Patchwork governance, patchwork integrity

Canada

If CorDorate Governance
Is a Fid, We Need
More Fads

(continuedfrom page 4)
Defining the purpose (or, in Carvers
language, Ends)
Determining appropriate limits to
what is delegated
Measuring achievements against the
demands of both the Ends and the
limits imposed in delegation

bylohn Carver

Y PERSONAL
NOTEin the previous

issue of Board Leadershipbegan

with the following sentence: Withall the
hype about corporate governance in
the air over the past few years, it may
be no wonder that media baron Conrad
Black was quoted in the May 23,2003,
Financial Post as saying, Like all fads,
corporate governance has its zealots.
Lord Conrad Black, better known to
Canadiansthan Americans, is one of
the worlds most affluent figures in the
publishing business. The complexity
and extent of his corporate holdings
are staggering.
With some risk of being accused
of Schadenfreude, I am compelled
to make note in this issue of Board
Leadership the drama that engulfed
Black in mid-November, only a few
months after the quote noted above.
The November 22 Canadian Globe
and Mail, among a flurry of Blackrelated stories, ran the following indictment of Hollinger International, Inc.,
part of Blacks empire: The company
admitted yesterday it was plagued by
a host of corporate governance problems that failed to detect possible conflicts of interest.
I know of no one who disputes Conrad
Blacks intelligence. Hes not only a savvy
businessman, but a published biographer
of Franklin D. Roosevelt. But I cannot say
the same for persons who agree to sit as
outside directors for any company in
which even a brilliant person who isnt the
100 percent owner is allowed to run things
his or her own way. It seems that the corporate landscape continues to accumulate the litter of disintegrated companies
due in part to governing boards that

JAN.-FEB.

2004

refuse to be governingboards, rendering

the term frighteninglyoxymoronic.
As always, of course, the blame
dished out in the press is heaped on
the most obvious perpetrator of the
bad deeds. Remember Kenneth Lay at
Enron? But pointing a righteous finger
at the individual-though satisfymg and
perhaps even deserved-does little to
make the future better. In fact, it is a
dysfunctional way to approach the
problem. There will always be bad
actors, often brilliant and attractive
ones. The idea of a board-and therefore the idea of governance of any type
of organization, including nonprofits
and the bodies politic-rests not on
the unattainable perfection of every
appointed leader but rather on the
belief that even though individuals may
stray, the good intentions, good faith,
and competence of the group can act
as the steadying keel deep in the water.
But that works only if the group
knows that and rises to the challenge.
Unfortunately, many of the accepted
norms in governance-again, corporate
or otherwise-act against a boards competently taking on that task in a way that
does not also trap it in trivia, micromanagement, and disempowerment of the
very people who must get the organizations job done. Ironically, not a few
best practices do just that in the
absence of a powerfully compellingand
conceptuallywhole paradigm of governance. Governance as the world still
accepts it remains a patchwork of disjointed practices. It should be no surprise
that it then produces a patchwork of probity and proper oversight.
Fadindeed. 0

Policiesfor Carver are any instruction by the board to the CEO or to the
board itself, from the very broad to the
very particular-any level of focus desired
by the board. The great strength of Policy
Governance is that it speaks prescriptively
to stipulate ends and proscriptivelyto
exclude means. When a board is prescriptive concerning means, it retains for itself,
and does not assign, accountability.
Carver emphasizesthat the board has
total accountabilityfor the organization.
Policy Governance is designed to encompass that total accountability,both the
intended results and the means used to
achieve results. It is designed to ensure the
clear assignment of accountabilityto the
CEO, with the concurrent obligationupon
the CEO to formallypresent that accountability (report)back to the board. Policy
Governance,used as intended,provides
excellencein governance.The board of
a Canadian charitable corporationthat
adopts Policy Governance has performed
duediligenceand fuElled all legal obligationsimposed on its directors.On a comparative basis, such boards and directors
are far ahead of most corporations, even
those in the world of commerce, in observing their legal and moral obligations.
The assertion in the Primer quoted at
the beginning is quite inaccurate.Any
interpretationor perception that Policy
Governance fails to assign or incompletely
assigns accountabilitydemonstratesan
erroneousunderstandingof what Carver
postulates. By not presenting the fullpicture, the sponsorsof the mimer have done
a disserviceto those who will be led to the
incorrect conclusionthat the Carver model
is unlawful in Canada. Hopefully, a new
edition of the Primer, with appropriate
corrections,will be issued without delay.
Hugh M. Kelly, Q.C., Toronto;
(4 16) 595-8 176;hkelly@millerthomson.ca
(continued on back page)