What is a Board Policy?

A board policy is a formal document outlining the rules and principles the organizations must have and follow. Often called the voice of the board, these policies are written with the sole purpose of guiding the actions and decisions of the governing board. Therefore, all board policies must reflect the values and perspectives of the organization on topics including but not limited to: 

• Board membership agreements
• Meeting procedures
• Document retention
• Codes of conduct
• Conflicts of interest

What is the difference between law and policy?

Laws are designed to prohibit behaviors and bring justice to society. Meanwhile, board policies are created to establish order and provide guidance inside the boardroom — primarily to achieve a consistent and transparent decision-making process.

Why is a board policy important?

Board policies are critical to achieving the organization’s long-term goals. They provide:

• Clear guidelines: Board policies clearly outline processes and procedures for handling various situations so that there is consistency in responses, even in cases of an emergency.
• Risk protection: Well-crafted policies help mitigate risks and avoid potential liabilities.
• Enhanced accountability: Policies hold board members and staff accountable for their actions and decisions.
• Effective governance: Clear policies are key to good leadership, which ultimately contribute to good governance practices.

Types of Board Policies

Board policies fall into two main categories: governance policies and operational policies. Governance policies provide frameworks for managing the business, often focusing on the strategic, legal, and ethical aspects of the organization. These policies also define the relationship between board members and the company they serve. Some examples include: 

• Code of Ethics
• Conflict of Interest Policy
• Whistleblower Policy
• Board Composition Policy

Operational policies, on the other hand, focus on the day-to-day business operations or the procedures and rules the board and other members of the organization must follow in their daily activities. This often includes:

• Travel Policy
• Human Resources Policy
• IT Security Policy
• Health and Safety Policy

How to Write a Board Policy

The specific actions may vary based on the type of policy, and additional steps may be necessary for more complex issues. But generally, these are the steps to follow when creating an effective board policy: 

1. Needs Analysis – Answer questions like: what is the purpose of this policy? Who needs this policy? What current problems will it solve? 
2. Research Process – Gather relevant information, including laws, industry standards, and best practices. 
3. Draft the Policy – Take all the gathered data and start drafting the policy, adjusting some items to align with the organization’s goals. 
4. Consult with Stakeholders – Feedback from stakeholders is necessary when writing a new policy since they are often the ones directly affected by this change. So, make sure to consult with them to identify what needs revision.
5. Approval Process – Once finalized, run the policy with the approving authority for review and formal approval.
6. Implement the Policy – To avoid misunderstanding or non-compliance, the policy must be communicated well and allow ample time for stakeholders to adapt.  
7. Monitor and Update as Needed – Continuously evaluate the policy’s effectiveness and relevance. Depending on the size of the organization, a policy review can be done every three to five years or as needed.