What if the Board Doesn't Like the Leader's Interpretation?

If you have followed me at all you will know of my obsession with asking the right questions. The above is not the right question, but let me answer it anyway.

If the Board doesn’t like the Leader’s interpretation of a policy, that’s almost always the Board’s problem.

Let’s re-establish some assumptions about Policy Governance^®.

This model assumes a basic implied trust in the Leader. Policy Governance does not cover for a Leader who is fundamentally incompetent; although the model will expose such incompetence. Having a basic trust in the Leader, the Board develops explicate limitations and monitors compliance to those limitations. 

When a Compliance Report is submitted, the Board must accept the Leader’s interpretation of the Leader Limitation Policies provided it is reasonable. In Policy Governance, interpretation does not mean providing synonyms for words used in the policy, but rather a metric. The Board may use words such as “current” or “adequate”. The Leader may interpret “current” as within a certain number of days or “adequate” as a dollar amount, depending on the policy.  The only reason a Board will not accept an interpretation is if it is not reasonable. A reasonable interpretation is one which the Board agrees would be likely considered reasonable by a prudent and contextualized person in a similar situation.

If the Board finds that the Leader’s interpretation is reasonable, but one with which the Board is not comfortable, it needs to amend the policy.  The failure of the Leader to interpret the wishes of the Board is almost always a failure on the part of the Board to carefully word its policy. Once it has clarified the policy, the Leader will interpret the revised policy.

Leader Limitation Policies must not be written as breadcrumbs which are dropped along the governance path, with the hope that the crumbs will lead to the board’s desired expectation. It must not say, “This is what we really want; let’s see how close the Leader gets to that”. Policies need to be written with extreme care.

Keep in mind that the more detail in a limitation, the more interpretation and the more data are required from the Leader, and more monitoring of compliance is required by the Board.

So what is the right question?

“Are we comfortable with any reasonable interpretation the Leader may apply to this policy, putting away any personal biases or preferences individual Directors may have?”