Andrew
BoardroomTalk
Dr Proctor Nyemba
One of the defining characteristics of a strong board is alignment on purpose, long-term vision, and strategy. This alignment must permeate throughout the organisation so the board and management are fully aligned on why the organisation exists (purpose and vision), where the organisation is going (strategy), and how it will get there (tactics).
The board’s role is to approve and oversee strategy, in partnership with management.
Management’s role is to develop the strategic plan, reflecting on guidance and expectations set by the board, and execute on strategy and tactics. While there are commonly accepted ways the board feeds into strategy, the depth of the board’s role in strategic planning depends on a number of factors, including board and management experience and capacity, contextual issues, external factors, and the overall impact on the organization. In seeking to maintain an appropriate line, boards must analyse their context and strategic horizon to determine the expected level of board involvement and communicate their intended level of involvement to management.
For example, if the organisation is about to embark on the development of a transformational strategic plan, the board should lean in more significantly given the overall impact on the organisation, or if management is inexperienced in developing strategy, the board should plan to be more engaged than what might otherwise be the case.
High-functioning boards and management teams partner on strategy in the following ways:
The Board’s Role in Crafting Strategy
Contribute knowledge, insights, and ideas
Challenge management’s assertions around strategy and risk, and the data behind such assertions
Engage in debate and ask penetrating questions; push and test the thinking
Seek to understand the rationale
Satisfy themselves that management has thought through all the issues, options, risks, and implications
Approve management’s recommendations or send them back to conduct more research and analysis
Management’s Role in Crafting Strategy
Engage the board in broad framing, input, and exploration long before making recommendations
Define and provide consistent reporting of key performance indicators (KPIs) and other qualitative and quantitative measures to inform the strategy development process
Frame the issues, provide frameworks
Lay out and lead exploratory discussions of pros/cons, options, criteria, rationale, key risks
Tap into the board’s ideas and knowledge and probe to understand them
Bring vision and passion, and make recommendations in line with the board’s direction
Develop and present a sound, well-structured strategic plan to the board for approval
The Board’s Role in Overseeing Strategy
Ensure management is making progress on strategy execution as planned through regular reporting, dashboards, KPIs, etc.
Ask questions and provide input on matters brought forward by management
Management’s Role in Executing Strategy
Ensure there is a plan for tactical execution of strategy, with clear accountability and ownership
Develop a reporting framework that shows progress towards strategic priorities, major shifts, and other important considerations for the board
Report on progress towards strategic objectives at board meetings and seek board input on major shifts or challenges
High-functioning boards and management teams also take the time to structure and articulate a clear strategic planning process to outline how the board will be engaged at each stage of strategy development.
A well-structured strategic planning process includes the following elements:
A dedicated strategic planning session (usually every three to five years) in which the board and management team align on the organisation’s vision, mission, and values, reflect upon the organisation’s opportunities and risks, and discuss the go-forward strategy and risk appetite
Dedicated board and management sessions (following the strategic planning session) to discuss and establish business plans, related budgets, resources, risk mitigation strategies, and key performance indicators needed to execute on the strategy
Periodic reviews (typically at regular board meetings) on progress towards implementing the strategic plan, emerging issues, and management of related risks
Dedicated strategy sessions (usually annual) to review and refresh aspects of the strategic plan and risk appetite
The board’s annual calendar should be thoughtfully designed to consider the timing of these sessions in light of the board’s annual fiscal cycle.
A well-designed, collaborative process enhances the effectiveness of each party’s role and contributions, ultimately increasing the long-term value of the organisation.
How effectively is your board contributing to your organisation’s strategy?
Dr. Proctor Nyemba is Certified Professional Director®-Pro.Dir specializing upon Governance and Strategy, Governance and Risk, Governance and People, Governance and Board Effectiveness, Governance and Resources, Governance Culture and Behaviour.
He helps board members and executives understand their role in governance so they can succeed in the boardroom.
For comments and feedback please send to [email protected] Call 0772469893
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