In brief
- A useful governance policy helps people understand their responsibilities.
- Recurring disagreements can show where existing guidance is unclear.
- Plain language and realistic examples make a policy easier to apply.
- Legal and compliance policies belong with your counsel.
What problem should the policy help with?
The request for a new policy often comes after a frustrating experience. A contract needed approval and no one knew whose. A committee made a commitment others did not expect. The board and CEO disagreed about what an earlier decision allowed.
Before adding another document, ask what would have helped in that situation. The answer might be a clearer policy, a better conversation about an existing one, or a change in how information reaches the board.
Clarify the responsibilities
These areas can be useful to examine when questions of authority keep returning:
- Delegation of authority. What the CEO may decide, sign, and spend without coming to the board.
- Approval thresholds and escalation. Which matters return to the board, and at what size or level of risk.
- Committee charters. What each committee may decide, recommend, or review on the board’s behalf.
- Board information and reporting. What the board receives, how often, and in what form.
Involve your counsel where policies address legal or compliance obligations, including conflicts of interest, whistleblower protection, and document retention. Governance agreements and legal requirements need to work together.
A good policy is the one people reach for when a real decision comes up.
Try the wording on a real situation
A policy can sound clear in the abstract and still be difficult to use. Read a draft with the people who will rely on it. Ask how each would apply it to a familiar situation and compare their answers.
Keep them current
Make the current policies easy to find and agree who will keep them under review. A change in leadership, a new activity, or repeated uncertainty can all be reasons to look again. The aim is guidance people understand and use.
About the author
Dan Liutikas
Dan Liutikas is Boardpath’s founder. A former chief executive of the International Legal Technology Association and chief legal officer at CompTIA, he works with boards and executive leaders on decisions, governance, and their working relationships.
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