How the Board Learns Strategy through Careful Ends Monitoring

 In the Policy Governance^® world a well done operational definition (previously referred to as a reasonable interpretation) of the intended End as part of the monitoring process should reveal to the board the essential strategy of the organization directed at creating the intended Ends. And, it should reveal the critical mileposts against which the board can assess the progress toward Ends.

There are times when achieving the Ends must take place through an uncertain and ambiguous world. It is not a linear sequence of predictable actions and results (it rarely is). This means that little steps are best experimentally taken toward the Ends. It also means that the organization must develop the competence at doing that — creating a theory of how things are and then creating a hypothesis on how to move forward, executing against that hypothesis and then analyzing the results. Progress? Theory confirmed? To what extent? —> Install the process that brought the improvement and repeat. Theory —> hypothesis for improvement —> try it out and measure results. Better results? Hang on to them and repeat. This is the essence of getting better and better, eventually excellent. Don’t be afraid to experiment —make small bets as the book by that title suggests.

This is the essence of the PDCA cycle that Deming taught. To pull this off, the organization must create a culture that permits, enables and strengthens its capacity to improve. A culture of curiosity, collaboration, not blaming, but a systems-focus, willingness to listen to negative information from employees and customers, a learning culture, etc.

How does the Board know all this is going on and what progress is being made? It certainly won’t wait for the Ends to be created. Reporting can be part of the incidental information report and/or part of an Ends monitoring report reporting on progress along the roadmap laid out in the operational definition. Further, I believe that these reports also be presented verbally to the board as well as in writing. The give and take, (not meddling nor “advice”), will clarify for the board the effects of the strategy as being executed. The board can assess the operational definition and the progress being made for completeness and desired effect.

An Expensive Aspect of Risk Often Overlooked by Organizations

 Even organizations that are fairly sophisticated concerning their approach to risk, fail to consider an area that might well be costing them much more than they dream — the health of their employees. Companies are aware of employee injuries and work-related issues and the costs attendant to being lax about worker safety in all its aspects. That is not what I am talking about. If the organization were to just look a bit beyond work-related injuries and think about the cost to them, both directly, including lost productivity and health care costs, (if self-insured) or indirectly (if being experience-rated by a carrier or plan).

The typical management isn’t aware of what can be saved by proactive attention to the preventive health of employees. The employer of all people, other than the employee himself, (and then maybe more), has a reason to keep an employee healthy, not only the care costs, but the lost productivity and/or replacement cost for early loss of an employee.

There are two branches of strategy an employer can pay attention to - primary prevention (prevention before there is any illness), including being sure the employee is up to date on all recommended immunizations, insisting on wearing a seat-belt, creating knowledge (free assessments), assurance of early and proper prenatal care, incentives and enablers for weight control, exercise, and for a healthy diet.

I was consulting to a large international ministry several years ago on this subject and suggested several preventive initiatives the organization could take, including the policy of insisting on the wearing of seat belts. It turned out that it had a significant number of boomers who did not wear their seat belts. These folks were located all over the world in places like Rome! And Paris! The CFO (who was over medical care) asked me in all naivety why they would want to have such policies and spend that money. He was oblivious to the risks the organization was exposed to. AND one year later one of their missionaries who was not wearing his seat-belt had a crash that resulted in injuries requiring expensive medical care and years of therapy and low productivity. All would have been prevented if he had been belted in. (The layman often under-estimates the protection provided by wearing a seat-belt.)

Secondly, early secondary prevention is also valuable. Catch a developing problem early and correct it — early indications of adult diabetes, hypertension, bone loss, and other circulatory threats developing. When a knowledgeable consultant runs the numbers for an organization, usually hundreds of thousands of lost dollars are preventable. Employers often expect the provider to think in terms of prevention. Don’t count on it. Providers are not trained in prevention and do it frequently because someone makes them (unless they are very progressive and experienced such as Kaiser). Historically, providers were paid for piece-work and still are in many cases. It was sick patients that made money! Not healthy patients; - talk about perverse incentives working against employee and employer interests! It is a mental habit hard to break. Furthermore, insurance companies don't take a long view since they do not know how long those employees will be on their rolls. Employers create the incentive for insurers to think short term by re-bidding coverage regularly. Preventive benefits are long term and are likely NOT to be to the current insurer's benefit!
Consequently, employers must themselves become proactive with savvy intentionality across the spectrum of their employees' health. They will mutually benefit, often sooner than they think.