2012 ASPIRE Modules_10 - 2

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					Susanne Matthiesen: Hello my name is Susanne Matthiesen I’m Managing Director of
Aging Services for CARF International, it’s my pleasure to be your presenter today and
I’m going to present to you information on section one B as in boy, the governance
standards in the aspire to excellence model

This first slide here presents you with an illustration with the aspire to excellence model
of standards, this model of standards is the foundation upon which the business practice
standards or section one of each standards manual that CARF has is designed around. As
I said before today I am going to present you with information on the governance section
of the aspire model, you will see that near the top of this slide on the right side of your
screen under the A for the aspire to excellence model assessing the environment you will
see the governance standards identified there.

With regard to the Aspire to Excellence model the governance standards really focus on
how governance is accountable in the organization, how governance helps an
organization to be accountable to its various stakeholders. The governance standards also
address the lineation of roles and function, so what’s the effective functioning of a
governing board and its members versus the effective functioning of management and
leadership within an organization making sure that there are policies and procedures and
systems and lines of communications to ensure that each part of the organization is
functioning effectively.

So these are the main concepts that really are addressed in the governance section of
standards. Okay so it’s important to remember that the governance section of standards
are not required to be applied on our survey, they are an optional section of standards and
they apply if the organization has a corporate governing board these standards would be
applied to the board that is vested with authority to guide the legal affairs of the
organization’s corporate entity.

So where you identify if your organization is going to apply to governing standards is on
your intent to survey or application, if you select to apply the governing board standards,
again for the majority of CARF organizations we do not require you to use the governing
boards standards, there are some states and provincial entities where CARF may be
accepted or may have been status where perhaps those state of provincial entities might
require you to apply the governing board standards. So as an organization working
through CARF accreditation check with your staff at CARF, your resource specialist
that’s assigned to your organization to see if these apply and also check with your state of
provincial entity to see if there’s any such requirements.

So the entities that are requires to apply the governing board standards are, continuing
care retirement to communities and aging services networks, all other types of programs
governance is optional. Now one thing that’s also really important to remember is that if
your organization has an advisory board, a community relations board, different
management committees these standards don’t apply to those types of entities, again its
only for your corporate governing board that can direct the legal affairs of the
organizations corporate entity.
So let’s talk about what’s the definition of a governing board, just again so we reinforce
where do these standards apply to, so in the glossary of every standards manual which
you’ll find in the back of the publication, the governing board is defined as the following,
it’s the body vested with the legal authority by your state of provincial statutes to direct
the business and affairs of a corporate entity. Such bodies are often referred to as boards
of directors, they could be trustees or governors, advisory and community relations fords
and management committees do not constitute governing boards. So just make sure that
you’re applying when you’re preparing for accreditation or if you’re a surveyor going out
to survey an organization that you’re clear on the entity to which the governing boards
have been… the governing boards standards have been applied also make sure then in
your intent to survey that you see that information where they’re not the governing
standards will be applied on the survey.

So really what’s the principle or the over arching purpose behind having governance
standards, you know we really as an organization and as an accreditor in many different
sectors of health and human services we want to ensure that the governing board provides
effective and ethical governance leadership on behalf of its owners and stake holders. To
ensure that the organization focuses always on its purpose and on good outcomes for
person’s served resulting in the organization’s long term success and stability.

So as your accreditor in the field we feel it is critical to ensure that at the highest level of
any organization the governance level that there really are affective practices policies and
good communication that help the organization at all levels to function effectively, those
are the principles that underlie section one B of every standards manual.

So the governance standards, what are the key areas that they address? I f we just break
this down into the major concept that you should be aware of if you’re serving on the
governance standards or applying them at your own organization. We’re really talking
here about making sure that ethical active and accountable governance is working in and
organization that applies these standards. The standards are also going to look at who
comprises the board, what’s the board composition, how are individuals selected to be on
the board, orientation process these ongoing development of board members, self
assessment of the whole board and individual board members and succession planning
for the organization.

The standards also have some topics dealing with board leadership, how board is part of
the organizational structure, needing planning and management of various boards
activities, its always critical to have an effective and clear linkage between governance
and executive leadership, so there are some topics in the standards that address those
kinds of linkage issues, corporate and executive leadership performance review and
development to ensure that when governance certainly is reviewing executive leadership
performance that there are some principles that are followed and then finally executive
compensation, all of these concepts together ensure that the governing board is active,
engaged following ethical and legal practices and acting as good stewards on behalf of
the organization to help the organization fulfill it’s mission, vision, values and purpose.
So really when we break down the governance standards I’m going to go through some
of the topics that are addressed in the governance standards in a high level way but I am
going to touch on all of the elements, so really what you will find throughout this section
of standards is that there are a variety of governance policies in place. Again we are not
telling you exactly what your policies have to say because this is not a prescriptive kind
of accreditation, these standards are open ended and they give you a god foundation and
framework for the elements that your policies should address in order to ensure effective
governance, manage risk and ensure that your organization is following any legal and
regulatory requirements that can be applicable to governance.

So the standards start out by saying that your board has governance policies that really
helps facilitate ethical governance practices and ensure that two stake holders that your
governance is active in the organization and accountable and meet the legal requirements
that may be in place in your country in your state around legal requirements of
governance. So that can be very broad, so the surveyors are going to identify, work with
you to identify where are your policies and they’re going to review those policies and ask
how the policies address ethical practices and accountability and meeting legal
requirements of governance and so you want to make sure that you’re able to talk through
what policies you have in place and how they were developed and are updated to address
these concepts.

So further in the standards we get a bit more specific in the governance policies, we have
policies that address the selection of the board including what are the criteria for
somebody to be a member of your board, what are they for you? Are there certain
professional requirements, are there certain backgrounds that you’re looking for, certain
amount of time individuals need to be available certain expertise, what’s your criteria?
How do individuals get selected to be on the board and when they need to go off the
governing board how may they do so? So a selection process, what’s yours? Do people
have to be voted on the board, is there a nominating committee, are there certain forms…
Well if you have those systems where do you have that identified in your polices? And
then an exit process are there… is there a term limit is there a certain debriefing process
before someone comes off the board? What’s your process? So making sure that
whatever you’ve got that you have got it clearly identified in your policies, so that
everyone is acting from the same information, maybe this is something that is in your by-
laws maybe it’s something that is in a hand book you may call it a variety of things but
make sure that you have something that addresses in policy this topics.

Being acting in the governing…in the organization is really clear or is really important
for the governing board so here is a bit of humor being active in the organization this
says, “I’m afraid I have some bad news the company has been taken over by the little kid
who sells lemonade down the street.” So you never want to be in a position where your
governing board is so out of touch with what’s happening in the organization that
something like this could occur in an organization, make sure that the governing board is
active and accountable.
Okay moving along governance policies also need to address once you have decided or
once you have really gotten individuals to be part of your board how are they going to be
oriented, how might that happen is there a mentoring process is there an orientation
manual, do they go to certain meetings, is there something they need to read, do you have
a webinar? What do you have for your board member orientation? How are boards
developed over time? you may have board members who are engaged with your board for
a number of years things may change in the field. Things may change in your
organization around things that you are offering or doing for your strategic planning.
How do you make sure that your board is staying on top of what they need to know so
that you’ve got the right competencies at the table?

So board development, do you have some lectures that you have board members go to?
Do they go to professional conferences? Do you have some information that they can
read? Is there something that your staff shares around the board on emerging issues that
you want the board to be apprised of, how do you do that? Board education is very
related to that and again do you have some type of education ongoing that your board can
use to make sure they are knowledgeable about the field, their area of expertise that they
might bring to the table that might be beyond something that’s in the field. Board
leadership including section of your board chair and committee chair, so again in your
policies how does this happen for your organization for your governing board, we are not
telling how the selection needs to occur, you identify that but document it and your board
structure including your size, composition, how you identify who is independent and
unrelated board representation and what’s the duration of your board membership? So
having that clearly outlined in your policies will make sure that your board continues to
function very well.

Governance policies further more should address board performance including things like
financial matters if any regarding individual board members. Do you provide any
compensation to your board members? If so how does that work? What about making
loans to board members or board members making loans to the organization? What about
expense reimbursement if someone travels to a board meeting or you do cover expenses
how does that process work? Do you have any guide lines or procedures around what
stock a board member can or cannot own and any other matters of financial interest if
you’ve got someone who is a financial consultant, are there any conflict procedures or
conflict of interest issues that you need to have identified in your policies. So if you do
not engage in any financial practices with your board that this is completely voluntary,
you want to make sure in your polices it says that, but if you do have financial matters
that any board members engage in you want to make sure you got something outline in
your polices.

Many boards use outside advisers whether it’s consultants that come in and do financial
planning, strategic planning, or share information what is your policy on use of external
advisers including resources like auditors and executive compensation advisers or any
other advisers or consultancies needed. We are not telling you what you can and cannot
do here we are just saying make sure your policies outline what your approach is.
Governance polices also should address board performance again as I said before we
want to make sure that the governing board provides effective and ethical leadership
behalf of the different stakeholders engaged with your organization, if you have board
members that are disengaged, not knowledgeable, maybe not participating in meetings
even, you got to make sure that you have polices that address how are you going to
handle those situations to ensure you’ve got a high functioning board. So what we have
in standard is that board performance includes annual self assessment of the whole board,
periodic self assessment of individual members, you could evaluate the whole board or
have self assessment of the whole board but looking at individual member participation is
also a very important corollary.

Written annual and signed conflict of interest declaration, what are your policies around
external interactions? For example, is anyone on the board allowed to speak to the
media? That might be something you want to address policy. Can board members
participate in other boards with other organizations that might be complimentary
organizations? Can they be engaged in any kind of presentations on behalf of your
organization at trade shows or meetings or conferences, so those are just some things to
think about that you want to make sure that your governing polices address this broad
topics.

Now, I also mention earlier that it’s really important to have clear distinctions between
what’s the role of the board and what’s the role of executive leadership, so both can be
complimentary in working together effectively. So the governing standers look at
delegation of the authority to executive leadership so authority can mean signing off on
work approving the work and the responsibility to executive leadership. What is
executive leadership responsible for doing or implementing not just what they are signing
off for or approving or have the authority for.

How is the board provided with access to personnel? Can personnel interact directly with
board members do they need to go through executive leadership and vice versa, how does
that process work? And supportive governance by the organization so that could mean
what kind of information is provided to governance by the organization? It might mean
things like does the governing board get access to dash board reports? Does the
governing board have actually come on campus to a provider or organization if it is a
campus based kind of program. So what is the support of governance by the organization
would be something that you really want to look at with your processes. And now a little
bit of humor when we think about the relationship with the executive leadership.
“Honey, I just never thought to ask the board for the power of flight before.” So making
sure that they are clear relationships effective working relationships and good
communication between executive leadership and management and the governing board.

Okay, the standards also touch on important board processes and making sure that you’ve
got clear processes outlined for things such as agenda planning to make sure that you are
meetings are effective that the high level topics that really need board attention get on the
agenda and that you are able to address them. Developing your meeting material so that
the board has access to information and distributing that then overseeing the following
committee work as applicable. Okay so this as applicable is in here because we
recognize that there may be different committees some boards have more committees
than others, some boards are small and don’t have committees they might have key
individuals involved with certain tasks or responsibilities, but if you have committees and
they are engaged in this work this would be applicable to you if you are using the
governance standards. Governance development, governance management, financial
audit, executive compensation and any other pertinent activities defined by the board.

So you might have strategic planning there, you might have business development you
might have committee around strategic partnership. Depends on what your board is
really engaged in and what the focus is strategically of your organization. Now again
here we are talking about governance policies, so again you are going to want to have
something in writing that addresses executive leadership development and evaluation.
And here the field told us it was very important to have something in your polices or
around how the formal annual or written review of executive leadership performance
happens in relation to what’s the overall cooperate performance verses whatever targets
have been established.

Those targets might be for maybe their budget targets maybe their investment targets
maybe they are occupancy or person served targets, maybe they are financial indicator,
maybe certain bench marks for financial performance, maybe you use certain indicators
for regulatory compliance, maybe all of the above might go into looking at overall
corporate performance versus targets. And then individual performance versus target
making sure you have clear goals and targets established for your executive leadership
again, professional development, professional accomplishments and professional
opportunity. So making sure there is some type of annual review of your executive
leadership that you have linked back to your governance policy to outline your process
and then also annual review of the executive leadership secession planning.

So again we are not saying that we need to see a copy of your succession plan, what we
are saying in the standards is that you have governance policies that address these topics,
we are not going to need to take your succession plan and review it if that might be very
confidential to you, but that you are annually reviewing your executive leadership
succession planning and that that planning annual review is part of your policies for
governance.

Policies also furthermore again address executive compensation including what your
written statement of your total executive compensation philosophy, how do you base
your decision on how the executive is compensated, that your executive compensation,
you’ve got that again in your policies, that it’s reviewed by an authorized board
committee comprised of independent unrelated board members. So again you are going
to need to look at how do you define independent unrelated board members, how does
that committee work, make sure you’ve got something outlined in your policies on this
topic of reviewing the executive compensation. And that your policies also define total
compensation mix up to and including as wanted what’s that executive base pay and the
incentive plans, benefit plans and any prerequisites that need to be in place that might
impact compensation.

So what are your policies on this topic? Do you have compensation advisors? Do you
look at a report on this matter to identify compensation that would be appropriate? How
do you factor in these deferent parts of compensation that have been identified here?
Again we are not telling you how you have to do this but make sure that your policies
address these key concepts around compensation. Furthermore when you address
executive compensation in your policies, the total compensation makes reference to
market comparator data, so what’s happening throughout the market place? If you are in
the behavioral health sector, what’s happening in the market place with regard to
executive compensation and also making perhaps sure that you are looking at
functionally comparable positions as we know not all executives have exactly the same
functions and responsibilities, so when you are looking at executive compensation in
your policies it should identify for you not only that you are looking at market data but
you are also looking at the function of that executive’s role.

Furthermore on this topic of executive compensation you have a documented process, so
again we are going to want to see something in paper that outlines the terms of any
compensation arrangements when you’ve approved this information, names of who was
involved or approve the compensation decision, what data did you use in that decision
making around what’s the compensation package or procedure, disclosing any conflict of
interest if you’ve got any annual review of executive compensation records and authority
of board members to exercise the executive compensation action. So again make sure
that your policies around governance address these key concepts that relate to executive
compensation. Again, this is managing your risk as a governing board, this is making
sure you’ve got ethical governance happening in the organization and that there is
fiduciary responsibility that is being carried out effectively, having these things outlined
in policies very clearly is very important for any organization whether you are for profit
or not for profit organization.

And finally, the governing board annually should review its governance policies. Okay,
what this is saying is that you’ve got to take a look at these policies every year, so
someone’s got to be reviewing them, maybe you’ve got a committee on the board that
reviews policies, maybe you have a staff member that does governance relations that
actually review the information with the board members, it doesn’t matter how you do it,
you determine what works best, even your resources available and how things work
within the culture of your governing board. But we’re going to want to discuss with you
the process that you have for annually reviewing these policies, so it doesn’t mean that
you have to update them every year, if they’re working effectively and they don’t need
updating that’s acceptable to meet the intent of the standard but you do want to
demonstrate clearly to the surveyors that they’ve been reviewed on an annual basis.

These are all of the concepts that are addressed in the 2012 governance standards, I very
much appreciate your attention through this presentation, if you would like additional
resources or additional clarification on any of the standards that I’ve addressed that are in
the governance section of the Aspire to Excellence model in every CARF’s standard
manual, please contact your resource specialist in the customer service unit at CARF that
you are working with for any additional tools, maybe there are some checklist that might
be helpful to you, assessment tools, articles, we have some resources that can help with
the concepts related in the governance standards. There is also an organization called
Board Source that has some nice resources as well, it is a membership organization and
the website is www.boardsource.org. That has some nice resources for you as well on the
concepts in the governance standards.

Again I would remind you that the governance standards is only one part of the Aspire to
Excellence model, this slide illustrates for you that many of the concepts that we’ve
talked about in governance can relate to other areas of the standards, so please do not
apply these standards to your organization or asses conformance on these standards in
isolation, the governance role is critical, it relates to the leadership section of standards, it
relates to strategic planning, it relates to person served and other stake holders and how
we obtain and use inputs, relates to risk management, legal requirements and as well
performance improvement. So again, when you are applying these standards in an
organization make sure that you recognize the governance standards and those concepts
have elements in other sections that are inter-related. So these themes that we’ve talked
about in governance will also be echoed in other parts of the Aspire to Excellence model.

Again I thank you for your attention, again my name is Sue Matthiesen, managing
director of aging Services for CARF International, thank you very much for your interest
in the Governance standards.

				
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