A board is at the top of homeowners’ association with authority and accountability for that organization. Larger hoas have gone through a transformation in their approach to managing their associations. They have changed from believing that they personally were required to manage "hands-on" to recognizing the value of hiring professional managers. The next level of sophistication in governance is to recognize that the board’s role is not to look over the manager’s shoulder but rather to govern by establishing policies.
A manager makes hundreds of decisions every day. The board is ultimately accountable for them all. Boards try to make the most important decisions and hope that the rest are suitable, or at least, legal. Since the board can’t make all of the decisions necessary to manage an association, it makes sense to agree on a policy that has the benefit of being appropriate to many action decisions. Policy decisions last a long time. One decision through a policy can reach out and effect the whole organization because of the breadth of the statement.
Boards have policies now. How would managing by Policy Governance be different than the policies presently in place? Policy Governance is a model that describes the responsibilities and functions of a board of directors. It defines the work of the board as ‘governance’ and makes the distinction between governance and management.
It begins with a premise that the board does not exist as volunteers who manage or advise management, but, rather, as trustees on behalf of all of the owners. Once the board recognizes who their ownership is, they have a responsibility to communicate with them.
In Policy Governance the board must determine why the organization exists. What difference does the hoa make in the world, for whom, and at what cost? John Carver calls these the "Ends" of the organization. The "ends" are not easily determined. The manager, not the board, is entirely responsible to see that those ends are achieved. When the board has concisely expressed them they hold staff accountable in a way that no strategic plan does.
Having given staff direction through the ends policies, Policy Governance then does something counterintuitive. Rather than attempt to tell the manager how he/she will achieve the ends, the model assumes that the manager is an expert creative in fashioning the means, the activities necessary to achieve the intended results. But there are some means that would not be acceptable to the board. These polices are called "Executive Limitations" and instruct the managers what not to do. They are generally issues of law, ethics and morals.
To ensure that the manager is achieving the ends and avoiding the executive limitations, the board develops a monitoring plan. If policies are worth creating, then they are worth monitoring. These reports may come from the manager, from an outside consultant or, more rarely, direct inspection by the board.
Finally, the board must govern itself and so develops governing process policies. By structuring its conduct, personalities control the board less. However the entire board must be willing to remind each other when the policies are not being followed
These policies are referred to at every board meeting, transforming the board forever.