Policy Governance, informally known as the Carver model, is a system for organizational governance. Policy Governance defines and guides appropriate relationships between an organization's owners (also with non-legal 'moral owners'), board of directors, and chief executive. The system is built on 10 principles, three of which are especially distinctive for the system. Firstly the clear distinction between policies that describe Ends (long term outcomes for the organization) and that describe Means (all other aspects of governing and operations), secondly the importance of executive limitations to control risk, and thirdly the board’s obligation to engage with its “moral owners” (the specific groups of stakeholders to whom the board wants to be accountable to, apart from the formal owners). The Policy Governance approach was first developed in the 1970s by John Carver who has registered the term as a service mark in order to control accurate description of the model. The model is available for all to use without royalties or license fees and has been adopted by commercial, nonprofit, and public sector organizations.
Principles of Policy Governance John Carver described Policy Governance as an integrated system of governance principles intended to enable boards to govern organizations with clarity of authority, accountability, and delegation. Across Carver’s writings, the principles were expressed with generally consistent intent, although wording and presentation varied somewhat over time. A later articulation of the principles appeared in Policy Governance® in a Nutshell (2009), included in the revised Carver Policy Governance Guide series. The ten principles identified in that articulation are:
Ownership Position of the board Board holism Ends policies Board means policies Executive limitations policies Policy sizes Clarity and coherence of delegation Any reasonable interpretation Monitoring In the Policy Governance model, boards are responsible for defining organizational Ends — the intended organizational impacts, for whom those impacts exist, and their relative worth or priority — while delegating operational means to executive leadership within defined limitations. The model emphasizes that the principles operate as an integrated system rather than as independent governance practices. Carver argued that applying only selected principles weakens the coherence and effectiveness of the model as a whole.
Claims for the model Authors of the Policy Governance model say it is a paradigm shift from the traditional practice of governance and that it provides a clear differentiation between governance and management responsibilities in organizations.
According to the Policy Governance principles, it is the board’s responsibility to act as a trustee on behalf of the organization’s owners by setting clear expectations for the outcomes of the organization (Ends), setting clear operational boundaries for the CEO (Executive Limitations) and ensuring accountability by monitoring the actions of the CEO against those boundaries systematically and rigorously. From this definition, board governance enables the board to maintain accountability for everything without the need to be involved in daily operations and details. Said another way, the board’s arms are wrapped around the entire organization, but their fingers are not in the day-to-day details. The board's primary relationship is with the organization's 'ownership'. As a result, governance is a downward extension of ownership rather than an upward extension of management. In this space, the board, as a single entity, assumes a governance position that is the link between ownership and the operational organization. That governance position is a commanding authority. The board exists to exercise that commanding authority and to properly empower others. "Proper empowerment" means to define the results to be achieved by the organization (Ends), and define what would be considered unacceptable in terms of ethics and prudence (Executive Limitations). The board delegates the job of achieving its Ends within the parameters defined in policy to the CEO. To complete the delegation, the board rigorously monitors performance to policy to uphold accountability of the CEO. In Policy Governance, the board has three primary jobs: Ownership Linkage - connecting with owners to learn their values about ends that are desired and means that would be unacceptable; Policy Development - writing those values as guidance for organization and for the board itself; and Assurance of Organizational Performance - monitoring to ensure the organization demonstrates reasonable progress toward desired ends and reasonable compliance with policy guiding means. The board's focus is at the broadest level of policy informed by the ownership's values. When writing policy, the board goes into as much detail as needed, and stops making policy when it can accept any reasonable interpretation of its policy language. Experts in the model argue boards should govern with an emphasis on (a) outward vision rather than an internal preoccupation, (b) encouragement of diversity in viewpoints, (c) strategic leadership more than administrative detail, (d) clear distinction of board and chief executive roles, (e) collective rather than individual decisions, (f) future rather than past or present, and (g) proactivity rather than reactivity. Templates of policies are provided in the literature and by those trained in the model in order to illustrate what model-consistent policies might look like. However these templates are not themselves the model and their use does not substitute for a board developing its own policies using the model's principles. Each policy that a board adopts should be an organizational value statement that reflects the shared values of that organization's ownership. Many people confuse modification of policy language so that it fits their organization with changing the model itself. Model-consistent practice is assessed by considering whether board performance aligns with the model's principles, not by reviewing the policy language that is adopted.
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