This blog entry is the second in a series on the internal CEO monitoring report, a critical board tool for assessing organizational performance. These reports have four elements: 1) a restatement of the exact policy language, 2) the CEO's operational interpretation of that policy, 3) the data that proves the organization is in compliance (or that it isn't!) and 4) the signature of the CEO verifying the report. A properly executed operational interpretation is explicitly stated, measurable, and justified. This entry focuses on the role of measurement within the operational interpretation.

The CEO submits monitoring reports to the board on two types of policies established by the board; policies that define desired external outcomes (“Ends”) and policies that describe situations to be avoided by the organization (“Executive Limitations”). Explaining how the organization measured outcome accomplishment or situation avoidance is a key component of the CEO’s operational interpretation. Let’s look at two measurement examples.

The CEO shall not fail to have and use policies and procedures that meet federal and state document retention and destruction requirements. (Asset Protection policy provision in Executive Limitations)

Obviously, the CEO’s first step is to restate this policy in the context of her organization, probably starting with an explanation of the appropriate federal and state document laws and a description of how the organization’s related policy is embedded operationally. To measure this policy, the CEO can simply state that “compliance to this policy will be measured by 1) providing proof of an organizational document retention and destruction policy that meets the necessary standards and by 2) providing a document destruction schedule for the period being monitored as well as a list of any instances of documents that were not handled according to procedure during the period being monitored.” The evidence proving compliance is placed in the data section.

Measuring external outcome policies (Ends) requires a slightly different approach. Here is a portion of this type of policy:

First generation immigrants to our state will have the support they need to create an economically viable life.

Ends policies are actually the board’s contribution to the organization’s strategic plan. Therefore, Ends Policy monitoring reports are going to reflect the CEO’s strategic plan. The operational restatement for this policy will explain the strategic thinking about target clients (all immigrants versus the three biggest populations versus most at risk populations versus unskilled immigrants) and defining “economically viable life” (stable income above the poverty level versus education path so clients are self-sustaining in the future, etc.). Once the CEO has restated the policy language, determining measurements is her next step. Perhaps her planning team determines that a reasonable goal would be that the organization connect with 75% of annual new arrivals from Somalia. To measure this, the CEO may decide it is most effective to annually connect with the immigration office to check on the number of Somali immigrants to the state during a certain time and compare it to the number of new Somali immigrants assisted by the organization. The actual numbers would go in the data section.

Determining measurements is most effectively handled by the CEO because she is in the best position to determine what is possible to achieve based on organizational resources and to know the most appropriate tools and opportunities for effective measurement. The board, rightly concerned about measurement, best exercises that concern by assessing the reasonableness of her interpretation. Hmmmm. Sounds like the subject for another blog!