by Jannice Moore
Frequently boards that are implementing Policy Governance® find that the general public does not understand what they are doing, Sometimes they think that the Board is ‘abdicating’ its responsibility by using Policy Governance. This article was written to assist boards in explaining the basic concepts of Policy Governance to members of the public who have no background at all in the model. It does not try to address every nuance, but to explain in broad terms how the model works.
Policy Governance is a model which allows a board, on behalf of the people it represents, to ensure that an organization achieves what it should and avoids what is unacceptable. Let’s take a simple example to show how it works. In this example, you and four other people, on behalf of your extended family (in this example you will be “the Board”) are responsible for organizing a dinner for a birthday or anniversary celebration. The five of you live in different towns, and the location for the celebration is in yet another city. You decide that the best thing to do is to hire a chef (who in this example will be the Chief Executive Officer) to handle preparation and serving of the dinner. So you check out the qualifications of chefs in the area, and hire the best one you can. However, you will need to provide the chef with some directions.
The five of you sit down together and make some decisions. What will the menu include? Who will be on the guest list? How much do we have to spend on the dinner? These are “board” decisions. They are the determination of what benefits or results are expected, who those results are for, and how much they are worth. In Policy Governance language, these things are referred to as the “Ends.” In making those decisions, you will have to gather some information. Are the majority of guests “meat and potatoes” types, or would they prefer a more exotic menu? Are there a lot of children, who might require a different menu? Do you have a lot of older guests who would prefer to be served, or is buffet-style better?
After gathering your information, you come up with the following set of desired results (Ends) for the Chef to produce:
“We would like a tasty buffet dinner for one hundred people. The menu must include roast beef and potatoes, with at least one other main course option. There must be at least three choices of dessert, one of which must be low fat. There will be a few guests who have physical limitations, who must be served rather than go through the buffet line. The total cost of the dinner shall not exceed $2500.00.”
The above statement tells the Chef (CEO) what results you expect. You have provided clarity in your instructions. You have specified areas where the chef’s choices are limited (e.g., there must be roast beef). Where you have not provided further specification, the chef is free to make any reasonable interpretation of what you have said. (He can serve mashed potatoes, scalloped potatoes, baked potatoes, etc., since you did not choose to specify the style.) He can hire assistants to help prepare or serve the meal, as long as the total cost does not exceed your specifications.
Now, you have told the Chef what you want. Do you:
go away and never talk to him again until the dinner is served?
hang around the kitchen and look over his shoulder, suggesting that he add a little more salt to the soup?
Neither of the above?
The correct answer is (c). You (as the Board) still have two more things to do. First, you need to let the Chef know if there are any things that he may not do in the preparation of this dinner. While you do not want to interfere unnecessarily with his creative abilities and his professional training, there are certain methods that you may not find acceptable. The Chef needs to know about these in advance. Second, you need to decide how often you will check up to be sure that preparations are on track and consistent with your expectations.
What may the Chef not do? In Policy Governance language, these are called the “Executive Limitations.” The five of you (the Board) may not all have the same idea about these things, but the Chef can’t work for five different bosses, so the group of you will have to sit down together and come to an agreement about what values you have. Let’s assume that you have done this. First, you decide that you don’t want any artificial additives and preservatives used in the meal. Then you discuss the fact that giving a dinner could leave you open to liability if someone gets food poisoning, so you tell the Chef that he must not fail to meet all public health standards regarding the preparation and preservation of the food. You also do not want to get in trouble with the law, so you tell the Chef that he must not fail to obtain the necessary permits for serving alcohol. Finally, you decide that you would like to support local businesses in this venture, so you tell the Chef that he must not buy major ingredients from outside the local trading area.
Your last task is to decide how often to check up on, or “monitor” the Chef. You decide that two weeks before the dinner, you would like to see the menu plan, so that you can assure yourself that it meets the criteria you previously specified. You might ask whether the necessary public health and liquor permits have been obtained, or even ask to see them. You might ask for verification that the food was ordered locally, or even ask to see the invoices. For each area where you identified an expectation, you (as the Board) have a right, and indeed an obligation, to assure yourself that your expectations are being met. However, this does not mean that you will stand around the kitchen and offer “helpful advice” during the preparation of the food. You hired a professional, you set the expectations, you monitor results, but you let the professional do his job. Everyone knows that “too many cooks spoil the broth.”
As the Board, you have as much control as you need over the results. You decide what the results should be, for whom they should be, and how much they should cost. You allow the Chef, who is the professional, to make the decisions about “how to” achieve the results, except to specify clearly that certain methods are not acceptable. This approach is not abdication of responsibility. Indeed, it is rigorous and planned control over the things that are important to you as a Board.
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by Jannice Moore
As Boards who have begun using Policy Governance® begin to tackle their most important job—specifying the Ends of the organization—they also struggle with how to obtain the information needed to make Ends decisions. Since Ends are determined on behalf of the “moral owners” of the organization, how does a board ensure that it is truly informed regarding the needs of those owners? Boards in the “public” sector, whether elected, appointed, or voluntary, generally have an “ownership” that might be described as the “general public.” Membership organizations (unless they are regulatory bodies) usually have an ownership of “members.” In both cases, the challenge is similar – how to “connect” with the owners in a meaningful way.
The following ideas are not intended to be “the definitive answer,” but I hope that they may trigger some discussion as your board considers ways to more effectively link with “owners.”
Ask for ownership input early enough in the process of Ends development that appropriate changes can be made based on that input. Be aware of subtle ways in which your invitation to the owners to provide input is actually designed to limit the impact of such input (Dowling1). Be open to criticism. Be willing to revise Ends that are not on target. Recognize that the ownership’s trust and support depend on meaningful involvement and influence. Is the intent of connecting with owners merely to “be seen” to be allowing ownership input, when in reality the desire is to limit the ability of the owners to effectively influence a desired decision, or is the intent to give due consideration to owners’ views when making a decision?
Be clear regarding what you want from owners that you involve in the process. Many boards design a variety of “committees” intended to help them link with the owners. The principle here is the same as the principle for any committee: if you don’t clearly specify what “product” you expect from the committee, they are likely to spend much energy with little result, trying to figure out just what it is that you want from them. “If realistic goals cannot be specified early in the process, little in the way of substantive participation follows.” Lack of clarity about goals can lead to concentration on procedural rather than substantive matters, and result in “dropping-out” of participants who feel that they have no impact. “This often produces precisely what providers have sought, a paper consumer majority but an operative provider majority…” (Metsch and Veney1). If boards truly desire ownership participation, then they must spend the time to clearly define the goals.
The method or techniques used for obtaining input should be dependent on the goals. No one method has been shown to be the “best,” as the development of methodologies for obtaining ownership input is still in its early stages. Focus groups, needs assessments, public hearings, surveys, public forums, and town-hall meetings are some of the more common methods.
Be sure that when you structure a vehicle for “ownership” input, that you are truly getting “ownership,” rather than “stakeholder” input. Stakeholder input should also be obtained for fully informed decision-making, but it should not be confused with ownership input. Several studies (Piette, Lomas1) bear out the fact that when participation is intensive, those of higher socio-economic status are better placed to bear those costs, and thus tend to be over-represented. Lomas and Veenstra1 conclude that “we should not … pretend that current consultation technologies really attract the general public … they continue to be dominated by stakeholders of one sort or another.”
One area in which the literature is nearly silent relates to ways in which decision-making bodies with accountability to the “general public” might hear from the “unheard voices”—the marginalized of society. Is there a way of “going to them” rather than expecting them to “come to the decision-makers”? Aronson1notes that consumers of health and social services in particular tend to be in a relatively powerless position, because many are from already disadvantaged and marginalized groups. They have little experience in expressing themselves in a formal public context, are further threatened by class and culture barriers such as having to attend meetings in hotels and speak into microphones, and from experience have little reason to believe that they can make a difference. Beresford suggests tailoring opportunities to participants’ time and interests, rather than taking an “all or nothing” approach. This may be a starting-point for examining ways to obtain the input of such groups. Carver1 argues that boards have a moral accountability to ensure that they are effectively serving all of their constituents, not only the “squeaky wheels.”
Bracht and Tsouros1 note that an important outcome of community and citizen involvement is a sense of community ownership. In other words, the “owners” actually feel as if they are owners. They suggest a number of measurements of such involvement:
1Email The Governance Coach to request a list of references cited in this article.
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by Jannice Moore
It is interesting to reflect on the underlying principles which John Carver has incorporated into his Policy Governance® model. Carver’s genius lies in having been able to take a number of simple, common-sense concepts, and articulate them into a set of principles that are internally consistent, so as to provide a complete system or model that can be applied to virtually any organization with a governing board. While many of the individual principles have value in their own right, when formulated into the Model, they prove the adage that the whole is greater than the sum of the parts. Removing any of the principles damages the system.
Those who think that Policy Governance is too inflexible, or complain that “one size does not fit all” have not understood that the model is not a set of rules, such as, “Thou shalt have no committees,” but rather a set of principles to apply to your particular situation – “have committees if and when using them does not violate any of the principles.” For example, don’t create a committee to help the staff do work that’s already been delegated to the CEO, because that would violate the principle that if there is a CEO, the board delegates only to the CEO and holds the CEO accountable; don’t create a committee if doing so will interfere with the board’s ability to speak authoritatively with one voice.
Two principles in particular relate to the roles in an organization: (1) The board connects its authority and accountability to the owners, and has a responsibility to provide to the organization the perspective of the those owners. (2) The board is situated as a link between owners and the operating organization, so the work of governance is quite separate from the work of management.
These are not new concepts. Robert Greenleaf, writing in the 1940’s and ’50’s, stated, “Trustees have a significant role that they can play best because they are able and informed people who are NOT managers … I argue for an arrangement in which trustees provide the vision and purpose of what is to be done and managers get it done.” [Emphasis added.] He goes on to suggest that “the managerial mind … is not likely to generate the absolutely basic visions that give purpose and direction … The managerial mind is limited by its first priority to get things done—in the immediate—and to keep the institution afloat from day to day. To be good at getting things done, a manager must concentrate on the short range … The long range, the indefinite future framed against a good view of the distant past, requires a different kind of thinking … I did not pull my contentions out of thin air. They rest on considerable experience as a member of the corporate staff of a huge bureaucracy and in a variety of trusteeships, both capped by extensive consulting experience to both trustees and managers.”1
1On Becoming a Servant Leader, Robert Greenleaf, Ed. Don Frick and Larry Spears (San Francisco: Jossey-Bass, 1996), pp. 222ff.
**Your Organization: What is it For? John Argenti (London: McGraw-Hill Book Company Europe, 1993), pp. 203 ff.
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by Jannice Moore
Often when I have given a presentation about Policy Governance to a board, someone will say to me, “You really believe in this, don’t you?” While I always answer, “Yes, I wouldn’t be spending my life teaching it if I didn’t believe in it,” the question has made me ponder just why it is that I do believe in it—besides the fact that, if properly applied, it works … (As those of you with whom I have worked will know, I have a pragmatic streak!) I have come to the conclusion that I feel so strongly about Policy Governance because the model is founded on the concept that the Board is not there for its own benefit, but to make the best possible decisions on behalf of the “moral ownership.” Policy Governance is rooted in the idea that the board is the “servant-leader” of the owners. In fact, Carver goes so far as to say that “proper governance is a logical impossibility if it does not include the concept of servant-leadership.”
The term “servant-leadership” is widely attributed in this century to Robert Greenleaf, who pioneered the application of the concept to the business setting. However, the reason that the concept has such importance for me is that its origins go much farther back—it was Jesus Christ who said to His disciples, “Whoever wants to be great among you must be your servant.” Since I try (not always successfully) to live my life as a disciple of Christ (not Carver, as I’ve occasionally been accused of!), a model which is based on the idea of servant-leadership is congruent with my own deeply held values.
Integrity has been described as something you cannot see until it is not there. Servanthood is similar—it is neither dominance nor servility. “The ability to empower others makes great leadership a servanthood” (Bennett Sims). Let’s explore the concept of servant-leadership more fully—with liberal credit to Robert Greenleaf for enlarging the concept and John Carver for applying it in a practical way to boards. Carver suggests that Policy Governance might be considered a “technology of servant-leadership”—a carefully-designed method for boards that are committed to being servant-leaders. A review of Greenleaf’s writings has identified ten major characteristics of servant-leadership. We will examine just a few of them.
Servant-leader boards see themselves as stewards. This means pondering what has been entrusted to them, and what they will hand on. Many aboriginal North Americans apply the “seven generation” test to the decisions they make. Boards would do well to consider what the impact of their decisions will be, not just today or tomorrow, but on the next seven generations.
One of the most important tasks of board servant-leadership is shaping the vision for an organization. The “leadership” is evidenced by the board’s ability to see beyond the present, to understand the “big picture.” Greenleaf says, “A mark of a leader, an attribute that puts him in a position to show the way for others, is that he is better than most at pointing the direction … the leader can articulate [the vision] for any who are unsure.” This vision is stated so that it excites the imagination and challenges people to work for it even if they do not yet know how to do it. Carver puts it slightly differently, suggesting that board members must be “capable of envisioning a world that isn’t, rather than being captured by a world that is.” Creating the vision cannot be done in isolation. The “servanthood” comes into play in inviting the ownership to help shape that vision.
The servant-leader has “an openness, an ability to listen, and an ability to speak in a way that engages people directly affected by the choices to be made” (John Rosenblum, dean of University of Virginia’s business school). From shared dialogue emerges a vision that is stronger and better. Building shared vision does not mean surrendering individual visions, but establishing harmony among diverse visions so that the group can move forward together.
Richard Smith of the Greenleaf Center suggests the concept of “holographic inquiry—the skill of seeing the issues from all sides and perspectives … accepting the perceptions of others as valid … Being open to viewing the world from another point of view tends to threaten us because we might have to admit that a view we have held for years is not right.”
Unfortunately, the approach many of us take is, “I don’t want to understand more about the problem. I only want to know what to do about it.” The next time a critical issue is discussed at your board meeting, try taping the exchange. Then analyze it and ask, “How much of the exchange was simply each member trying to convince the others that their opinion was right? How much effort was made to truly hear what others were saying? How many questions were asked to try to understand the point of view of others?”
Listening to understand also takes time. Ann McGee-Cooper suggests that most leaders are consumed with “hurry-sickness,” in which they cannot increase their awareness or broaden their perceptions because they have moved on too quickly to notice anything in depth about a situation. Reflect on a recent board meeting. Was so much time spent on making decisions that should really have been made by management, or hearing “reports” about “nice-to-know” (but not critical for governance) items, that the board did not have sufficient time to seriously grapple with understanding what was most important to the owners, or considering the future implications of an Ends decision?
Servant-leader boards must be able to understand the lessons from the past, the realities of the present, and the likely consequences that their decisions will have on the future. Greenleaf proposes the interesting perspective that failure to foresee is an “ethical failure, because serious ethical compromises today (when the usual judgment on ethical inadequacy is made) are usually the result of a failure at an earlier date to foresee today’s events and take the right actions when there was freedom for initiative to act.”
Carver suggests that owners have the right to expect boards to know more about any given issue than the owners do, because the board has been put in a position of trust and leadership on their behalf. So, while the board must take into account the opinions of the ownership on any issue, they must also exercise leadership by making decisions which factor in additional information that the owners may not have. Leadership includes going ahead, not avoiding controversy. Servanthood may include being willing to be vilified for your position on a controversial matter.
A few suggestions from Greenleaf on “preparing to know the unknowable and foresee the unforeseeable”: Approach the problem in the spirit of a search for understanding. Ask, “what questions can I ask about it?” Acknowledge that you see the present in terms of partial truth only. If you are dogmatic about the present, you are likely to be dogmatic about the future—and wrong. The best knowledge is not certainty, but progressively sharper insights. He concludes by suggesting that one must always live at two levels-in the “real world,” and also “detached,” seeing today’s events in the long sweep of history and into the indefinite future.
Meeting the tall order imposed by the characteristics of servant-leadership demands that a board exercise considerable self-discipline. A number of boards I have worked with have expressed discomfort with the word “discipline” when developing a policy that talks about their own behaviour. They see discipline as a negative, punitive concept. In fact, the word comes from the Latin “discipulus,” which means “pupil”—also the root of the word “disciple.” So discipline in the context of board servant-leadership refers to the board “discipling” itself to follow a set of principles, to clearly articulate its values and then to “walk as it talks.”
Greenleaf suggests that the best test of servant-leadership is “do those served grow as persons? Do they … become healthier, wiser, freer, more autonomous, more likely themselves to be servants? And, what is the effect on the least privileged in society; will he benefit, or, at least, will he not be further deprived?” Servant-leadership concentrates on building up others, not on the leader’s self-importance.
Senge says that the choice of servant-leadership is not something you do, but an expression of your being. Leadership must be obsessed with values, says Carver. We need a way of connecting who we are to what we can do. For Boards, this connection is not for their own benefit, but for the benefit of those they serve. “If the board fails to act powerfully, it cheats those for whom it is holding the organization in trust of a voice. If it acts self-servingly, it fails to act in their behalf. It must be powerful and deferential at the same time, for both timidity and high-handedness defraud the trust.”
You can’t learn to use a computer just by reading about it—you must do computers. Servant-leadership is the same. You can’t learn about servant-leadership only by hearing about it. You must do servant-leadership. And “doing” servant leadership means “being” servant leaders. So, don’t just be a humandoing. Be a human being.
For more on the subject of Servant-Leadership see Further Reading.
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by Jannice Moore
Will Policy Governance survive as the modus operandi of a board when board membership changes? That depends on the foresight of the Board. The Board has an obligation to ensure that accumulated “learning” about governance is not lost when new members are added to the Board. Boards would do well to give some advance thought to the issue of “governance succession.”
If Board members are appointed directly by your organization, recruiting members with the desirable qualifications is relatively straightforward. However, even if members are elected, or appointed by another body, making available in advance to appointing authorities and to potential board candidates as much information as possible about what the board does, how it operates and the desirable attributes of board members can have a positive impact on board composition. Board members should:
If your board does not already have a manual, you may want to develop one as part of the orientation package for new board members. Consider a binder format for easy updating, with the following sections:
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by Jannice Moore
I frequently hear “myths” about Policy Governance.
In fact, Carver spends a significant amount of time in his books explaining the appropriate use of committees. What he says is to “start with no committees and add them only when clearly needed.” That does not necessarily mean to get rid of them, although it will mean getting rid of “traditional” committees if they are not doing board work. A Board Committee may be very useful, and appropriate, IF it is doing board work, not work that has already been delegated to staff, and IF it operates so as to avoid interfering with the holism of the board. That means that a committee would be:
The insistence that boards should never get involved in operations is perhaps the right course for large, well-established groups that have lots of expertise on staff. But a small grass-roots organization may well be best served by a working board.
While Carver certainly stresses that the most important work of the board is in determining Ends, and developing broad-based limitations, leaving development of means to the CEO within those limitations, the model is NOT “one-size-fits-all.” The beauty of the model is that it is based on a set of principles, which are internally consistent. Because of this, it is indeed possible to customize it to the circumstances of different boards, without contravening the principles. In the above case, two basic principles apply:
The Board’s policies limiting the staff means should begin at the broadest level. For a large organization with lots of expertise on staff, ideally, those limitations would remain very broad. For a small organization with limited staff expertise, the Board may write more detailed limitations, as long as it remembers the principles of starting with the largest, moving inward only in sequence, and allowing the CEO to make any reasonable interpretation of the policies that it has developed.
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by Jannice Moore
At some point after beginning on the Policy Governance journey, boards are in danger of falling into one or both of two traps: (1) thinking that now that they have written their policies, there is nothing worthwhile left for them to do and therefore starting to edge their way back into the CEO’s domain, or (2) becoming too obsessed with the “mechanics” of using Policy Governance. While attention to the details is admirable, it should not be carried to the point that a board feels it is spending all of its energy on “doing” the model. The energy should rather be spent on setting the direction for the organization – that is what the model is intended to free the board to concentrate on. Far from having nothing “worthwhile” to do, the board is now freed of routine “administrivia” so it can concentrate on providing visionary leadership. When the board glimpses its new potential, meetings should change from mechanical, boring exercises to exciting opportunities to change a corner of the world.
Regular periodic review of the content of policies in the Governance Process, Executive Limitations and Board-CEO Relationship categories is important, yes, but not nearly as important as continual emphasis on Ends. Therefore, once your board has developed the policies in the first three categories, and done one round of content review to ensure that you are comfortable with them, you might wish to schedule regular policy review in a cycle over two to three years. Then you will be able to devote your time to better informing yourselves about Ends issues. This means having a well-designed plan to link with your “ownership.” It also means having a deliberate plan for obtaining enriched board education and input related to Ends issues, since the quality of your decisions will only be as good as the quality of the information on which they are based.
This is all easy to talk about. But how does a board actually put these concepts into practice? I would suggest the following approach as one way of moving towards more proactive, Ends-focused agendas:
Set aside a significant chunk of time at your next board meeting to simply talk about how you will develop effective linkages with your owners. I am assuming that you have already clearly identified who your “moral ownership” is. If not, that is the first step. To whom are you accountable when determining what benefits your organization should produce, who those benefits should be for, and how much they are worth (the Ends)? Who are the equivalent of your “shareholders” -not your “stakeholders.”
Next, decide how you might break that ownership down into some manageable segments, so that you can effectively listen to what they have to say. Perhaps geographic areas, perhaps pre-existing groups within the ownership. Whatever approach you use, the key is to design a linkage strategy that allows you to hear from a representative selection of ownership. Most boards find that their previous attempts at ownership linkage have been largely listening to “self-selected” groups or individuals that come to them. It is highly likely that such input will not be representative.
Since the purpose of this article is not to talk about the details of ownership linkage, but rather to highlight how it ties into an overall agenda cycle, I will not elaborate further. Suffice it to say that you need to develop a plan – perhaps over several years. You may not have the resources to do everything you would like overnight. But if you develop a strategy, over time you will develop strong linkages.
When developing your linkage plan, keep in mind that a reasonable amount of elapsed time has to be allowed to collect this ownership input and consolidate it into an overall picture.
This step is really a sub-section of the overall linkage plan, but I will mention it separately because of its importance. As a board, identify specific questions to raise with the ownership when you talk with them. These questions should be future-oriented. An example of this type of question is, “If we were standing here in 2012, looking back over the last ten years, what could be different for people in your community because this organization has been here? Which of those results should occur in the next 1, 2, 5 years?” Adapt the question to personalize it for your situation. Change the time frames as appropriate for your situation. But focus on the future.
Ask specific questions related to your Ends, to find out if the owners feel these are appropriate results for the organization to achieve, and how important the results are to them. Be sure that all the owners you talk to are asked the same set of questions so that you obtain a comprehensive view of the owner perspective.
As a board, you have been placed in a position of leadership that requires a higher standard of you. You are expected to know more about the issues than the average owner. Therefore, it is important for the board to identify its own learning needs. The board should not rely solely on the CEO to decide what it needs to learn about Ends issues.
Concurrently with developing your ownership linkage plans, also collectively identify the areas in which the board requires education to better understand the Ends issues facing you. Choose two or three key areas. Then find ways to obtain that information.
Some of it may come from asking the CEO to provide “environmental scanning” data. Other information may be researched by board members themselves, and shared with the whole board. Find ways to stretch your thinking, to push the envelope. Look into the future. Learn what may be different in your industry or business five or ten years from now. Identify how needs might be different in the future, so that the direction you set will enable your organization to “be there” for people, providing benefits appropriate to their needs. Think like Wayne Gretzky – where is the puck going to be, not where is it now?
The above pieces of an overall process now need to be linked together, so that they all focus on creating an agenda for every meeting that has as its centerpiece some aspect that relates to Ends.
The easiest way to do this is to work backwards. Let’s assume an annual cycle. The CEO needs to know what the Ends will be in order to develop plans to meet them, including a budget, which is simply part of the plan. That means that the board needs to affirm or amend the Ends, including the “what cost” component, at some point prior to the beginning of the budget cycle.
Continuing to work backwards, before the board can actually amend or affirm existing Ends, it needs to have had the enriched input or education. It also needs to have already collected and analyzed the implications of the ownership input. This leads to a timeline that might look something like the following:
|Meeting Date||Agenda focus|
|January||Develop ownership linkage plan for the year.
Determine board education needs re: Ends issues for the year.
|February to April||Obtain Owner input and discuss its implications|
|May to August||Obtain Board Education on Ends Issues (Other boards, expert sources, staff, etc.)|
|September to October||Based on all information obtained above, amend Ends or affirm existing Ends|
|November||(start here, in whatever month CEO needs the Ends in order to develop budget; work backwards to determine other dates)|
by Jannice Moore
I frequently receive questions about board self-evaluation. Many boards seem to get tied up in knots about the process of self-evaluation, spending a lot of time talking about “how to” do it, but not getting down to actually DOING it. If your board has been struggling in this area, this article will be of some help.
As with many endeavours, it’s often tempting to simply ask the “how” question without placing it in the context of “why”? In this regard, I find the old Rudyard Kipling poem to be a good guide:
I keep six honest serving men.
(They taught me all I knew);
Their names are What and Why and When
and Where and How and Who.
Board self-evaluation is simply an organized process by which the board regularly re-examines its collective and individual performance, and then reaffirms its commitment by identifying plans for improvement.
The content areas for board evaluation should include all aspects of governance. Your Governance Process policies should already have set out your expectations for yourselves. This proactive approach means that you are evaluating yourselves against criteria that you have predetermined. (If you are not using Policy Governance® and have not developed policies about how the board should govern, then that should be your first step.) At minimum your policies should address the following content areas, which then become subject to your self-evaluation:
As a board, you are entrusted with the stewardship of resources on behalf of someone else—your “moral ownership.” That places a moral obligation on you to use those resources most effectively – and I’m not talking about “approving” financial statements. I mean that you need to be able to show accountability for the organization as a whole. Is it achieving what it ought to achieve? The board sets the direction for the organization. If the board is not doing its job effectively, the whole organization suffers.
The board is responsible for its own development, job design, self-discipline and performance. These are not areas that can be delegated to the CEO. Self-evaluation is a way to assure yourselves and your ownership that you take accountability seriously.
Remember that the purpose of board self-evaluation is not to evaluate individual board members, but the performance of the board as a whole.
A good board self-evaluation should be:
Some board self-evaluation should be done at every meeting. At the bare minimum, time should be set aside at the end of each meeting for a brief evaluation of how well you have lived up to your “governance style” commitments during that meeting.
Compliance with all board policies in the Governance Process and Board-CEO Relationship categories (these are the categories of policies where the board is “talking to itself”) should be evaluated (self-monitored) regularly. There is no one “right” way to do this. I favour scheduling a few policies for self-monitoring at each meeting. Some boards prefer to monitor all of the policies at one meeting once a year. The important thing is that they do get monitored. If you choose the first approach, you may still wish to set aside a significant period of time every several years, (frequency may depend on your board turnover), perhaps as part of a retreat, to comprehensively review your own performance.
The regular self-monitoring of a few policies per meeting obviously occurs at the board meeting itself. If your board is one whose meetings are “open” to the public, you will need to consider whether you are comfortable enough to include this self-evaluation as part of the “open” meeting, or whether you would prefer it to be “in camera.” Your values about how transparent you wish your board processes to be will influence your decision here.
For the periodic “retreat” approach, it is valuable to get away from your usual setting, to a place where disruptions are minimized, so that you can put concerted focus on the task at hand.
It is important that all board members participate in board self-monitoring. This is not a task that can be delegated to a person or a committee, although some aspects may be delegated. The CEO should definitely be included. If other members of staff regularly attend the whole board meeting, it would be valuable to obtain input from them as well. They may give you a new perspective on your board function. Input from an external coach may also be valuable. This might be in the form of written comment based on your board package and minutes, and/or periodic observance of your meetings.
For an in-depth retreat approach, you may wish to consider retaining an external facilitator. Ask yourselves these questions:
Self-evaluation does not need to be difficult. There are a few simple steps.
As a board, decide in a broad way how you will proceed regarding end-of-meeting evaluation, and regarding structured evaluation of all Governance Process and Board-CEO Relationship policies.
End of Meeting Evaluation. The whole board can do this, using a simple form to jot down examples of when the board has behaved consistently with the style to which it has committed itself, and examples of when it has not followed those commitments. Or you may assign one board member at the outset of the meeting to be the “monitor”, who will keep track of these examples, and then report his or her findings at the end of the meeting. If you are interested in examples of this approach, please contact me for more information.
Structured Evaluation of All Policies. Decide whether to schedule some policies for consideration at each meeting. If you go this route, actually develop the schedule. The frequency of your board meetings will influence this decision. Also decide if you will periodically have a “retreat”, and delegate responsibility for developing detailed plans to a board member or committee.
2. Set Performance Targets for the Board
Often when boards decide to do a self-evaluation, there is a grand search for a “form.” Evaluation should not be done against a set of generic criteria identified after the fact. The best board self-evaluation is based upon criteria that have been set in advance. Those criteria, in fact, are your Governance Process and Board-CEO Relationship policies, if you are using Policy Governance®. There is no need to run out and invent a new set of criteria. Simply go to your policies, and ask yourselves questions to determine whether or not you have followed them! (This approach to evaluation assumes that you have done a good job of policy development to begin with.)
If you are not using Policy Governance® yet, and have not developed a comprehensive set of policies, then the place to start would be with some basic questions about governance in general. Discussion around these questions should help you determine some goals for further action. Contact me if you would like a very basic set of questions.
It is important at this point to emphasize that board self-evaluation is not about evaluating whether the organization has achieved its Ends, or whether internal management is consistent with board limitations. That is evaluation of the CEO. Evaluation of the Board focuses on the Board’s own performance.
3. Gather Information
Decide on a method of gathering information from each board member regarding the policy or policies being monitored. This may be as simple as doing a “round table” discussion, focusing on each item in a policy and then asking yourselves to cite representative examples of your board behaviour that illustrates compliance or non-compliance with the criteria that you stated in the policy. It is useful to have the board recording secretary make notes of the discussion, so that you have a record of your evaluation, and in future can look back to see if you have improved.
Be careful here not to confuse “reviewing” the content of a policy with “monitoring” your compliance with it. Too frequently, I see board minutes under the agenda item “self-monitoring” that read like this. “The board determined that the policy did not need to be changed.” That is not monitoring – that is reviewing the policy content (something which also needs to be done regularly, but should not be confused with self-monitoring).
Another method of gathering information is to structure a set of questions, based on the specific contents of your policies. These questions can be circulated to board members in advance, and responses tabulated prior to the discussion.
4. Discuss and Interpret the Findings
This is a crucial step in self-evaluation. A common mistake that I see is for boards to gather the information, and then simply “receive” it, without discussing it or taking action on what has been learned. If the evaluation is to serve a purpose, it is important to discuss your self-observations. This can be done on a policy-by-policy basis. It can also be done in a more comprehensive way at an annual retreat.
5. Formulate a Board Work Plan (Governance Action Plan)
You have planned the evaluation. Your policies have set the target against which you measured your performance. You have gathered information from board members about how well you have met those targets. You have discussed the findings. In that process, you will likely have identified gaps between where you want to be and where you are in your board performance. Use that gap information to formulate a GAP (Governance Action Plan). This plan should set specific targets for improvement in your board performance, including what actions need to be taken, who will be responsible for coordinating them, and a target date for completion.
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by Jannice Moore
The New Year is a time for resolutions. Sometimes it helps us to get on with life if we “clean up” a task that we have been putting off. Cleaning up bylaws is one of those tasks about which many boards are prone to procrastination. Yet, it is often unwieldy bylaws that give rise to board practices that are incompatible with effective governance.
When a board implements Policy Governance®, Bylaw revisions are generally needed, in order to create consistency between the Bylaws and the principles of Policy Governance, or at very least, to optimize the flexibility allowed to the board in designing its own process.
Bylaws set out the way in which the real people that constitute the “artificial person” or “corporation” can “speak.” They set out the conditions under which the board can be considered to have spoken. They must be consistent with the requirements of Articles of Incorporation, Letters Patent, or other legislation that provides authority for the organization’s existence.
Since bylaws are more difficult to amend than policies, they are best kept brief and to the point, so that they act as an “enabling” document for the board. In organizations made up of members, Bylaws also provide a means for the members to limit the authority of the board. However, too many limits can hamstring the board, preventing it from governing effectively, just as too many limits from the board can negatively affect the CEO’s ability to achieve Ends.
Typically, bylaws in most organizations contain more detail than is necessary. While there is no one “right way” to create bylaws, here are some general tips.
In general, bylaws should be kept lean. Given a choice, put details in policies rather than bylaws.
If you aren’t sure about whether something should be in bylaw or policy, bylaws would normally include content about:
For organizations with a membership, bylaws would also include:
Issues relating to committees created by the board (rather than by membership), and issues relating to staff, are better handled in policy.
Some organizations are granted authority to regulate the behaviour of others, such as professional regulatory bodies (who regulate the members of their profession), voluntary membership organizations (who choose to expect certain behaviour of members in order to qualify for membership), or municipal councils (who regulate certain behaviours of citizens by virtue of civic bylaws). These organizations may be required to create additional bylaws setting out in detail, for example, the disciplinary process for a profession, or the conditions under which membership will be accepted or rejected. In some cases, the requirement for these bylaws to exist is set out in legislation. When that is the case, the objective should be to make them as enabling as possible, and consistent with Policy Governance® principles, while still remaining within legislated requirements.
Incorporation documents or legislation generally require bylaws to include the “objects” or “purpose” of an organization. In order to avoid having to amend the bylaws every time that the board amends the Ends, it is wise to keep this statement as broad as possible. That way, it can enable the board to finetune the Ends as required, without necessitating bylaw amendments. Rather than the usual list of activities, (e.g., “to maintain,” “to improve,” “to advise on,” “to foster”) create a broad statement of the result of the organization’s existence.
Bylaws in traditionally governed organizations typically include detailed lists of standing committees and provisions related to them. When revising your bylaws related to committees, there is really only one enabling statement necessary: “The board may create whatever committees it considers necessary to assist it in fulfilling its governance accountability.” This permits the board to create committees if needed, but does not set up a series of committees that must exist, regardless of whether they cease to serve any useful purpose. The exceptions, as noted above, are committees created directly by a membership, or committees that legislation requires to be committees of the board. Unfortunately, the drafters of legislation do not always consider good governance principles, and sometimes require committees that can confuse the clarity of delegation from board to CEO. Read such legislation carefully.
Usually the legislation may require only that a given committee must exist in the organization. This does not mean it must be a committee of the board, only that the board is accountable to ensure that it exists. That accountability can be handled by the board’s creation of an Executive Limitation that prohibits the CEO from operating without the use of whatever committees are legally required to exist, consistent with the legislated requirements. Along similar lines, some legislation may require an organizational committee to exist, with members appointed by the board. Again, simply because members must be appointed by the board does not automatically mean that the committee must be a committee of the board. Ideally, the CEO should be able to appoint the members of operational committees. However, in this particular instance, the legislated requirement for the board to make the appointments can be handled as a Consent Agenda item.
When revising bylaws, if it is at all possible, omit the Executive Committee. If you are a membership organization, and the members are simply not ready to accept this step, then strictly limit the authority of the committee, to prevent it from becoming the “real” board. While traditional organizations had a valid reason for an Executive Committee – to “approve” decisions regarding management issues for the CEO in between board meetings – in Policy Governance there are Ends in place, and limitations within which the CEO may operate. Thus, the need for “in between” decisions is very rare. Only if you have a board that is very large (in which case, the ultimate solution is to examine the size of the board), or that meets very infrequently, might an Executive Committee be necessary. Even then, limit its authority to making decisions on behalf of the board only in situations where it is impossible to convene a quorum of the board. With the ability to hold teleconference meetings, this eventuality will be very rare.
Updating bylaws is a perfect opportunity to consider whether your board is the optimal size. A smaller group of people who are committed to effective linkage with the whole ownership and concentration on the long term results to be produced by the organization is more effective than a large group who are theoretically “representative” of separate interest groups. Ask whether your board could be smaller (it’s rare to find a board that needs to be larger). Length of the board’s term and the number of terms to be served should also be reconsidered. Terms that are too short do not allow board members time to become skilled at governing. In general, a term of three years is suggested. This allows a year to become familiar with the organization’s issues and approach to governance, and two years to be fully active, productive contributors to the board. Shorter terms generally result in board members saying that just when they were starting to feel they could make a real contribution, their time was up. Eligibility for a second three-year term should also be considered. At the other extreme, do build in opportunity for healthy turnover, so that a board does not become “stale” or dominated by one or two “life members.”
Since bylaws are about the relationship of the board to its owners, not about the board to its staff, most organizations do not need to even mention staff in bylaws. For some organizations regulated by legislation, it may be necessary to include an enabling statement that indicates the board is empowered to delegate authority to the CEO. If uncertain whether this is required, check with your legal advisor.
The accountability for ensuring that bylaws are current rests with the board. In membership organizations, the final approval of bylaws generally rests with the members, but the board should take the initiative in suggesting necessary amendments. Carver1 suggests a few simple steps, summarized here:
1Carver, John. “A Board Enshrines Policy Governance in Its Bylaws.” Board Leadership, Jossey-Bass Publishers. Sept.-Oct. 1997.
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by Jannice Moore
The headlines about the deficiencies of corporate governance show no sign of abating. Most of the solutions being proposed relate to structure, composition, and regulation. While these approaches may indeed treat the symptoms, they appear to have missed the diagnosis of the underlying root cause. Many governing boards today are suffering from “governance scurvy” – a deficiency in one or both of the governance “vitamins” of sincere motivation, and the ability to clearly conceptualize the purpose and method of governance. An effective remedy already exists.
We now know that the cause of scurvy is a deficiency in Vitamin C, found for example in citrus fruit. In 1601 an English sea captain named James Lancaster conducted an experiment. At that time, over half the men on a ship would die of scurvy on a long voyage. Lancaster had a fleet of four ships. On one ship, each man received a tablespoon of lemon juice daily. The men on this ship remained healthy. On the other three ships, 110 out of 278 died by the midpoint of the voyage. Did this great idea change the world of shipping and save thousands of sailors’ lives? Not for nearly 200 years! It took another 150 years before another officer, James Lind, replicated the experiment, and another 48 years after that before the British Navy began providing regular dietary supplements.
In the 1970’s, two brilliant thinkers independently developed complementary concepts that have the potential to change the future of governance. Robert Greenleaf addressed the issue of the motivation of those who sit in positions of power on governing boards. John Carver provided a conceptually complete model of governance, that, when adopted, allows boards to operate in a way that fulfills their accountability to those for whom they hold their organization or company in trust. Yet, more than a quarter of a century later, most organizations are still struggling with how to “fix” what has gone wrong with governance, and in most cases, paying little heed to the answers that have already been provided. Is modern governance, like 17th century sailors, doomed to wait 200 years before taking advantage of these improvements?
First, the motivation vitamin: Greenleaf points out that the motivation for being on a board of directors ought to be grounded in the desire to serve: “The greatest leader . . . is seen as a servant first because that is what he is deep down inside. Leadership is bestowed on the person who is, by nature, a true servant.” (1995, p. 20) Servant-leader boards see themselves as stewards. The Toronto Stock Exchange Committee on Corporate Governance (1994, paragraph 4.3) had this to say about stewardship: “By stewardship we mean the responsibility of the board to oversee the conduct of the business and to supervise management which is responsible for the day-to-day conduct of the business. In addition [the board ensures] no issue affecting the business and affairs of the company ‘falls between the cracks.'”
Board members should seriously ponder their motivation. Are you on a board because you wish to wield personal power? Because the position is lucrative? (While this is unlikely to apply to most not-for-profit organizations, it may be a motivating factor for corporate board members.) Because it will look good on your résumé? Or are you there because you want, in some way, to make the world a better place, whether that is through the benefits your not-for-profit organization provides or the increase of shareholder value for your company? The New York Times has said that “Servant leadership deals with the reality of power in everyday life – its legitimacy, the ethical restraints upon it and the beneficial results that can be attained through the appropriate use of power” (Quoted in Spears and Lawrence, p. 4).
Greenleaf (1991a, p. 31) makes a very powerful statement about the potential of boards to create good in the world: ” . . . [trusteeship] is an important leadership opportunity. . . . no one step will more quickly raise the quality of the total society than a radical reconstruction of trustee bodies so that they are predominantly manned by able dedicated servant-leaders.”
He also acknowledges that when boards of directors are concerned enough to make a change, it will not necessarily be easy, but it will be worth it: “If directors want a more socially responsible company . . . they should start the process by becoming more responsible directors. This will require some adjustment from administrators who are accustomed to nominal (and, therefore, less responsible) directors. Directors should accept that when they move to their proper role they create a problem, and that they should deal with it as a problem. The heightened quality of the company that will result will be to everybody’s benefit, including the administrators who will be disturbed by the adjustment they must make” (Greenleaf, 1991, p. 4).
In The Institution as Servant, he suggests that boards of directors of companies should take a leading role in social matters, not only to follow the spirit of existing legal requirements, but to keep ahead of them. They should be aware of all new laws or regulations governing social performance, and develop policy to expect voluntary compliance. Further, they should devise a system for assessing the attitudes toward, and opinions about, social performance of the company by owners, be aware of trends and developments in other businesses and institutions, and start a regular flow of information to the directors.
He also notes “the interpretation of these data which the directors need for their policy decisions is different from what administrators need for their operating decisions. Therefore, the directors should begin to build their own independent source of advice to help them interpret the new data.” (Greenleaf, 1972, p. 4)
Finally, he makes a case that it must be clear who is in charge. Boards need to have foresight, the ability to see changing social conditions far enough in advance that institutions can adapt the business to the conditions before events ultimately force their hands. “Managers are not apt to develop those qualities [foresight]. These are not the qualities that bring a manager through a succession of steps to the top of an institution. These are qualities that are best developed . . . in people who are intensely interested in the institution, who basically control it, but who stand outside its day-to-day operation and have a perspective on it that active managers are very unlikely to have. . . .we’re suffering because this role has not been generally recognized or accepted by . . .chief executives of institutions of all kinds. Managers and executives . . evolve a strategy to manage their trustees rather than the other way round” (Greenleaf, 1996, p. 350, emphasis added). It rather sounds as if he were still around watching the recent events in corporate governance!
Having examined the “motivation vitamin” we turn to John Carver’s contribution: a complete “operating system” for boards, built on the premise that the leadership provided by boards is for the purpose of representing the owners (a characteristic emphasized in servant-leadership, as we have already noted). Greenleaf talks about what is often missing in governance: motivation to be a servant-leader; clarity of governance and management roles; information specific to governance. Carver goes a step further and provides the vitamin in which many boards are deficient – a conceptually complete and internally consistent model (Policy Governance) that actually gives boards a practical method that can be used to transform governance.
Carver (2002) emphasizes that the source of board authority is the owners, a fact that appears to be ignored in many companies. The board’s role is to act as a link between owners and management, directing and controlling the company on the owners’ behalf. In serving the interests of the owners, the board is obligated to provide leadership and exercise authority. This does not mean that the board simply blesses with its approval plans and strategies produced by management. It means that the board takes initial authority by clearly specifying what the company or organization is “for” – what benefits it is to produce. It also means that the board takes initial authority by clearly specifying what means are unacceptable for the management to use – an authority that seems to have been woefully lacking in most of the recent corporate governance disasters. Exercising this initial authority in both cases requires the board to have foresight, a requirement noted by Greenleaf. Carver also emphasizes that the authority of the board is vested in the group, not any individual member, including the Board Chair.
Carver’s model also provides a rigorous method by which the board can hold the management accountable for what has been delegated – once again, a serious vitamin deficiency in many boards. Used as intended, Policy Governance can be the basis for a culture of accountability in any organization: the board fulfills its fiduciary role by being clearly accountable to the organization’s owners; the board maintains an open connection with the owners so that it is aware of their values about the organization; the board delegates operational authority to the management, but not before clearly specifying the Ends it expects (what benefits are to be provided, for whom, at what cost) and operational situations that are unacceptable; the board holds the management accountable to it by systematically and rigorously monitoring performance based on those stated expectations.
Policy Governance provides a very useful distinction among the kinds of information that boards need in order to govern. While Greenleaf points out that directors need their own information flow, Carver further explicates the concept by helping boards clearly distinguish the difference between information they need to make decisions, monitoring information, and incidental information. He also encourages boards to develop their own sources of information in addition to that provided by management.
Current governance “band aid solutions” include the requirement for boards to have a variety of committees. These solutions generally give the committees considerable amounts of the board’s power, detracting from the ability of the board to function as a unified whole, using their authority as a group most effectively. Carver’s clear principles that board committees should be reserved only to do work that rightly belongs to governance, not management, and that board committees should never be allowed to interfere with the unity of the board’s process, should be applied before creating any committee.
Finally, the Policy Governance principle that the board is accountable for its own performance, and should evaluate itself just as rigorously as it evaluates the management, appears sadly lacking in most of the structural and regulatory quick fixes being proposed for corporate governance.*
Over the past several years, there has been a flurry of activity in drafting legislation (e.g., The Sarbanes-Oxley Act in the USA, proposed amendments to the Criminal Code in Canada), changing the corporate governance listing requirements for the NYSE, Nasdaq and TSX, and controversy over the benefits of rules versus principles. Each of these initiatives, while not necessarily bad in themselves, fails to look at the bigger picture. They strike me as rather like the parable of the blind men and the elephant. Each looks at isolated parts of the “governance elephant,” without benefit of conceptual wholeness. Canadian scientist David Suzuki (1989) wrote “As long as scientists look at nature in isolated bits and pieces, they can never describe the whole.” We might paraphrase that to say, “as long as society looks at governance in isolated bits and pieces, it can never describe the whole” – or realize its full potential.
Greenleaf (1991a, p. 35) asked: “Who is the enemy? Who is holding back more rapid movement to the better society that is reasonable and possible with available resources? . . . .The real enemy is fuzzy thinking on the part of good, intelligent, vital people, and their failure to lead, and to follow servants as leaders. . .”
Will governing boards continue with their fuzzy thinking, like blind men feeling part of an elephant, ignoring solutions that have already been discovered? Or will they exercise true servant-leadership, and opt to apply a model that already exists, and that has great promise to cure the “scurvy” presently afflicting many boards?
*Note that for reasons of space all the principles in the Policy Governance model have not been described here, but because the model is conceptually a whole, it is intended that all, not just some, of the principles be used.
“Our Board is not certain how to go about using a consent agenda properly. When should we use it, and how do we document the discussion?”
A Consent Agenda (Required Approvals Agenda) is used for items which the Board has clearly delegated to the CEO in its policy, but which some outside body stipulates must be “formally approved” by the Board. These items go onto a special portion of the agenda, which may be called the Required Approvals, or Consent Agenda. The CEO provides a special monitoring report that includes evidence to certify that any relevant criteria previously stated by the Board in its policies have been met. If the board is satisfied with the monitoring evidence, it then adopts the entire Required Approvals Agenda with one motion. There is no discussion. An item can be removed from this kind of consent agenda to the regular agenda to allow discussion only by majority vote of the Board.
When disagreement arises on wording of a policy, determine if the issue causing the problem is about values. (James Collins1, in an article in Fortune, defined a value as something that you would continue to hold even if the world changed such that you were penalized for it.) If the issue is about values, take the time to resolve it. If it is about procedure or “word smithing,” and the choice of words does not reflect a value issue, move on.
Which of these descriptions best characterizes your Board meetings?
Discussion: from the same root word as percussion and concussion. Literally means, “to break apart.” According to Peter Senge, “Discussion involves heaving one’s views at another … a cacophony of voices battling it out to see who wins and who loses.”
Dialogue: from the Greek “dia-logos,” meaning “through the meaning or word.” It involves the “flow of meaning.” People in dialogue are unconcerned about who says what, about whose view prevails, or who saves face. They enter the domain of truly thinking together.
“[the chair] … has a deep understanding of the problem or issue under consideration and is able to articulate clearly and succinctly so that all will grasp it quickly.
“[the chair] … sets the model for listening in the hope that all will listen intently and seek to understand all points of view. Listening … gives a temperate quality to the discussion that is conducive to reaching consensus.”
” … be sensitive to assess the course of the discussion and decide when it is feasible to begin to search for consensus … In one way or another, the chair states a consensus idea tentatively, asking, “Is this a possible solution?”
“… chairing toward consensus calls for sustained inventiveness in searching for both language and concept that will make a consensus idea.”
Would you invest in a new car, and then not bother to have regular oil changes and tune-ups? It might run well for a while, but in time, that investment would lose value.
It saddens me when Boards do that very thing—invest time, energy and money into implementing the Policy Governance model—and then neglect basic “preventive maintenance.”
Check your Board’s practices against this list. If you answer “yes” to any of these questions, consider a “tune-up” soon!
Don’t allow the neglect of basic maintenance to turn your shiny new governance model into a rusting “has-been” that isn’t operating on all cylinders! Practice preventive maintenance. If any of the above practices are slipping into your use of the model (or haven’t yet been eliminated from previous practices), a “refresher” may be a good investment for you.