Public Agency Boards of Directors: Going from Good to Great

Public Agency Boards of Directors: Going from Good to Great

One area of consulting that our firm specializes in is governance, specifically Board governance for large public agencies. The work we’ve done in this area has been groundbreaking – resulting in much clearer definitions of what the Board does and doesn’t do and stronger alignment around strategic goals and performance expectations. This work has proven successful for a number of public agencies in the United States.

Our work on governance for a large public agency began in 2001 when the president of the Board of Directors of the Sacramento Municipal Utility District (SMUD) asked us for help. He told us that while the utility was working well, the Board’s role was very unclear. We conducted a situation assessment and presented these findings at a public meeting of the SMUD Board:

• Board members thought the status quo was unacceptable and that something needed to change.
• The Board wanted its leadership role defined – along with how to exercise that role.
• Board members wanted to have real policy discussions in which differences could surface and be debated in a healthy way.

Our recommendation was that the Board develop these three types of policies:

After the Board voted to adopt our recommendations, it took 12 months to develop a full set of policies. But once the governance system took hold, people started to see its benefits right away. One benefit was that no individual Board member could direct the CEO or management any longer. By putting the Board’s expectations into writing, it created a clear, stable set of performance expectations that the CEO could use to manage operations and long-term planning. Another benefit was the increased alignment across the organization. Everyone from front-line employees to the executive team understood what results the Board wanted the utility to achieve.

In summary, here’s why this approach to Board governance has worked so well and why we think it is ground-breaking:

• First, the system bakes in the principle of unity of control. It is the Board, and not individual Board members, that directs the organization.
• Second, the Board directs the organization through clear, written policies, not some other means. This provides clarity to the CEO and management – and provides clarity and transparency to the public.
• Third, the monitoring process provides a way for the organization to measure how well it is doing on a regular basis, and in an open and transparent way.
  Lastly, the system builds alignment across the organization, from the Board to front-line employees, about the results that the Board wants the agency to achieve and how performance will be measured, which brings a level of focus and accountability often not seen in public agencies.

It’s been exciting to see how a systemic approach to governance can bring about such profound changes. And it is nice to think that it is a lasting form of governance, one that endures even as the people responsible for it change.

Please note: A case study of LRI’s work with public agencies can be found here.

Eric Douglas

Eric Douglas is the senior partner and founder of Leading Resources Inc., a consulting firm that focuses on developing high-performing organizations. For more than 20 years, Eric has successfully helped a wide array of government agencies, nonprofit organizations, and corporations achieve breakthroughs in performance. His new book The Leadership Equation helps leaders achieve strategic clarity, manage change effectively, and build a leadership culture.