Newer board members dislike the “negative language” of Executive Limitations.
Why not tell the CEO what to do in positive terms?
Carver and Charney close The Board Member’s Playbook with that question in rehearsal 6.10.[1]
Because a positive instruction selects a means.
“Maintain adequate liquidity” may sound encouraging. It also invites the board to define the method, threshold, timing, accounts, and exceptions. If the board prescribes the route, it shares responsibility for the route.
A limitation works differently.
“The CEO shall not allow liquidity to fall below…” or “The CEO shall not permit financial condition to become imprudent by…” defines an unacceptable condition. The CEO remains free to choose among every reasonable method that avoids it.
Govern for Impact’s Source Document calls this limiting, rather than prescribing, operational means.[2] The language is negative in grammar, not in spirit.
It protects freedom.
I would ask members to name the value behind the discomfort.
Do they fear the policies sound distrustful?
Are the limits too vague?
Do they want a particular practice because risk is high?
Do they believe the CEO needs clearer guidance?
Each concern deserves an answer.
Trust does not require an empty boundary. A strong CEO should know which conditions the board will not accept. Clear limits reduce the need to seek permission and reduce the chance of being judged by unwritten expectations.
If the board wants greater control, it can add specificity.
Begin with the broad limit. Ask whether every reasonable interpretation is acceptable. If not, state the next narrower unacceptable condition. Continue until the board is willing to delegate.
Then stop writing.
The board should not list preferred practices and call them limits by adding “shall not fail to.” A disguised prescription still restricts innovation and makes monitoring about conformity rather than outcomes and risk.
There are times when law, ownership values, or extraordinary exposure require a narrow rule. The board can prohibit one method outright or reserve a decision. It should understand the cost: the narrower the policy, the smaller the CEO’s decision space and the greater the board’s responsibility for the constraint.
I would test every proposed positive instruction.
If the CEO found a safer, less costly, more effective method, would policy allow it?
If not, why must the board’s method prevail?
If no governing value requires that method, leave it to the CEO.
Monitoring becomes clearer too. The CEO interprets the limitation, presents evidence, and states compliance. The board judges whether the interpretation is reasonable and the evidence sufficient. It does not ask whether management followed every preference voiced during discussion.
The board may still offer advice. Label it advice. The CEO may use or reject it without penalty.
That sentence is where many boards discover whether the “suggestion” was actually an order.
You can explain Executive Limitations without jargon:
The board names the shore.
The CEO chooses the route inside it.
The board monitors whether the organization stayed within the boundary and achieved the intended result.
Telling the CEO what to do can feel decisive.
Defining what must not happen is often the more demanding act of governance.
It requires the board to identify its values, write them clearly, and trust the authority it deliberately gave.
Footnotes
[1] Miriam Carver and Bill Charney, The Board Member’s Playbook (Jossey-Bass, 2004), rehearsal 6.10, pages 226–229.
[2] Govern for Impact, “Policy Governance Source Document,” principles on Executive Limitations and Any Reasonable Interpretation.
Additional reading
John Carver and Miriam Carver’s Reinventing Your Board provides practical examples of Executive Limitations and monitoring.
John Carver’s Boards That Make a Difference explains why boundary-setting creates both stronger control and greater CEO freedom.