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National keynote presentation on governance basics for directors of electric cooperatives.
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1/12/2008
1
NRECA CEO Close‐UpIndian Wells, California
Ellen‐Earle Chaffee, PresidentValley City State University
January 16, 2008
• Great governance is a quest.• The basics are well‐known and change little. • Greatness and misery lie in the human factors.
• Prevent major mistakes.• Automate the basics.• Revisit them on a regular schedule.
• Expect greatness.• Learning, partnership, values • Applied to strategy and interpretation.
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Short Stories that Made Headlines
• Board of Regents includes• three US Senators, • three US Representatives, • the Vice President, and • the Chief Justice of the United States
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• Board member heads a teachers union, kpickets.
• Board member expected favors, coach was fired.
• Board member recommended hiring a bodyguard investigated for child molestation.yg g
http://www.ajc.com/metro/content/metro/clayton/stories/2007/12/15/clayethics_1216_3DOT.html
• Board member heads a teachers union, kConflict of interestpickets.
• Board member expected favors, coach was fired.
• Board member recommended hiring a bodyguard investigated for child molestation.
Conflict of interestPersonal power
Old boy networkyg g
http://www.ajc.com/metro/content/metro/clayton/stories/2007/12/15/clayethics_1216_3DOT.html
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• Spying on employee, misappropriation ofSpying on employee, misappropriation of resources, favors for friends, illegally large surplus
• Director arrested (felony), fired, 16 mo. pay• 5 whistleblowers; one fired, one suspendedp• AG investigation of management• AG investigation of board chair
• Roles and responsibilities report• New Chancellor to strengthen the “system ”New Chancellor to strengthen the system, supervise Presidents
• One powerful President went renegade• Chancellor intervened
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• Support for Chancellor: 10/11 presidents, statewide faculty, all but one newspaper
• Board reaffirmed “roles and responsibilities”• Board negotiated Chancellor’s resignation. Cost: $200,000
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• Four‐year terms, no board education• Trappings do not replace education• R&R report detailed the confusion, not the expectations
• Power trumped policy
We Know What To Do. We Just Don’t Always Do It. Why?
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• Too complicatedl• Personality trap
• Hunky Dory• Discourage questions• The buck stops where??
“Everything is perfect, Mr. Chairman. Blue skies. Spring is right around the corner.” ‐‐CEO Jones
• Oversimplifyd• Focus on decisions
• Personality trap• Hero complex• Hold back
Hey, this is FUN! I can do this!Chairman Smith
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Put it in Writing
CoCo‐‐opop
BoardBoardCEO
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Ensure •Are we doing what we are supposed to do?
•Are we doing what we are supposed to do?
organization fulfills its mission
Ensure •Will it exist and succeed for a long time?
•Will it exist and succeed for a long time?
organization’s long‐term viability
Duty of CARE• Decide and act in good faith
Duty of LOYALTY• Decide and act in the best interest of the
i ti t t
Duty of OBEDIENCE• Faithful to founding documents
• Prudent person level of care
organization, protect and support
• Obey the law
Where does it say, “Focus on finances???”
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HOW WHAT
Mission
Roles
Transparency
• Codify it (policy manual)• Annual calendar • Flow chart it• Hang it• Set criteria• Make it into a form• Assign it to a Board committee
• Mission fulfillment• Organizational longevity• Accountability• Roles and responsibilities• Transparency• Leadership succession• Strategic goals• Assign it to a Board committee
• Measure it• Headline it• Review it routinely
• Strategic goals• Conflict of interest• Legal issues• Performance improvement
Fiduciary, Strategy, and Interpretation
ISF
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INTERPRETIVEINTERPRETIVE
Governance PyramidGovernance Pyramid
Cultural, Social SystemsCultural, Social Systems
STRATEGICSTRATEGICBiological SystemsBiological Systems
Integrated Systems Theory
FIDUCIARYFIDUCIARY
Governance as Leadership: Reframing the Work of Non‐Profit Boards by Richard P. Chait, William P. Ryan, and Barbara E. Taylor, NY:: Wiley, 2004.
E. Chaffee. "The Concept of Strategy: From Business to Higher Education." Higher Education: Handbook of Theory and Research, Vol. 1. New York: Agathon Press, 1985, 133‐171.
Mechanical SystemsMechanical Systems
INTERPRETIVEINTERPRETIVE
Raising Rates ExampleRaising Rates Example
Re‐examine assumptionsContrarian scenarios
STRATEGICSTRATEGICNew technologiesAlternative sources
Tell the story: Communication plan
FIDUCIARYFIDUCIARYAnalysesEfficiencies
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There
ELEVATION 100’•Mission•Longevity
Here
ELEVATION 10’ ISF
http://www.balancedscorecard.org/basics/bsc1.html
ISF
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ThThere
•Customer Benefit•Internal Business Processes•Learning and Growth•Financial
ISF
• LearnLearn•Governance, Industry•Communication skills
• Values and priorities• Expectations “softExpectations, soft automation”
ISF
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• Written, reviewed, revised, enforced member expectations; term limits
• Focus on Quality• Speak the headlinesRound the table• Round the table
• Distinctly different Board candidates• Governance staff and budget
ISF
• Well‐educated boardWell educated board • Shared vision and strategies• 50+ percent discussion – no vote• Strong, trusted board committees• Consent agendasConsent agendas
ISF
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INTERPRETIVEINTERPRETIVE..
Governance Pyramid SummaryGovernance Pyramid Summary
LEARN TOGETHER, BUILD INTO THE AGENDALEARN TOGETHER, BUILD INTO THE AGENDA
STRATEGICSTRATEGICPARTNER, BUILD INTO THE BALANCED SCORECARDPARTNER, BUILD INTO THE BALANCED SCORECARD
FIDUCIARYFIDUCIARYAUTOMATE, BUILD INTO THE CULTUREAUTOMATE, BUILD INTO THE CULTURE
• Great governance is a quest.• The basics are well‐known and• The basics are well known and change little.
• Greatness and misery lie in the human factors.
• Prevent major mistakes.• Automate the basics.• Revisit them on a regular scheduleschedule.
• Expect greatness.• Learning, partnership, values • Applied to strategy and interpretation.