Defending Fundamentals

If the appearance of schisms is considered a sign of success for a movement or idea, then Policy Governance would appear to be doing well in the world of food co-ops. In contrast to the classic description of the Carver model as an integrated system which should be adopted whole or not at all, we have begun to see advocacy for what might be called Policy Governance Lite: take the bits you want, leave the rest, add your own extra features as you see fit.

As a member of Weaver Street Market’s board of directors for nine of its twelve years of Policy Governance history, I’m a firm believer in the value of the Carver standard because I have seen how well it can work when applied with dedication and respect. Call me a fundamentalist, but I’m increasingly concerned to see compromised and crippled versions of the Carver model promoted to directors of boards that are in the process of adopting Policy Governance or are thinking of doing so. The sidebars of this article comment on a couple of recent examples, which have appeared in Cooperative Grocer.

A case study

I’ll start by looking at why a board might wish to adopt Policy Governance in the first place, using our own experience as an example. In 1994 Weaver Street Market was a young co-op experiencing the kinds of board dysfunction that are probably familiar to many readers of this article: lack of focus, ad-hoc decision making, and worst of all, board members with no clear and consistent notion of what their job was supposed to be. Good management was keeping us afloat, but lack of good governance was such a constant frustration and hindrance that we were in danger of losing valued senior employees. And while lackluster performance from the board might be tolerable for a natural foods co-op that has a secure local market monopoly, we had never enjoyed that luxury. We’d been in a competitive local market from the get-go and realized we needed to excel in all aspects of our organization in order to survive.

The systematic thinking and discipline of Policy Governance seemed to offer a light at the end of the tunnel. In addition, there was a vision within the organization of reaching for a fuller level of service and involvement in our community. Policy governance offered the chance of doing more than just healing the board process: it promised the opportunity to spread our wings and to seek excellence in the total performance of the organization.

How’s it working for us?

We adopted Policy Governance for our board process in 1994 with the same commitment as when we had adopted the cooperative model for our business organization six years earlier, and for similar reasons. It seemed to offer a better way of achieving our goals than any available alternatives. We approached it as a complete system because, as such, it appeared to show us how to allow management to operate with initiative, creativity and effectiveness without any compromise of our fiduciary responsibilities as a board.

We have not been disappointed. Since choosing that road 12 years ago, Weaver Street Market has grown towards maturity as an organization in all the ways that are important to us. Our position at the center of a lively and engaged community has become assured. We have grown and retained a first-class management team, our business operations are expanding sustainably and under confident direction even in the face of significant additional local competition, and we have posted a profit 12 straight years in a row. We have surpassed local livable wage standards for our employees, and our retention rates are high.

From our single store in 1994 we have now grown to operate two groceries and a full-service restaurant; in the works are another grocery location, a food house, a major expansion of our second store, and a fourth major expansion of our flagship store. We have undertaken three major real estate transactions, spun off new local cooperative ventures in housing, communications, and agricultural production, and have mentored a new grocery co-op in a neighboring town. All in all, we have made substantial, measurable progress towards the whole of our Ends within the cost constraints we have set ourselves.

It’s hard to envision how we would have stayed in confident command of such expansion of our community presence under a system of governance that was anything less than comprehensive and well-considered. Through our use of Policy Governance the general manager was able to know in advance the board position on all of the significant factors affecting this growth and could act accordingly. Meanwhile our board was able to focus on its job of setting expectations through policy and monitoring accomplishments through linkage, as much in accordance with Carver guidelines as we knew how.

Twelve years in and still learning

At its core the model itself is simple enough to understand, and many of the initial benefits can be felt early on. But the process of full implementation is not necessarily easy or swift. At Weaver Street Market the challenges of absorbing the paradigm shift that Policy Governance demands resulted in our taking several years just to settle on our Ends statement, and even then we cautiously retained it as a draft in our policy manual for two years more before formally adopting it. Beyond that is the steep learning curve for board/executive linkage processes, while harder still is achieving excellence in board/ownership linkage, which our board considers to be its most significant current challenge.

There is no standard Policy Governance template specifically designed for retail cooperatives, and each board is going to be faced with many significant choices in the implementation process. There is always pressure to take those tempting short cuts—“Why can’t we, just this once, simply tell the general manager what to do?” In the long term a successful implementation of Policy Governance requires a high degree of commitment by both board and management, and boards need to be always on their guard against variants to the model likely to undermine its integrity and completeness. Be patient and persevere.

Carver has often compared Policy Governance to a clock or watch: don’t expect it to run properly if you add or subtract parts. A board that is drawn into tinkering with Policy Governance at the system level is likely to find itself ornamental but dysfunctional, like the stopped grandfather clock in the hall.

For a less mechanical analogy, let’s compare Policy Governance to a violin. Don’t waste time worrying if the fiddle needs a different complement of strings: this elegant, expressive instrument is capable of communicating a wealth of visions in an abundance of styles just as it is. And if you have Carnegie Hall aspirations, then it’s time to tune up and practice, practice, practice!

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James Morgan is a design professional and is a board member of Weaver Street Market in Carrboro, North Carolina (jpm@mindspring.com).