OE21 Guideline: 1.2 Governance and Social Responsibilities

Strategic Objective:

Strategic Objective:

Documents how the organization is governed and fulfills social responsibilities

Quality Objective:

Quality Objective:

Defines governance system, legal/regulatory/ethics, and social responsibilities 

Approved: DD-MMM-YY:

Approved by:(Name) Chair, Leadership Focus Team (LFT)



Lead: Leadership Focus Team (LFT)  Support: LFT-IT, and FAC 




This OE21 Standard is presented in three (3) parts: 

1.2a Organizational Governance System
1.2b. Legal and Ethical behavior
1.2c. Societal Responsibilities   

DECISION: (1.2A Organizational Governance System): A Governance System is NOT normally required for organizations other than large public corporations, nonprofits, and some government organizations. If your organization is not one of these types of organizations then you are not advised (by the OE21 Provider) to implement this OE21 Standard 1.2. Citation: Wikipedia (2019): "Corporate governance may be necessary to align and coordinate the interests of the upper management with those of the shareholders. The shareholders and upper management may have different interests, where the shareholders typically desire profit, and upper management may be driven at least in part by other motives, such as good pay, good working conditions, or good relationships on the work floor, to the extent that these are not necessary for profits. Corporate governance is necessary to align and coordinate the interests of the upper management with those of the shareholders." 

The Value Added by having an effective Governance System includes the following:

  • It helps determine how the organization ensures that everyone in the organization behaves legally and ethically, how it fulfills its societal responsibilities, and how it supports its key communities.


  • It helps fulfill the need for a responsible, informed, transparent, and accountable governance or advisory body that can protect the interests of key stakeholders (including stockholders) in publicly traded private, and nonprofit organizations. 


  • It helps address (1) the need for ethical behavior, (2) all legal and regulatory requirements, and (3) risk factors


  • It helps address the public concerns for certain organizations including their cost of programs and operations, timely and equitable access to their offerings, and perceptions about their stewardship of resources. 


  • It helps address the conservation of resources (e.g., green technologies, reduction of carbon footprint, use of non-hazardous chemicals, energy conservation, use of cleaner energy or recycling.

The Values Added by having policies for 1.2b. Legal and Ethical behavior and Societal Responsibilities are applicable to all organizations, sizes, and types. All organizations should implement these sections of this OE21 Standard 1.2 (1.2b. Legal and Ethical behavior and 1.2c. Societal Responsibilities).   


The organization has adopted the Baldrige Framework Items 1.2 Governance and Societal Responsibilities and 7.4a (items 2 through 5) as internal policy, including the following sub-items:

1.2a(1) Governance - (maintain responsible governance, including reviews)


1.2a(2) Performance Evaluation​ - (evaluate performance of senior leaders and governance board)


1.2b(1) Legal Behavior - (address and anticipate legal, regulatory, and community concerns with products, services, programs and operations)

1.2b(2) Ethical Behavior - (promoting and ensuring ethical behavior in all interactions)

1.2c(1) Societal Well-Being - (considering societal well-being and benefit as part of strategy and daily operations)

1.2c(2) Community Support - (actively supporting and strengthening key communities)


1.2 Flow Diagram.PNG

1.2 Flow Diagram (Figure 1.2-1 Governance and Societal Responsibilities)

Inputs to 1.2 Governance and Societal Responsibilities

  • 2019-2020 Baldrige Framework Criteria Commentary Item 1.2

  • List of OE21 Focus Team Chair Persons (LFT, CFT, OFT, and WFT) and team members

  • Organizational Governance System Description (if it currently exists)

  • 1.2-LFT-S Community and Risk (survey)​​

Measurement and Analysis Tools and Techniques

  • Organizational Governance System Description (outline from this standard)

  • 1.2-LFT-A Community and Risk Analysis (xlsx)

  • Community Alliances and Contributions guidelines (from Baldrige Commentary 1.2)

  • Legal and Ethical Behavior guidelines (from Baldrige Commentary 1.2)

  • Societal Responsibilities guidelines (from Baldrige Commentary 1.2)

Outputs from 1.2 Governance and Societal Responsibilities

  • ​Milestone 1 - Organizational Governance System Description (OGSD)

  • Milestone 2 - Integrate OGSD into LFT Leadership Excellence Strategy Plan

  • Milestone 3 - Community & Risk (survey, analysis and legal/regulatory compliance)

  • Milestone 4 - Planning for societal responsibilities, fair costs, conservation

  • Milestone 5 - Establish Community Alliances and Contributions

  • Milestone 6 - Update LFT Leadership Excellence Strategy Plan and Results (KPIs

1.2 Implementation Instructions

1.2a Organizational Governance System


Task 1.2.1 - Create Organizational Governance System Description. The Leadership Focus Team (LFT) chairperson, with assistance from the other Focus Team chairs, use the Baldrige Excellence Framework as a guide for creating the Organizational Governance System Description (OGSD) document. The OGSD includes the following governance responsibilities, each defined in one or more paragraphs of the OGSD:


  • Accountability for senior leaders’ actions

  • Accountability for strategic plans

  • Fiscal accountability

  • Transparency in operations

  • Selection of governance board members and disclosure policies, as appropriate

  • Independence and effectiveness of internal and external audits

  • Protection of stakeholder and stockholder interests, as appropriate

  • Succession planning for senior leaders


Task 1.2.2 - Assign Organizational Governance Members. As provided in the OGSD, the Leadership Focus Team assigns the organizational governance members, to include:


  • Leadership Focus Team (LFT) Chair Person

  • Customer Focus Team (LFT) Chair Person

  • Operations Focus Team (LFT) Chair Person

  • Workforce Focus Team (LFT) Chair Person

  • Community Alliance Team (CAT) Chair Person

  • Selected key stakeholders, as appropriate to the organization


Task 1.2.3 - Assign Organizational Governance Members Accountability. As provided in the OGSD, the Focus Teams and Key Stakeholder members of the organizational governance system assume accountability for results, consistent with their focus team responsibilities; summarized as follows:


  • The Leadership Focus Team (LFT) Chair Person is accountable for Leadership Excellence results, including financial performance, marketplace performance, strategy alignment and accomplishment, leadership and social responsibilities, and impact.


  • The Customer Focus Team (CFT) Chair Person is accountable for Customer Excellence results, including customer engagement, satisfaction and value, key stakeholder's satisfaction and value, product and service performance (in the eyes of customers), and program outcomes.


  • The Operations Focus Team (OFT) Chair Person is accountable for Operations Excellence results, including process management, product and administrative management, supplier/supply chain management, quality management, and risk management.


  • The Workforce Focus Team (WFT) Chair Person is accountable for Workforce Excellence results, including workforce satisfaction/engagement, workforce capability and capacity, workforce learning and development, and workforce performance outputs.


  • The Community Alliance Team (CAT) Chair Person is accountable for Community Excellence results, including social responsibilities for societal well-being and benefits from the organization's operations that contribute to the community's environmental, social and economic systems. The CAT is also responsible for the identification of communities where regional alliances between local government, businesses, healthcare, educational and nonprofit organizations are mutually beneficial, and contribute to community improvements.


Task 1.2.4 - Deploy Organizational Governance System Description (OGSD).  When the OGSD is complete, and approved by all OGSD members, the Leadership Focus Team (LFT) deploys a current copy of the OGSD to the INTRANET Page 1.2 and alerts all OGSD members and others with the need to know, to the availability of the document.

  • PROGRESS: You have reached Milestone 1 (good work). Input the status [15%] on the organization's OE21 Intranet Main page alongside the title of this standard.


Task 1.2.5 - Conduct Organizational Governance Members Performance Evaluation. At least annually, or when significant changes to OGSD requirements or memberships occur, the Leadership Focus Team (LFT) conducts the Organizational Governance Members Performance Evaluation aimed at evaluating the performance of the senior leaders and the Governance Board. This evaluation is a survey with rated (1-5) questions aimed at:


  • Providing a basis for determining the compensation of the OG members;

  • Advancing the development (increasing capability) of the OG members; and

  • Improving the effectiveness of the OG members and its leadership system


This performance evaluation is aimed at an evaluation of the Organizational Governance Board's overall effectiveness, as well as the Board's CEO or Chief Administrators' performance and effectiveness. All Organizational Governance Members rate the "entity" - the board as an organization. Typical survey questions are in the following context:


"To what extent are the OG members being fairly compensated (overall) for their group contributions and effectiveness in meeting the OGSD requirements?"


"To what extent is the OG CEO or Chief Administrator contributing to the requirements of the OG Board, including:


  • Accountability for senior leaders’ actions

  • Accountability for strategic plans

  • Fiscal accountability

  • Transparency in operations

  • Selection of governance board members and disclosure policies, as appropriate

  • Independence and effectiveness of internal and external audits

  • Protection of stakeholder and stockholder interests, as appropriate

  • Succession planning for senior leaders


The OG Members Performance Evaluation is launched by the LFT, and members respond to the survey within three working days after receipt of the survey link. When the OG members have responded, the LFT and Facilitator will close the survey, export the results to an Excel file, place a copy of that file in the Organization's DropBox account, and notify the LFT of the availability of the results.


Task 1.2.6 - Analyze OG Members Performance Evaluation Results. The OG senior members (CEO, Chief Administrator, Focus Team Chairs) review the evaluation results and create a list of suggested improvement actions, as appropriate.


Task 1.2.7 - Integrate OG Evaluation Results into Leadership Excellence Strategy Plan. Integrate suggested improvement actions from Task 1.2.6 into the 2.0-LFT-P Leadership Excellence Strategy Plan. The new tasks help improve the effectiveness of the Organizational Board and its senior leaders, as well as the overall leadership system.

  • PROGRESS: You have reached Milestone 2 (good work). Input the status [20%] on the organization's OE21 Intranet Main page alongside the title of this standard.

1.2b(1) Legal and Ethical Behavior

Task 1.2.8 - Conduct 1.2-LFT-S Community and Risk Assessment. The results of these assessments are used to identify areas of emphasis aimed at improving the satisfaction of key communities and customers. Satisfaction with the organization's products, services, facilities, operations, economic revenue (e.g., jobs, business revenue, tax contributions, donations, volunteer work), and environmental (e.g., air, water, noise, traffic) are surveyed. Impacts that affect the communities in the organization's regional locations are part of the assessment.

The Leadership Focus Team (LFT) conducts the 1.2-LFT-S survey, at least annually or when changing conditions warrant more frequent assessments, and to assess the following:

  • 1.2-LFT-S Community and Risk (survey)

    • Survey Statistics (Target Population, Sample Size, Number of Responses)​

    • Survey Attributes with Ratings and Comments:

      • Name, Zip, and Organization of Responders​

      • Impact (of products, services, or programs on the community)

      • Ethical Behavior (of leaders)

      • Equitable Access (to the community)

      • Conservation (of natural resources)

      • Social Contributions

      • Community Safety

      • Referrals 

A_1.2 community and risks table.PNG

                 Table 1.2-1 Implementation of 1.2 Community and Risks Assessment

Table 1.2-1 Notes:

  • The LFT and OE21 Facilitator implement this assessment 

  • The decision on integrating the 1.2-LFT-A Action Plan into the 2.0-LFT-P Leadership Excellence Strategy Plan depends upon whether or not the 1.2 Action Plan has "strategic value" for the organization. 

Suggested Best Practice: Correlation of KRD and KRI: 


During monthly performance reviews, when 2.0-LFT-M Leadership Excellence Results trends are reviewed, the KRD (key results drivers) Trends are correlated with the KRI (key results indicators). The correlation goal is to determine if KRD trend improvements lead to KRI trend improvements. 

PROGRESS: You have reached Milestone 3 (good work). Input the status [35%] on the organization's OE21 Intranet Main page alongside the title of this standard.

Task 1.2.9 - Ensure Legal and Regulatory Compliance and Community Concerns. To address and anticipate legal and regulatory compliance and community concerns, the Customer Focus Team (CFT), Operations Focus Team (OFT), and Community Alliance Team (CAT) include legal and regulatory compliance requirements and anticipated community concerns in the requirements specifications for design, production, and delivery of the organization's products, services, and programs. The goal of these focus teams is to meet or surpass the legal and regulatory compliance requirements. The focus teams recognize that there may be a moral and competitive advantage in providing products, services, and programs that surpass legal and regulatory compliance requirements.


All Focus Teams pay special attention to the detection and elimination of "unintentional consequences" that may arise from the production and delivery of the organization's products, services, and programs. These issues may include:


  • Adverse societal impacts of products, services, programs, and operations;

  • Failure to conserve natural resources;

  • Failure to implement effective and efficient supply chain processes; and

  • Failure to implement successful risk management to prevent significant or severe impacts of products, services, programs, and operations.

1.2b(2) Ethical Behavior


Task 1.2.10 - Promote Ethical Behavior. The Leadership Focus Team (LFT) promotes ethical behavior in all interactions with the workforce, customers, partners, suppliers, other stakeholders, and the community. To facilitate high ethical behaviors, the LFT publishes the Ethical Behavior Statement document (see OE standard LFT 1.1 Senior Leadership).


1.2c Societal Responsibilities


 Task 1.2.11 - Promote  Societal Responsibilities - The Leadership Focus Team (LFT) and Community Alliance Team (CAT) work in collaboration to ensure that the organization's strategic planning and accomplishment process includes societal well-being and mutually beneficial community support and outcomes.


Task 1.2.12 - Set Fair Cost of Programs, Products, and Services. The LFT and other focus teams collaborate to ensure that customers or participants receive competitive and fair costs for the value offered by programs, products, or services, including appropriate cost policies at times when severe weather or hazardous occurrences might lead to opportunities to charge higher prices, for example, no price-gouging or excess management costs vs. programs costs are allowed.


Task 1.2.13 - Conservation of Natural Resources. The LFT and other focus teams collaborate to ensure, where possible, that conservation of natural resources is integrated into the design, production, delivery, and support of products, services, or programs, for example, in cases where it is "economically feasible" the following conservation practices are incorporated:


  • Use of "green" technologies;

  • Reduction of "carbon footprint" or excess emissions;

  • Non-use of hazardous chemicals in operations, products, or services;

  • Applied energy conservation (e.g., automatic climate control systems);

  • Use of cleaner energy sources for machines, vehicles, and major equipment; and

  • Recycling of by‐products or wastes during production, delivery, and service operations.


  • PROGRESS: You have reached Milestone 4 (good work). Input the status [50%] on the organization's OE21 Intranet Main page alongside the title of this standard.

Task 1.2.14 Community Alliances (Optional) - The Community Alliance Team (CAT) identifies the key communities and the alliance opportunities with central regional community government, business, healthcare, nonprofit and educational organizations. The goal is to form mutual alliances between groups of non-competitive organizations who can benefit from sharing each other's customers (referrals) as well as reduction of internal expenses for supplies such as printer paper and ink, and other commonly shared costs. Notice: A new Community Alliance and Support standard is planned to be integrated into OE21 in late 2021.  


Task 1.2.15 Key Community Identification. Community Alliance Team (CAT) surveys the regional communities to locate opportunities for mutually beneficial alliances between the organization and selected community organizations, including:

  • Municipalities (city, or town government)

  • Non-competitive businesses that may have alliance benefits

  • Healthcare organizations

  • Non-profit organizations

  • Educational organizations (college, university, trade schools)

  • Community organizations (Chambers of Commerce, Rotary Clubs, similar organizations)


The CAT identifies key community opportunities, which have a "complementary strategic fit" with the organization's products, services or programs. For example, if the organization provides "green" products to homeowners (such as solar systems), then other non-competitive organizations with complimentary "green" products might be good community alliance partners, including companies who provide other types of "green" products such as home temperature control units, and low-energy appliances. Other examples of ideal community alliance groups might include:


  • Business to Business (B2B) non-competitive consulting firms

  • Financial Services organizations (e.g., CPA or Financial Advisors)

  • Health and Longevity organizations (e.g., health club, health care products, health care services, health care coaches)

  • Information Technology (software and hardware companies in similar markets)

  • Safety and Security (e.g., security officers, security systems, intellectual property protection.)


Task 1.2.16 Establish Key Community Alliances. The CAT identifies beneficial community alliance partners and, within each "network" of partners, the CAT identifies the largest, most successful organization as the possible "hub" of the network. The other partners are like "spokes" of the hub center business. Both the hub and spoke alliance organizations combine their "core competencies" to create a one-stop center for customers to get all or most of the products and services they seek at an attractive price and availability.


  • Example: A "hub" that is a health club, can offer a one-stop, centralized location, where clients come to get their exercise, a spa treatment, various energy food and drink, products, and safe healthcare items (e.g., shampoo, soap, lotions, sleeping aids).  All the companies in this alliance have the advantage of sharing their customers and bulk-ordering their common supplies and services (at reduced cost).


Task 1.2.17 Contributions to Community Alliances. The Leadership Focus Team (LFT), Customer Focus Team (CFT), and the Workforce Focus Team (WFT) work in collaboration with the Community Alliance Team (CAT) to ensure that the organization fully supports and contributes to the success of regional community alliances. Typical Focus Team support activities for community alliances include:


  • Marketing presentations to new Community Alliance Partners (hub and spokes)

  • Co-marketing of alliance members to regional government organizations

  • Business case studies showing the positive economic impact of alliances

  • Awareness of regional problems and opportunities in education

  • Awareness of regional problems and opportunities in health care

  • Awareness of regional problems and opportunities in crime and safety

  • Partnering to influence trade, business, and professional associations to engage in beneficial and cooperative activities

  • Workforce volunteering for regional beneficial causes (blood banks; food banks; etc.)


PROGRESS: The status (Milestone 5 = 94%) is input on the organization's OE21 Intranet Main page alongside the title of this standard.

  • PROGRESS: You have reached Milestone 5 (good work). Input the status [85%] on the organization's OE21 Intranet Main page alongside the title of this standard.

Task 1.2.18 - Integrate Analysis Action Plans into Leadership Excellence Action Plan - The measurement and analysis tools (.xlsx) used in this standard may include tasks added to the (Plan) tabs, or other analysis observations that should require actions. If necessary, these new tasks should be integrated into the 2.0-LFT-P Leadership Excellence Strategy Plan (xlsx). This integration of new tasks may require the approval of the added tasks, labor, and non-labor resources, schedules, and revised budgets for the Leadership Excellence Strategy Plan.  


Task 1.2.19 - Select 1.2 Governance and Social Metrics.


NOTICE: If the organization has an existing Performance Measurement System (PMS), then the internal process is followed for selection, input, and review of measures associated with this OE21 standard. The following guidelines are suggested for the selection of metrics: 

Guideline 1 - Select Key Results Indicators (KRI). The KRIs are commonly called Key Performance Indicators (KPI).


Examples of KRIs for 1.2 Governance and Social Metrics:


  • Financial Statement Results

  • Auditor Reports and Recommendations

  • Internal governance audits

  • Oversight audits (gov. or funders)

  • Management Response to Audits

  • IRS 990 audits (for some nonprofits)

  • OSHA Results

  • Organization contributions 

  • Environment improvement

  • Community services

Guideline 2 - Table 1.2-2  provides Metrics selection and review implementation steps, actions, references, and instructions guides.

A_1.2 Governance Social Metrics.PNG

Table 1.2-2 Implementation of 1.2 Governance and Social Metrics Selection and Review

Task 1.2.20 Review 1.2 Governance and Social Metrics - Conduct regular (at least monthly) reviews of Standard 1.2 Measures. Reviews for KRIs are critical to show whether overall organization performance is moving toward target levels and key intended outcomes (KIO) for Leadership Excellence.  

Correlation: Where possible, the KRD (drivers) are correlated with KRI (indicators) to determine if and how much the KRD Action Plans are helping boost KRI performance. 


At this point, regular performance reviews are conducted and attended by all OE21 Focus Teams. 


  • Figure 1.2-2 provides an example KRI for 1.1 Senior Leadership (Financial).

  • Figure 1.2-3 provides an example KRD for 1.1 Senior Leadership Results Analysis. 


PROGRESS: You have reached Milestone 6 (congratulations). Input the status [100%] on the organization's OE21 Intranet Main page alongside the title of this standard.

A_1.2 community contributions.PNG

Figure 1.2-2 Example KRI for 1.2 Governance and Social Metrics

A_1.2 Community Risks Trend.PNG

Figure 1.2-3 Example KRD for 1.2 Governance and Social Metrics