Understanding the difference between governance and management and implementing a few key practices can help boards avoid getting bogged down in details that keep them from providing critical leadership and direction.
By Erica M. Osborne, MPH, principal, and Cindy Fineran, senior consultant, Via Healthcare Consulting
One of the fundamental challenges of governance is understanding the difference between governance and management.
Governance is about vision and organizational direction. In general, system and regional boards set goals and make strategic decisions, while local boards advise and consult on those decisions and oversee implementation. Management, on the other hand, involves the day-to-day running of the organization and taking direction from the board. Management delivers results by implementing policy and strategy set by the system and regional boards and reporting on performance. In other words, governance is the “the what” and management is “the how.”
Yet a common pitfall in governance is getting bogged down in details and deliberations in the mistaken belief that the duty of care and responsibilities of oversight require digging deep into the weeds.
Although the board is obligated to be “nosy” and aware of what is taking place in all key aspects of the organization, board members must resist the temptation to stick their fingers into operations. The temptation is, of course, understandable. Board members are often recruited specifically for their experience and success as business operators. This new role requires board members to provide a different function, one that is not always intuitive to those accustomed to running a business.
What Happens in the Weeds
When a board wanders off the beaten path, there are plenty of interesting, but not necessarily valuable weeds to explore, and the board generally doesn’t get any closer to its destination. Those weeds can also be dangerous. One theory about the origin of the phrase “getting too deep in the weeds” is telling: When helicopter pilots fly low, they can see the ground in helpful detail, but if they fly too low, they are literally in the weeds and in danger of crashing.
Asking the Right Questions
So, just what are the right questions?
In the article “Distinguishing Governance from Management,” governance consultant Barry S. Bader recommends that boards ask themselves the following questions when trying to draw the line between what’s governance and what’s management.
- Is it big?
- Is it about the future?
- Is it core to the mission?
- Is a high-level policy decision needed to resolve a situation?
- Is a red flag flying?
- Is a watchdog watching?
- Does the CEO want and need the boardʼs support?
Using these questions as a guide can help the board stay focused on the bigger, board-level picture.
What’s Oversight if It Isn’t in the Details?
Management also has a responsibility in helping the board stay elevated to board level governance. For example, board packets prepared by management and comprised of detailed reports often overwhelm board members with information that members must sift through for critical information; they may also draw board members down into management level analyses, discussions, and deliberations.
To help the board address issues effectively, reports should include a short, one- to two-page cover memo or executive summary that begins with the “bottom line first.” That bottom line should inform board members of the specific purpose of the issue and what is expected of them. Is it to approve, discuss, provide guidance, or review to be informed? The recommendation should be followed by a summary that succinctly or in bulleted format outlines:
- The situation;
- Background or history of the issue;
- Assessment of pros and cons;
- Reviews conducted by other departments, committees, or councils, including legal and financial and any findings therein;
- Questions the executive team would like the board to consider; and
- Expected outcomes, including key measures, indicators, milestones, and/or deadlines used to measure benefit or success.
The summary should be followed by a list of any attachments.
When executives combine concise, yet complete executive summaries with to-the-point presentations, they strengthen the board’s ability to focus at the governance not management level with more time to deliberate over critical concerns.
Finally, it’s the board chair’s job to set an agenda that is focused on the right issues. If board members begin to delve into the weeds, it’s up to the board chair to refocus attention on the appropriate level of discussions and actions that will guide the hospital closer to fulfilling its mission, vision, and promise.
Source: Bader, Barry S. “Distinguishing Governance from Management.” Great Boards. Fall 2008.
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