Five keys to high-impact governing: unlock the secrets to meaningful governance.

FOUR YEARS AGO, THE HEALTH Industry Group Purchasing Association (HIGPA), Arlington, Virginia, was blessed with a hard-working board of directors consisting of highly capable and dedicated members who were outstanding leaders in their industry. However, as is the case in many organizations, commitment and good intentions alone could not ensure the kind of governing performance that the challenging times demanded.

The HIGPA board, which includes 17 directors, was significantly underdeveloped in terms of its governing role, processes, and structure. The absence of well-designed standing committees, for example, meant that complex issues were endlessly discussed without resolution. And board members often became mired in administrative details that would normally be left to the association's staff.

Today the HIGPA board, working in close partnership with the association's president and CEO and the executive team, does the kind of high-impact governing work that is required for an association to thrive in these rapidly changing, always challenging times. This is the story of one board's transformation into a high-impact governing body--one that regularly and systematically makes a significant difference in HIGPA affairs and, more broadly, in the health care group purchasing industry. Results of the new governing model include enhanced member service, increased respect for the organization by members, and a higher level of awareness of the industry among legislators and opinion leaders. An added benefit: Board members have gained deeper satisfaction from their volunteer efforts.

Defining a high-impact board

A trade association that represents 35 group purchasing organizations and 139 of their trading partners, HIGPA's members include for-profit and non-profit corporations, purchasing groups, associations, multihospital systems, and health care provider alliances as well as trading partner members spanning the range of the supply chain. HIGPA provides five main services to its members: advocacy, education, information, the promotion of dialogue among health care organizations, and maintenance of industry ethical standards. Since its governance transformation, the updated vision and values statements that the HIGPA board played an active role in developing have led directly to significant improvements in member services and have strengthened HIGPA's image in the eyes of members. That's high impact.

High-impact governing boards such as HIGPA's set their sights high, never allowing themselves to become mired in operational detail or to meddle in truly administrative matters. They also actively shape governing decisions rather than passively respond to finished staff work--thereby building feelings of ownership and satisfaction among board members. In this regard, as part of its annual strategic planning retreat, the HIGPA board now plays a hands-on role in identifying and analyzing strategic issues facing the association. For instance, one strategic issue that the board identified was the lack of in-depth understanding of the industry among national opinion leaders. They then led the charge to develop a winning public affairs strategy in response to the issue.

A seed for transformation

High-impact governing boards are not built in a day; nor do they develop naturally across time. They are invariably the product of an intensive and systematic developmental process such as HIGPA's 2050 Initiative, the vehicle that transformed the board.

The seed for the 2050 Initiative was planted in late 1998, when the HIGPA board chair and the CEO recognized that the times demanded stronger board leadership and asked the board's officers to work with a consultant in designing a strategic work session that would involve the board and CEO. Held in March 1999, the session focused on two major goals: to identify and explore strategic issues and to consider practical ways to strengthen the board as a governing body. The initiative that emerged from this intensive, 1 1/2-day event consisted of a number of recommended improvements in the board's role, structure, and governing processes; these improvements were refined in a second work session in spring 2000.

HIGPA's experience in carrying out the governance recommendations has taught the board, president and CEO, and executive team that building a board's capacity to do high-impact governing work involves five key elements:

1. A strategic framework that is clear and detailed.

2. Detailed design of the board's governing work.

3. Standing committees that serve as powerful governing engines.

4. Board self-management and performance accountability.

5. Strong support from a board-savvy CEO.

Strategic framework

High-impact governing work cannot be done in a strategic vacuum. A framework consisting of a detailed set of values and a clear vision for the long term serves two critical purposes. First, it raises board members' sights above mundane details, providing them with the fundamental outcomes that their governing work is intended to produce in the long run. Second, it provides the board with a practical tool that it can use--as part of the strategic planning process--to identify strategic issues and to fashion strategic initiatives that address the issues. As a critical part of every HIGPA annual strategic planning retreat, for example, participants routinely assess progress toward each of the vision elements (see sidebar, "Values and Vision"), asking themselves if progress has been acceptable, and, if not, what issues need to be addressed to ensure adequate progress.

Detailed design

While most organizations have a mission statement to guide them, boards can benefit from having their own missions as well. At the 1999 strategic work session, the HIGPA board and CEO brainstormed a board governing mission intended to serve as a high-level job description for the board, spelling out specific responsibilities. A break-out group at the 1999 session brainstormed this first version of the board's governing mission largely through an exercise in which they completed the sentence, "As a result of the board's governing work ...." Out of this exercise came a list of outcomes, such as "As a result of the board's governing work, the organization will have an updated vision and values statement." The 2050 Initiative Steering Committee subsequently reviewed and polished the governing mission, and the full board adopted it by resolution. Setting out the major functions to be carried out by the board (e.g., "serves as the steward and guardian of HIGPA values, vision, and mission" and "provides strong strategic and policy direction to HIGPA"), the governing mission provided a framework for the board's governing work.

The newly established standing committees served as effective vehicles for developing the detailed governing functions of the board. Of course, the HIGPA CEO played a leading role in this process as well. The planning and business development committee, for example, worked with the CEO in updating the annual planning cycle to ensure more active board involvement, principally by building in the annual board-executive strategic planning retreat to kick off annual planning. The governance committee, meanwhile, worked with the CEO to update the process for board evaluation of CEO performance.

Standing committees as governing engines

One of the most important steps taken to strengthen the HIGPA board's governing capacity as part of the 2050 Initiative was establishing four standing committees of the board. These committees have divided the board's governing work into manageable chunks, thereby enabling board members to dig into their governing functions in greater depth than would be possible in full board meetings. Consequently, critical decisions are based on a stronger foundation of information and analysis than existed in the past. And in-depth committee work has helped to turn board members into strong owners of their work. Serving as governing engines in that they do the detailed governing work in preparation for full board meetings, three of these committees--planning and business development, operational oversight, and external relations and volunteer involvement--correspond to the actual flows of governing work rather than to HIGPA's programmatic and administrative structure. The governance committee, meanwhile, headed by the board chair and consisting of the chairs of the other three committees and the president and CEO, addresses board operations, coordinating and monitoring the work of the other three committees.

The standing committees have proven effective in involving board members creatively and actively in working closely with the CEO to map out their detailed governing work, which has without question contributed to greater board member ownership of their work, as well as stronger satisfaction and higher morale.

It is important to note, however, that implementing strong standing committees has in no way diminished the authority of the full board, which continues to make all final governing decisions. Indeed, the full board has gained authority in a sense. Because of the spadework done by the standing committees in preparing for board meetings, the board is now much more focused on the big-ticket issues. For example, the planning and business development committee does a thorough analysis of the annual operational plan and budget in preparation for the full board meeting. When the budget is presented, committee members are able to highlight any significant programmatic initiatives and major expenditure changes that are built into the budget.

Self-management and performance accountability

Having a board that takes explicit accountability for managing its performance is a critical ingredient in maintaining high-impact governing. The HIGPA board has taken two important steps on the accountability front, both of which may be helpful to other associations:

1. It made the governance committee the guarantor of board performance management.

2. It set clear standards and targets for collective and individual board member performance, which are regularly monitored and evaluated.

Recognizing that the board as a whole would be an unwieldy vehicle for managing its own performance, the governance committee was assigned the responsibility. In this capacity, the committee prepares board-meeting agendas, monitors and coordinates the work of the other three committees, ensures that board performance standards are set and periodically updated, and regularly evaluates the board's overall performance. And of course, the governance committee is, on rare occasion, convened to deal with matters of strategic importance that occur between meetings of the full board.

In monitoring the board's collective performance, the governance committee primarily draws on the targets set by the three standing committees, which are accountable for the detailed design of the board's governing work. For example, the planning and business development committee works closely with the president and CEO and other executive staff members to update the annual planning calendar, which provides targets that can be used to evaluate the board's role in the planning process. The governance committee can, therefore, assess the effectiveness of the annual strategic planning session that the planning and business development committee has built into the annual planning cycle. Relying on the standing committees to flesh out important indicators of board performance enables the HIGPA board to go well beyond the kinds of mundane assessment checklists that are often employed, which tend to focus on process (e.g., whether board members receive their packets in a timely fashion) rather than substance.

The governance committee also monitors individual board member performance, relying on targets that were originally developed by a breakout group at the 1999 strategic work session and that they have subsequently refined and updated. Among other things, HIGPA board members are expected to attend and be prepared for both full-board and committee meetings and to participate in the annual strategic work session. And if performance doesn't meet expectations, the board chair or the appropriate standing committee chair typically counsels errant board members.

Strong CEO support

One final piece of the puzzle: HIGPA could not have transformed its board of directors into a high-impact governing body without the strong, aggressive leadership and support of its board-savvy CEO, who has been a leading participant in the HIGPA 2050 Initiative since the beginning.

A board-savvy CEO, above all else, brings a constructive attitude to his or her work with the board of directors, takes primary responsibility for helping the board develop its governing capacity, and possesses real expertise in the rapidly changing field of nonprofit governance.

At HIGPA, the CEO's collaborative role has included:

* Participating actively in designing and carrying out the strategic work sessions that resulted in the 2050 Initiative. Activities included making sure that the detailed agendas were capable of generating the desired outcomes and that the work sessions were well-facilitated. The CEO also was a highly vocal and enthusiastic supporter of both sessions and involved executive team members intensively in following up on the deliberations.

* Serving as an active member of the steering committee that guided the implementation of the recommendations and ensuring that the committee received strong staff support in developing priorities and plans and overseeing implementation activities.

* Making sure that the board's new standing committees hit the ground running, primarily by assigning a senior executive to serve as chief of staff to each committee and employing the executive team collectively as an active participant in developing committee agendas and allocating staff support to the committees as necessary.

A solid foundation

Developing a board's capacity to do high-impact governing work is a never-ending task requiring continuous time and attention. Governing processes can always be refined and strengthened, drawing on advances in the rapidly changing field of nonprofit governance, and new board members always need to be acculturated and educated so that they can participate effectively in governing. As such, the HIGPA Governance Committee continues to play an active, in-depth role in board development. Even though considerable fine-tuning has been--and will continue to be--done, it is clear that the foundation for high-impact governing at HIGPA is solid. The improved structure and processes are working, and HIGPA's members are benefiting in many ways from the strong leadership of a truly high-impact board of directors.

RELATED ARTICLE: Values and vision

Recognizing the need for board development to take place within a powerful strategic framework, the executive committee of the Health Industry Group Purchasing Association, Arlington, Virginia, made sure that the design of its 1999 work session included fashioning preliminary values and vision statements. A nonboard task force of industry leaders further developed the values and vision statements with the assistance of a consultant and the newly hired HIGPA planning director. The task force interviewed peers for their input on the articulated ideas and, across the course of two intensive work sessions, refined and augmented the drafts that had been developed by the board. The board's newly created Planning and Business Development Committee further refined the values and vision statements, which the full board eventually adopted. The full statements follow.

VALUES STATEMENT

To accomplish our mission and realize our vision, we adhere to these values:

* Responsibility: Our activities focus ultimately on benefiting the patient.

* Responsiveness: We actively communicate with our members.

* Quality: We provide to our members and other customers high-quality products and services that represent a powerful return on their investment of membership dues and fees.

* The power of information: We take the lead in information collection, analysis, and dissemination and in education aimed at enhancing our members' competitiveness.

* Neutrality: We provide a neutral forum for the exploration of health care cost issues and of legally acceptable buyer-seller cooperation.

* Integrity, honesty, and credibility.

* Advocacy: We take a leadership role in shaping national policy on behalf of our members.

* Fair competition: We contribute to the maintenance of an open, competitive market.

* Innovation: We look for innovation in product and service development and delivery.

* Courage: We take positions on sensitive and potentially controversial issues.

* Institutional leadership: We strive to be a model of exemplary practice for other trade associations.

VISION STATEMENT

As one of the nation's leading health care trade associations, HIGPA strives to have a long-term, positive impact. All of our efforts are focused on realizing our vision for tomorrow. We envision a world in which

* An open forum exists for the exchange and promotion of best practices in the nonlabor cost side of health care and for the exploration of complex issues in health care cost control.

* Cost-efficient, high-quality health care is more widely available.

* Innovative approaches flourish, and standards of practice and excellence are maintained, in the health care products market.

* Free market dynamics for health care products are maintained.

* Beneficial and legally allowable cooperation is not disrupted by the proprietary interests of industry competitors.

* HIGPA is an acknowledged national leader in speaking for and shaping the field of health care purchasing.

* HIGPA is a leader in providing educational and networking opportunities to our members.

RELATED ARTICLE: further reading

The key concepts in this article are explored in detail in coauthor Doug Eadie's latest book: High-Impact Governing in a Nutshell: 17 Questions That Board Members and CEOs Frequently Ask (2004, ASAE). Other governance resources, by Eadie and others, include:

* Boards That Work, by Doug Eadie (1995, ASAE)

* Extraordinary Board Leadership: The Seven Keys to High-Impact Governance, by Doug Eadie (2001, Jones and Bartlett)

* How to Build an Effective Board, by R.R. Richards (1997, ASAE)

* Nonprofit Governance: Steering Your Organization With Authority and Accountability, by Berit M. Lakey (2000, BoardSource)

* Ten Basic Responsibilities of Nonprofit Boards, by Richard T. Ingram (2003, BoardSource)

* The Will to Govern Well, by Glenn H. Tecker, Jean S. Frankel, and Paul D. Meyer, CAE (2002, ASAE Foundation)

For more information on or to order ASAE and ASAE Foundation titles, contact the ASAE Member Service Center by phone: [phone] or 888-950-ASAE; or e-mail: [e-mail].

BY ROBERT BETZ AND DOUG EADIE

Robert Betz is president and CEO, Health Group Purchasing Association, Arlington, Virginia. E-mail: [e-mail]. Doug Eadie is president, Doug Eadie & Company, Palm Harbor, Florida. E-mail: [e-mail].