Balancing Strategic Goals with Effective Board Selection Strategy
Author: Eric Allgood CMgr CAHRI MAITD
OK, for those of you who have been nagging me about writing a piece on strategic planning, the headline is a fraud, a ruse to get you reading. This piece is based on the assumption your organisation already HAS a strategic plan and focuses on where a Board can vastly improve the chances of success. I do promise my strategic planning piece is coming though.
The Perfect Board
Does it exist? Maybe, but, like everything in successful business, it all comes back to the strategy defined and the processes under it. Starting at the beginning, what is the key purpose of a Board of Directors? It is to ensure the company’s fortune by jointly directing the company’s affairs, whilst meeting the applicable interests of its shareholders and stakeholders.
This doesn’t really change from Corporate to Not-for-Profit (For-Purpose) organisation, and the structure of the Board should be based wholly and solely around the strategic goals of the organisation. Now for certain For-Purpose organisations (and some corporate ones) the Board may need to consist of a certain field of expertise to fulfil the needs and requirements of its members. However, advisory Board Members could be included to assist in giving direction in specific areas of expertise in alignment with the needs of the organisation. For example, if an organisation is about to go through some serious change programs, then inviting a leading change expert to the Board for the period of the program just makes sense. I believe every Board should have an Accountant on them for advisory purposes (if it is a For-Purpose organisation then the accountant should have sufficient ACNC Reporting experience.
Picture an organisation that has an unhealthy turnover or culture and I think we can all picture one in the news recently. I won’t name them, because that just wouldn’t be Cricket, though inviting a leading HR/IR of culture expert to their Board to help advise the CEO just could not hurt could it?
So, what makes up the perfect Board? Simple, having the expertise the organisation requires to advise the CEO to help the organisation achieve their stated goals. This means the advisory part of the Board should constantly be changing to suit the needs of the organisation.
The reason I am suggesting such an emphasis on the strategic advisory section of Board Selection is accountability. I have recently had some interesting conversations with my fellow Fellows (always wanted to say that!) of the Institute of Managers and Leaders around our collective experience with certain organisations that just aren’t doing as well as they should. These organisations all had one thing in common; they were either For-Purpose or smaller privately-owned companies with a Board, and they were losing money rapidly, or just not achieving their strategic or business goals.
The conversation ran around in circles for a while, when I asked for the make-up of the Board of Directors and if there was any relevant expertise on the Boards in the areas of failure. Almost to a T the answer was the expertise was lacking.
What this means for each of these organisations is that they had no real way of holding the CEO accountable, as they did not have the expertise to fully comprehend the results. In the worst of the situations, it was revealed that the CEO hadn’t had any performance reviews throughout their tenure, there were no real agreed targets and that the Board had been “winging it” throughout a rather serious change program.
Accountability is something a Board will expect its CEO to bring throughout the organisation, but they aren’t always holding the CEO accountable. Here’s where it gets interesting for some of you; accountability is only truly effective when it is two way, so a good CEO will also hold their Board accountable and expect their team to hold them accountable. Speaking personally, I am always telling my teams that I am just as accountable as they are and that they should hold me accountable in my promises, my actions and the culture I bring. Or, as I say when teaching leadership “be what you want to see”, not totally original I know, but if it ain’t broke …
If you’re a CEO or a Board member, consider what your organisations strategic plan states and do the same audit of knowledge and skills on the Board as you would in operations to ensure that both the advisory and the “do’ery” (shut up, it is a word!) sides of your organisation complement each other.
Remember, success is a team story!
Yes, I am available to discuss advisory Board positions, or to discuss what skills your Board may require in the advisory roles. Just contact me to discuss.