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Author
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Topic: Reporting
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John and Miriam Carver
Administrator
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posted May 04, 2005 06:30 PM
 
Buskens,Of course, the board’s approach to its own development should be captured by a Governance Process policy. But the fact that you ask that question makes us wonder if you have “Reinventing Your Board,” our book on Policy Governance implementation. But let us get to your main point – we have a few specific responses to your posting. 1] The problem with standard financial reports and narratives is not that they fail to tell about ends accomplishment. They are not supposed to tell about ends accomplishment, they are financial mornitoring. The problem is that they do not succinctly address (a) the CEO's interpretation of each part of the board’s Executive Limitations policy regarding financial management, (b) justification of that interpretation (so the board can determine if it is reasonable), and (c) credible data that demonstrates whether that a reasonable interpretation of the board’s policy has been fulfilled.
2] Policy Governance, in exchange for enabling the board to responsibly and safely give huge amounts of authority to the CEO, demands that the CEO provide periodic prove of performance on criteria the board felt were important enough to write policy on (as just described). Let us remember that the CEO works for the board, not the other way around. If the board really uses Policy Governance, it will regard the CEO's sending of monthly financial data and quarterly narratives as interesting but as completely failing to follow the board’s demand for appropriate monitoring information. Incidentally, this more rigorous approach to monitoring is a lot more work the first time around, but should get more routine after that. We understand that learning to operate in a new way and in a relatively new environment is very difficult. Besides, it may be that your CEO is trying to act like a Western CEO (in reporting style) while the board is trying to improve on the Western style. We think you need to discuss that possibility. We wish you well and hope your board can leapfrog over Western corporate governance.
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Buskens
Participant
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posted May 04, 2005 09:56 AM
Early last year this board has adopted Policy governance. Recently the board reviewed and amended some of its policies according to the change in legal structure (from NGO to shareholding company). I have downloaded the recommended publication (the e-book). That helped. The distinction between decision information and monitoring information is clear. The example in the book of a monitoring report is a tough thing to learn for the CEO. The comment is that it is a lot of additional reporting. Management keeps sending monthly financial data and quarterly narratives to the board. The board is a little confused at this point. They have learned to look in the past! We are so used to that kind of reporting. As chair of the board and custodian of the Policy governance standard in this board I need more arguments and guidance to convince the board and director.
As I understand the PG-model, financial reports and narratives give a picture of the past and are non-monitoring tools.They don't give a position of where the organisation is in terms of achieving its Ends. And compliance/violation with the Ex.Lims is reported by the monitoring report. That can be done annualy or semi-annualy.This board indeed aspires to better governance than the examples they find in Western companies. The national (Serbian) members are very eager to learn, and are making a paradigm shift from state-controlled systems without governance to market driven companies with effective and realiable governance. We have made good progress. We still are exploring how to stay on track with PG and how to train incoming board members. We cannot have a workshop at every board meeting. So training/development/enhancement is still an issue. I have not found yewt any material in your book on this chapter. Question: can board development be captured in a governance policy? [This message has been edited by Buskens (edited May 04, 2005).] [This message has been edited by Buskens (edited May 04, 2005).] IP: Logged |
John and Miriam Carver
Administrator
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posted April 26, 2005 04:32 PM
Buskens, We do not know if this board intends to use the Policy Governance model. If by “monitor shareholders values” you mean to find out what shareholders want, that would not show up “through effective reports in the Board-CEO relations policy.” In Policy Governance concepts, you are confusing ‘decision information’ (info that helps the board make decisions) with ‘monitoring information’ (data that reveal corporate performance on pre-established expectations). The publication you might get is the book “Corporate Boards That Create Value” (2002, John Carver with Caroline Oliver, see bibliographic pages of this website). Good luck. By the way, we hope your board can aspire to much better governance than is practiced in the West!
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Buskens
Participant
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posted April 26, 2005 09:36 AM
As board of a micro credit institution in Serbia we receive an enormous amount of data about financials, ratio's portfolio's etc. This is the culture, because the Central Banks requires this info.
The purpose of this joint stock holding company is to distribute small loans to poor farmers. Investors are interested because its an emerging market with an interesting roi and also some ideological interests. The majority of the board are Serbs which have to learn how we practise governance in a business environment in the West, representing the shareholders interest.
What suggestions do you have to monitor shareholders values through effective reports in the Board-Ceo relations policy. Can you recommend one of your publications in this field?IP: Logged |
John Carver
Administrator
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posted May 13, 2000 07:41 PM
Please use this topic "thread" for discussion of the kinds of reporting the board should receive...and how to keep the types of reporting separate.IP: Logged | |
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