsulting.com 1

IT’S NOT ALL BAD…..Understanding and Handling Non‐Compliance with Executive Boundaries and/or Lack of Achievement of Ends PoliciesOut of the Book and Into the Streets

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

Workshop for IPGA – June 2012Detroit Michigan

Presented by: Karen Fryday-Field, Meridian Edge Management & Governance Consulting

Kathy Wilkie, Registrar & Executive DirectorCollege of Medical Laboratory Technologists of Ontario

• When a Board and a CEO reach a point in their business cycle where the CEO reports achievement of Ends which are less than desired and/or being out of compliance with Executive Limitation policy, it can stimulate a crisis in governance how should the

IT’S NOT ALL BAD…..

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

stimulate a crisis in governance…how should the Board respond?  

• It can also put significant strain on the Board/CEO relationship.  But, is lack of compliance all bad?   And, how should both the Board and CEO respond to these situations?

The more you look at the world, the more you recognize that what one person values may be different to the next.

Ref: www.hsbc.comDifferent Points of Viewhttp://thefinancialbrand.com/6361/hsbc-brand/

Page 2: NOT ALL BAD….. - GovernforImpact · 9th IPGA 2012 Conference Out of the Book & Into the Streets IT’S NOT ALL BAD…. 6/12/2012 Meridian Edge Management & Governance Consulting

9th IPGA 2012 ConferenceOut of the Book & Into the StreetsIT’S NOT ALL BAD….

6/12/2012

Meridian Edge Management & Governance ConsultingTel: 519-439-7503 www.meridianedgeconsulting.com 2

SECURITYThe more you look at the world, the more you recognize that what one person values may be different to the next.

Ref: www.hsbc.comDifferent Points of Viewhttp://thefinancialbrand.com/6361/hsbc-brand/

The more you look at the world, the more you recognize that what one person values may be different to the next.

Ref: www.hsbc.comDifferent Points of Viewhttp://thefinancialbrand.com/6361/hsbc-brand/

RESPONSIBILITYThe more you look at the world, the more you recognize that what one person values may be different to the next.

Ref: www.hsbc.comDifferent Points of Viewhttp://thefinancialbrand.com/6361/hsbc-brand/

Page 3: NOT ALL BAD….. - GovernforImpact · 9th IPGA 2012 Conference Out of the Book & Into the Streets IT’S NOT ALL BAD…. 6/12/2012 Meridian Edge Management & Governance Consulting

9th IPGA 2012 ConferenceOut of the Book & Into the StreetsIT’S NOT ALL BAD….

6/12/2012

Meridian Edge Management & Governance ConsultingTel: 519-439-7503 www.meridianedgeconsulting.com 3

CHOCOLATEThe more you look at the world, the more you recognize that what one person values may be different to the next.

Ref: www.hsbc.comDifferent Points of Viewhttp://thefinancialbrand.com/6361/hsbc-brand/

The more you look at the world, the more you recognize that what one person values may be different to the next.

Ref: www.hsbc.comDifferent Points of Viewhttp://thefinancialbrand.com/6361/hsbc-brand/

Session Overview

• This workshop will explore practical and Policy Governance model consistent approaches to the challenge of non‐compliance and less than expected results through provocative discussion. 

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

• This workshop will be a theoretical and practical exploration of this very real challenge.

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9th IPGA 2012 ConferenceOut of the Book & Into the StreetsIT’S NOT ALL BAD….

6/12/2012

Meridian Edge Management & Governance ConsultingTel: 519-439-7503 www.meridianedgeconsulting.com 4

Session ObjectivesBACKGROUND UNDERSTANDING

1. Reflect on how and what role does the CEO Ends Policy Interpretation play in clarifying what expected Ends or impacts will be achieved?  What does this process look like when it is functioning well?

2. Understand the process the Board uses to assess performance data including how and when the CEO should report non‐compliance and/or l k f hi h B d

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

lack of achievement to the Board.  

THE KEY ISSUES

3. Identify situations when non‐compliance or lack of achievement is “not all bad” and when ii is “bad”.

4. Study ways a Board can respond to a CEO who is in non‐compliance with Board policy direction ‐ how can the Board juggle this challenge of being serious about their policies and working with a CEO who is not in compliance?

Session OutlineBACKGOUND UNDERSTANDING

• Part 1:  The Relationship and Dynamics from Policy Creation and Delegation to Policy Achievement and/or Policy Compliance

Board Policy Development 

CEO Policy Implementation/CEO Policy Interpretation

CEO Strategy and Plan

CEO Implementation

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

CEO Implementation

CEO Performance Data

Board Monitoring

• Part 2:  The Process the Board Uses to Assess CEO Performance Data

THE KEY ISSUES

• Part 3:  The Possible Outcomes Once the Board has Delegated Policy Implementation to the CEO

• Part 4:  The Good (and the Bad) that Can Come From Less Than Expected Performance Results (i.e. less than expected Ends achievement / non‐compliance with Executive Limitations)

Part 1

The Relationship and Dynamics from 

Policy Creation and Delegation 

to Policy Achievement and/or Policy Compliance

Part 2 Part 3 Part 4

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9th IPGA 2012 ConferenceOut of the Book & Into the StreetsIT’S NOT ALL BAD….

6/12/2012

Meridian Edge Management & Governance ConsultingTel: 519-439-7503 www.meridianedgeconsulting.com 5

Part 1:  CEO Policy Interpretation – A Key Link to Performance Results• How do Boards solve the challenge of getting from lofty Mega Ends Statements to Tangible Ends Performance Results?

… Clear, narrowing of policy language 

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

by the Board to the point at which any reasonable interpretation would be acceptable

… Clear, purposeful CEO Ends Interpretation

Policy Setting Process – The Board’s Job

Policies (Ends or Executive Limitations)

• Should not call for the impossible

• Should focus on meeting real needs

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

• Should be only as narrow (specific) enough to a point where the Board can live with any reasonable interpretation

Policy Setting Process – The Board’s Job• The Board first expresses the policy at a global level then 

the Board itself chooses whether it will further interpret  that policy, i.e. the Board can move into narrower decisions, level by level.

• The Board reaches a point where it is willing to forgo ki f h i i i lf ( d f i

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

making further interpretations itself (not due to fatigue but because the breadth of any remaining decision‐making is below the Board’s level of concern).

• The Board has no need to exercise further control because it is pleased to be accountable for any decision that could be made at the level of specificity at which the Board stopped speaking.

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9th IPGA 2012 ConferenceOut of the Book & Into the StreetsIT’S NOT ALL BAD….

6/12/2012

Meridian Edge Management & Governance ConsultingTel: 519-439-7503 www.meridianedgeconsulting.com 6

CEO’s Interpretation – What is it really?

• The CEO’s options for making decisions start at this point….first the CEO’s Policy Interpretations.

• When the CEO does make decisions on the

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

When the CEO does make decisions on the hows, the means, the strategies, the amount of good done in a period, the programs, etc. these must be treated as being just as authoritative as if the Board made these decisions.

CEO’s Interpretation – Two provisios

1. The CEO’s interpretations must be reasonable in the Board’s fair judgment.

2. The reality achieved (as demonstrated by performance data in the Monitoring Report)

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

performance data in the Monitoring Report) must fulfill the CEO’s interpretation.

The Ends to Strategy to Results Stairway• Too many CEOs rely on their highest core Ends to guide their program

delivery decisions. They miss two critical intermediate steps: formulating an operational definition of and targets for the Ends and devising a strategy platform to execute. Without those steps, organizations easily fall prey to under performance of policy achievement/compliance.

Ends 1. Ends Policy Statement

Ends Achieved(+ve change)

2. Ends Operational Definitions/ Milestones/Targets (CEO Interpretation)

3. Strategy Platform (CEO Strategies)

4. Programs/Services/Products Delivered

5. Ends Operational Definition Achieved

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Meridian Edge Management & Governance ConsultingTel: 519-439-7503 www.meridianedgeconsulting.com 7

BIG IDEA

CEO Ends Interpretation

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

Achievable idea in a time

frame with available

resources

The most common pattern where Ends Policy implementation goes off the rails looks like this…

BOARD CEO

Sets strategic objectives

Develops and runs products and services

May have some program

Board may educate itself well to inform Ends Policy decisions

Board declares its Ends Policy and delegates authority to CEO to achieve Ends impact

No or Little alignment Parallel Processes

measures

Towards Ends Monitoring Reporting time, CEO scrambles to identify measures/description of results to meet the Board’s request for evidence

Genuine evaluation of whether Ends got achieved. Are we getting the desired outcomes / performance results

No or little follow-up as to whether Ends are being achieved

Do these continue to be the right outcomes?

So what does this process of Ends Policy Interpretation look like when it’s done well?

• The Board may say…

– The End Policy of the organization is to eliminate cancer as a cause of human suffering and death.

• The CEO may then create an operational definition or 

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

operational mission that says…

– I interpret the Board’s direction to mean that we will eliminate cancer as a cause of human suffering and death in the 5 most common categories of cancer – this is as far as we can reach with the $400M we have to work with

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9th IPGA 2012 ConferenceOut of the Book & Into the StreetsIT’S NOT ALL BAD….

6/12/2012

Meridian Edge Management & Governance ConsultingTel: 519-439-7503 www.meridianedgeconsulting.com 8

What’s Reasonable?

… is that a reasonable interpretation?

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

Anatomy of a CEO Ends Interpretation• The CEO operational interpretation of the Ends Policy has 

several key elements:1. Operational Definition which narrows the field from 

the statement of the big impact on the need being served to an actual achievable change in the world.

2 S l b h d f

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

2. Some clear statement about the type and amount of good/change/impact that will occur in a period… i.e. what will be the return on investment or cost‐benefit measured quantitatively or qualitatively.

3. A rationale for the target should be provided.4. A way to measure the impact, the good being done.

Anatomy of a CEO Ends Interpretation

• If your Board is not getting these components, it is not getting a reasonable interpretation!!!

• A reasonable interpretation is needed in order to 

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

effectively assess performance data…….results.

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Meridian Edge Management & Governance ConsultingTel: 519-439-7503 www.meridianedgeconsulting.com 9

Examples of CEO Interpretation

Board’s Big Ends IdeaCancer as a cause of human suffering and death is eliminated.

CEO Interpretation to

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

Operating DefinitionCancer as a cause of human suffering and death is reduced and/or eliminated for the 5 top most cancers.

End Policy Operational Definition

Good to be Done in the Period (i.e. return on the investment)

Measures / Indicator

Cancer is eliminated as a cause of human suffering and death

Over the next 4 years,the top 5 cancers will be reduced and/or eliminated as a cause of human suffering and death• Colon Reduction of deaths 5% decreased

mortality rate• Prostate Increased longevity 50% of cases have

Example CEO Operational Definition of Ends Policy

life span of greaterthan 10 years after diagnosis

• Lung Reduced incidence 20% decrease in population incidence

• Breast Reduction of deaths within 5 years

25% more cases diagnosed in period live longer than 5 years

• Uterine/Ovarian Earlier detection 50% of cases will be diagnosed before any mastitis is diagnosed

Examples of CEO Interpretation

Board’s Big Ends Idea

CEO Interpretation to Operating Definition

New immigrants are functionally literate

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

Operating DefinitionAll new immigrants who have landed within 2 years are able to complete a job application, conduct banking, and carry a basic conversation

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6/12/2012

Meridian Edge Management & Governance ConsultingTel: 519-439-7503 www.meridianedgeconsulting.com 10

Examples of CEO Interpretation

Board’s Big Ends Idea

CEO Interpretation to Operating Definition

Consumers of our cars will have safe, enjoyable transportation

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

Operating DefinitionConsumers of our cars will have:•No accidents based on car design flaws•Will rank their very car high on visual design and function•Suffer reduced injury compared to other vehicles when in a car crash

LINKAGE WITH OWNERSHIP

BOARD

Ends and Executive Limitations Policy Development By Board

CEO is delegated responsibility for achieving Ends Policies within

Ends Achievement Monitoring

Compliance with Executive Limitations Monitoring

OWNERSHIP= Board Job= Board and CEO Job= CEO Job

achieving Ends Policies within Executive Limitations Policies

CEO interprets Ends and Executive Limitations Policies(Develops strategic goals, milestones, and operating plan/policies)

Process and Results Monitoring to lead and manage the organization and course correction

LEADS /MANAGES OPERATIONS

ACHIEVES RESULTS

DEVELOPS MONITORING FEEDBACK TOOLS ON PROCESS & RESULTS

Balanced Scorecard Metrics•Financial •Learning & Growth•Internal Process•Customers

CEO Policy Interpretation – Critical Success Factors

• The translation of the Ends Policy to the operational interpretation by the CEO takes:– Evidence, knowledge, insight– Wisdom, careful thought– Decision-making

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

Decision making– Clarity

• So the strategy platform and the strategic operating plan to act on and implement the operational interpretation takes the same – it is another CEO step that results in clarity and a definitive plan for action.

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Meridian Edge Management & Governance ConsultingTel: 519-439-7503 www.meridianedgeconsulting.com 11

Building the strategic/operating plan – the CEO’s job

• The plan needs to take into consideration the basic strategy to be followed and build specifics around:– Client and market development

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

– Program and service development– Funder and donor development– Organizational development

Strategic operating planning frameworks

• There are a thousand frameworks that a CEO can use to work with his/her team to create the ‘plan’ – here is one that works…

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

CEO’s Strategic Operating Plan

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www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

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6/12/2012

Meridian Edge Management & Governance ConsultingTel: 519-439-7503 www.meridianedgeconsulting.com 12

The future is not some place we are going, but one we are creating. The paths to it are not found but made and the activity of making

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

made, and the activity of making them changes both the maker and the destination.

John Schaar, American Sociologist

Part 1: Conclusions

• You may think that this process as outlined is basic and obvious.

• Yet many organizations practising Policy Governance® have a substantial gap in one or all of the following areas of defined CEO operational definitions.

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

– Board End CEO Ends Interpretation– CEO Ends Interpretation (Operating Ends) Strategy– Strategy Strategic Operating Plan– Strategic Operating Plan Performance Data/Results

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ALIGNED AND EFFECTIVE

NOT ALIGNED USUALLY LESS EFFECTIVE

Board Ends

CEO Interpretation Operation Definition /

Milestone / Target / Amount of Good

Board Ends

Fuzzy CEO Operating Definition of Ends

Strategic / Operating PlanStrategic Platform

Strategic Goals, Strategic Initiatives

Programs and Services

Measures and Monitoring

Real Strategic

Plan, Goals, Initiatives, Measures(Business

Plan)

Race to Relevant Measures and Milestones to

Satisfy the Board or No Monitoring

of Ends

• In the journey of building a governance system that works for the organization, both the Board and the CEO need to put in the needed amount of work with the key ingredients to ensure real alignment b t th B d’ bi id E d d th CEO’

Part 1: Conclusions (con’t)

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

between the Board’s big idea on Ends and the CEO’s interpretation and plan.

– This includes – operational definitions of Ends

– And, amount of return on investment / how much good can be done in the period.

Part 1 Part 2 Part 3 Part 4

The Process the Board Uses to Assess the CEO 

Performance DataPerformance Data

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Assessing CEO Performance Datai.e. Reviewing the CEO Monitoring Reports

• It’s a whole subject of study itself, so in this workshop we will just focus on the key components to be able to address the issue of non‐compliance

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

non compliance.

• It is a disciplined process which takes rigor.

• It is a process whereby the Board makes a reasonable judgment  on CEO/organizational performance.

The Key Questions a Board Needs to Ask

• Is it clear which Ends Policy/policy criteria are being monitored?

• Do you believe the CEO has explicitly provided a reasonable interpretation of the policy supported by rationale?

• Do you believe there is sufficient evidence to convince you that reasonable progress (achievement of key Ends milestones) has been made toward the Ends (as per the CEO’s Ends Policy

www.meridianedgeconsulting.comPRIME, LEADING, FIRST SUPPORTING EFFECTIVE ORGANIZATIONS

been made toward the Ends (as per the CEO s Ends Policy Interpretation)?

– Results of activities are presented (not a report of the activities themselves).

– Comparison, trends, ratios, or percentages are presented – not just raw data/numbers without context.

– Does the evidence provided demonstrate reasonable progress?

The Key Questions a Board Needs to Ask

If yes,

• What feedback should the Board provide 

h

If no,• What questions do you need to ask at the 

Board meeting? i.e. What data would be needed to demonstrate reasonable progress?

– If there has been insufficient progress t d th E d h t it t d

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to the CEO? toward the End, what commitment needs to be made as to when the Board can expect to see achievement?

– Do you have any suggestions for the CEO as to how to make the Monitoring Reports more useful? (These would not be instructions for the CEO, rather simply opinions for consideration).

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Policy Item/Number

Do you believe the CEO has

li itl

Do you believe there is sufficient evidence to convince you that reasonable progress (achievement of key milestones) has been made toward the End?

If NO, note questions/comments you believe should b k d / d t

MONITORING WORKSHEET FOR ENDS POLICIES

This worksheet is intended to assist you as a Board Member in assessing the Monitoring Report, and expediting RELEVANT discussion at the Board Meeting. For EACH ITEM in the attached monitoring report, please think through your responses to the following questions.

and Criteria

explicitly provided a reasonable interpretation of the policy supported by rationale?

be asked / made at the meeting. For example, what data would be needed to demonstrate reasonable progress?

RESULTS of activities are presented (not reports of the activities themselves)

Comparisons, trends, ratios, or percentages are presented – not raw numbers

Does the evidence provided demonstrate reasonable progress?

YES NO YES NO YES NO YES NO

321

Options for Board Response to Monitoring Reports

Report is approved as evidence that

alternatively alternatively

At the end of the Board discussion, you will be asked to contribute to the Board decision and resulting motion regarding the Monitoring Report.  Here are some options:

Parts of the report are approved but some areas

Report not approved as it does not provide evidence ofevidence that 

appropriate progress has been made in Ends achievement

If yes, are there any comments to be recorded in the minutes?_____________________________________________________________________

approved but some areas do not demonstrate reasonable interpretation or progress.

If yes, clarify the required action and timelines for the minutes.•CEO action: ____________•Board action: Having reviewed the Monitoring Report does anything you have learned make you believe the policy should be reviewed/amended? ___________

not provide evidence of reasonable interpretation and/or of appropriate progress toward Ends achievement

If yes, what action will the Board take or request to be taken?_____________________________________________________________________

Part 1 Part 3Part 2 Part 4

The Possible Outcomes Once the Board Has 

Delegated Policy Implementation to the CEO

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Scenarios where performance data are not as expected or not good compared to the Board Policy /CEO Interpretation

1. Pre‐performance assessment/monitoring of CEO interpretation – no results yet, not out of the starting gate yet. 

2. Performance data achieved demonstrate different milestones/targets were achieved than were anticipated but these results can be judged as reasonable, i.e. good and 

i t b fit

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appropriate benefit.

3. Performance results are in the right direction but not as much good was achieved as projected/expected.

4. Performance results are non‐existent, minimal, or way off subject.

5. Performance results are off target because the interpretation was not considered reasonable by the Board.

Part 1 Part 4Part 2 Part 3

The Good (and the Bad) that Can Come From 

Less Than Expected Performance Results

Scenario 1 – Pre‐performance review of CEO Interpretation

• The Cancer Trust Board of Directors considers its Ends Policy to be:

“Cancer Trust exists for the elimination of cancer as a cause of human suffering and death”

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• The Board is not prepared to interpret this Ends Policy further; however, it does expect the CEO to interpret the policy and review the interpretation with the Board in advance of the start of the business cycle.

a cause of human suffering and death .

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Scenario 1 ‐ The CEO’s InterpretationCEO’s Interpretation: (provided in a Pre‐performance Monitoring Report)Between 2012 and 2014, with our $400 million dollars, cancer will be interpreted as the top three killing cancers:1. Colon/Rectal Cancer2. Breast Cancer3. Lung Cancer

During this period the following Ends will be achieved:During this period the following Ends will be achieved:•Colon/Rectal Cancer will be detected early (↑ by 30%)•People with Breast Cancer will have an increased survival from 5 to 15 years on average.•Lung Cancer incidence will be decreased by 25%.

Rationale:Epidemiology identifies these as the biggest social impact types of cancer and research indicates these ‘ends’ are achievable.  (Rationale has been abbreviated for the case)

• The CEO brings forward a pre‐performance Monitoring Report to the Board which includes his Ends Policy Interpretation but no performance data.

Notes:   There is no achievement here because it is a pre‐performance Monitoring Report.

Scenario 1 continued

Where is the possible good in this?When a Board receives a pre‐performance Monitoring Report that has interpretations but of course no performance data, this process affords the Board the opportunity to provide feedback as to whether the CEO’s decision/approach is a reasonable interpretation of what the Board said in its policy.

Advantages of Pre‐Performance Monitoring (i.e. Board review of the Interpretation)

1. Board/CEO achieve a clear understanding of alignment around the Policy the CEO Policy Interpretation – early warning signs of lack of alignment can be spotted and addressed.

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g p

2. Board gets early feedback on the CEO’s interpretation capability and initial commitment to performance.

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Downsides/Disadvantages of Pre‐Performance MonitoringThe Board can make mistakes:

• Very easy for the Board’s pre‐performance focus on CEO interpretation to morph into an approval of those interpretations – when really the Board is to judge whether it is reasonable or not…not approve it.

• Board’s can get fixated on a particular interpretation even though interpretations need to be flexible and evolve with changing 

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circumstances and environments.

• The Board can, through the back door, force its policy into a lower level of more detail by “approving the interpretation” there by making it the Board’s policy –if the Board wants to make the CEO accountable for a specific interpretation then it should just make that interpretation its policy – because at that point it is forcing the CEO to stick with the “Board approved interpretation” versus “any reasonable interpretation” [the CEO needs to be able to evolve his/her interpretation].

Discussion Questions

• Does this interpretation appear to be reasonable?  Why?

• Given this, is a pre‐performance Monitoring Report subject to the monitoring rules and the discipline 

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that comes with that process?

• What action can the Board take in response to this Monitoring Report?

• What are the possible pitfalls of this approach in this example?

Scenario 2Performance Data are Different Than Planned and Expected by the CEO

CEO’s Interpretation: (provided in a Pre‐performance Monitoring Report)Between 2012 and 2014, with our $400 million dollars, cancer will be interpreted as the top three killing cancers:1. Colon/Rectal Cancer2. Breast Cancer3. Lung Cancer

During this period the following Ends will be achieved:•Colon/Rectal Cancer will be detected early (↑ by 30%)•People with Breast Cancer will have an increased survival from 5 to 15 years on average.•Lung Cancer incidence will be decreased by 25%.

Rationale:Epidemiology identifies these as the biggest social impact types of cancer and research indicates these ‘ends’ are achievable.  (Rationale has been abbreviated for the case)

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Scenario 2 – continuedMonitoring Report at 1.5 years

Phenomenon Indicator/Measure Ends Targets

Performance Data

Colon/Rectal Cancer

Early Detection ↑ 20% ↑ 20%

B t C L th f lif ft ↑ 10 ↑ 3

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Breast Cancer Length of life after diagnosis

↑ 10 years ↑ 3 years

Quality of Life  ↑ No target ↑ 50%

Lung Cancer Incidence decreased

↓ 25% ↓ 20%

Discussion Questions on Scenario 2

• Although the CEO has 1.5 years left in the current Ends mandate, he has some areas where the Ends interpretation is clearly not being met yet.

• What are possible Board responses to these results?

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• How should a Board respond when the performance achieved is different – not necessarily poor – but different than expected?

• What kind of learning can be achieved and hence is this situation “all bad”?

Scenario 3Performance Results Are in the Right Direction But Not As Much Good Was Achieved as Projected/Expected

CEO’s Interpretation: (provided in a Pre‐performance Monitoring Report)Between 2012 and 2014, with our $400 million dollars, cancer will be interpreted as the top three killing cancers:1 Colon/Rectal Cancer

The Board’s Ends Policy:“Cancer Trust exists for the elimination of cancer as a cause of human suffering and death”.

1. Colon/Rectal Cancer2. Breast Cancer3. Lung Cancer

During this period the following Ends will be achieved:•Colon/Rectal Cancer will be detected early (↑ by 30%)•People with Breast Cancer will have an increased survival from 5 to 15 years on average.•Lung Cancer incidence will be decreased by 25%.Note: Full Board Ends Policy on for whom and for what values not listed here due to space.

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Scenario 3 – continued Monitoring Report at 3 years

Phenomenon Indicator/Measure Ends Targets

Performance Data

Colon/Rectal Cancer

Early Detection ↑ 20% ↑ 10%

B t C L th f lif ft ↑ 10 ↑ 5

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Breast Cancer Length of life after diagnosis increased

↑ 10 years ↑ 5 years

Lung Cancer Incidence decreased

↓ 25% ↓ 17.8%

Discussion Questions on Scenario 3

• Given the timeframe and these results, how might the Board appropriately respond to these performance data?

• What might be a Board response to these ends results which is not consistent with Policy Governance®?

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• Should the Board judge these performance data as all bad?

• Might the Board have anything to say on the cost/benefit issue?

Scenario 4You may have encountered this scenario…

• The Board on several occasions has found the CEO out of compliance on a particular Executive Limitation Policy and with less progress toward Ends Policies as expected….

• The Monitoring Reports do not demonstrate that the organization’s performance reflects reasonable achievement

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organization s performance reflects reasonable achievement as outlined in the CEO Interpretation and certainly not what the Board called for in policy…

• Several of the Board Members are questioning whether the Board needs to “tighten the policy knowledge” in order to tell the CEO more specifically what the Board wants.

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Scenario 4Performance Results are Non-existent, MinimalThe Board’s Ends Policy:“Cancer Trust exists for the elimination of cancer as a cause of human suffering and death”.

CEO’s Interpretation: (provided in a Pre‐performance Monitoring Report)Between 2012 and 2014, with over $400,000 million dollars.  Cancer will be interpreted as the top three killing cancers:1 Colon/Rectal Cancer

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1. Colon/Rectal Cancer2. Breast Cancer3. Lung Cancer

During this period the following Ends will be achieved:•Colon/Rectal Cancer will be detected early (↑ by 30%)•People with Breast Cancer will have an increased survival from 5 to 15 years on average.•Lung Cancer incidence will be decreased by 25%.

Phenomenon Indicator/Measure Ends Targets

Performance Data

Colon/Rectal Cancer

Early Detection ↑ 20% ↑ 1%

B t C L th f lif ft ↑ 10 ↑ 1

Scenario 4– continued Monitoring Report at 3 years

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Breast Cancer Length of life after diagnosis increased

↑ 10 years ↑ 1 year

Lung Cancer Incidence decreased

↓ 25% ↓ 4%

Discussion Questions on Scenario 4

• Given these results at three years in, what might be reasonable conclusions by the Board about these performance data?

• What possible actions can a Board take when 

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performance data are significantly less than expected/projected as outlined in the CEO Ends Interpretation?

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Interview with Kathy Wilkie, Registrar & Executive Director (CEO) of The College of Medical Laboratory Technologists of Ontario (CMLTO)

• Please describe a scenario where your organization was out of compliance with an Executive Limitation Policy.– E.g. An unbalanced budget – out of compliance with Financial Planning 

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Executive Limitation Policy

• What was the reason you were out of compliance?

• What was the experience like for you as a CEO?

• How did your governing body manage that situation?

• How did you, as CEO, manage this situation?

Interview with Kathy Wilkie, Registrar & Executive Director (CEO) of The College of Medical Laboratory Technologists of Ontario (CMLTO)

• Have you ever been in a situation where Ends performance data did not demonstrate the Ends achievement you had expected and outlined in your CEO Ends Interpretation?

• What explanation did you give to your governing body?

H did h i b d d? W hi bl

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• How did the governing body respond?  Was this a reasonable response?

• What did you learn as a CEO?

Summary of When Out of Compliance or Less than Planned Ends Performance Data Are Not All Bad• When CEO learns that certain strategies / initiatives / programs / products don’t 

produce the desired result.

• When CEO learns that certain positive Ends impact can be made; however, it is slower or less than planned – stimulates review of the root cause of this.

• When Board recognizes they were looking for a different End and are stimulated to review their policy.

• When the Board recognizes that their current CEO is unwilling or unable to cope 

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with the significant responsibility delegated to him/her.

– CEO who wants to drive the vision for Ends (and not work to achieve the Board’s vision for Ends).

– CEO who doesn’t want to be accountable for performance/ performance data.

– CEO who sees the Board as a fundraising or lobbying helping body versus a governing body.

– CEO who doesn’t have the skills, capacity, or insight to produce the desired Ends.

……. The Board can then take action

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Karen Fryday‐Field, MBASenior Consultant

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Se o o su ta t190 Wortley Rd. LL‐8London, ON, N6C 4Y7Tel: 519‐439‐7503  Fax: 519‐963‐2962E: kfryday‐[email protected]