.png)
There exist two long-held approaches to strategic planning in corporate America: relegate strategic planning to the CEO and upper-management team or shift strategic planning to be a primary duty of the Board of Directors.
Which is the right approach?
An often volatile economic environment and the heightened legal accountability of board members to corporate shareholders suggest that increased board involvement in the strategic planning process is sound governance.
Board members invested in strategy development are better positioned to understand, direct, and oversee plan implementation and management compliance. Integrating the board into the strategic planning process is vital to a cohesive advancement of corporate objectives.
Reasons to include Board Members in Strategic Planning
Board members should have a pulse on their company’s immediate objectives and long-term strategic vision. They should prioritize being informed about vital information and practices impacting the company’s strategic plan.
The best way to be informed is to be involved. Active participation in strategy development offers board members an improved understanding of company operations and organizational challenges.
Directors involved in strategy planning should exhibit good listening skills, open-mindedness, and sound judgment. They should offer diverse viewpoints, an inquisitive mindset, and a desire to work cooperatively with senior management.
In return, board members should bring value to the strategy by increasing ownership and accountability, providing informed oversight, and establishing synergy within the organization.
Defining the Board's Role in Strategic Development
When seeking to expand the participation of board members in strategy planning, it is essential to define the desired extent of their involvement clearly. Drawing distinction between strategic planning and strategic management is critical to ensuring a good working relationship between the board and corporate management.
The Hands-Off Approach
Many boards adopt strategic plans presented by CEOs and senior management teams without contributing to the development or implementation of the plan.
Under this scenario, strategy planning and execution are corporate management’s sole responsibilities. Board members operate from hind-sight, rewarding management performance or shoring up corporate liability based on revenue and earnings reports.
This hands-off, reactionary approach reflects a disconnect between the board members and executive management and ultimately between board members and their shareholders to whom they are responsible.
The Over-Step
Boards shifting from a hands-off approach to a more active role in developing a strategic plan can easily overstep boundaries.
Board members must be cautioned against discounting or pushing aside senior management when assuming active participation in strategic planning and execution.
Failure to solicit input from a CEO and upper-management team during planning may create strife within the organization. At the same time, micromanagement may reflect a lack of confidence in the executive staff’s ability to deliver on vision.
Care should be taken to align corporate strategy, governance, performance, and culture through synergistic efforts of board members, the CEO, and senior management. Savvy board members rely on their CEO and senior executives’ input about internal operations and the organization’s position relative to competitors.
The Collaborative Approach
A successful corporate strategy most often results from a collaborative effort between the CEO, executive management team, and corporate board of directors. Each entity offers a unique perspective based on its knowledge, experience, and proximity to the company.
CEOs and upper-management are integral to strategy development because they are front-line operatives inside the company. They bring an intimate knowledge of daily operations to the strategy planning process. The executive staff should have a keen understanding of the company’s internal strengths and weaknesses that will either support or undermine growth and profitability. They should offer recommendations about how to surmount foreseeable challenges.
A board member’s business expertise, personal network, and industry knowledge offer more profound insight into strategic planning issues, including opportunities and risks impacting the marketplace. The board of directors should contribute a global perspective to strategy development. Through a “distance” lens, the board is well-positioned to assess the company's future potential against its current economic, environmental, and human resources.
Corporate management and its board of directors combine to create a system of checks and balances in the strategy planning process. Thorough collaborative planning, development, execution, and management, risks can be averted and opportunities maximized.
Incorporating the Board in Strategic Planning
Board members entering into the strategic planning process should lay a foundation of trust with their counterparts.
The board should endeavor to work cooperatively with their management team, not above their management team. The CEO and management team should interface willingly and provide any financials, market research, or other supporting material to aid in strategy development.
Board members may prefer to work with their executive team internally to formulate strategy. However, identifying and navigating everyone’s respective roles can be tricky. It may be helpful to retain an outside facilitator to ease the transition into collaborative strategy development.
Strategic Planning Services for the Board
Strategic planning services provide the benefit of an experienced, neutral facilitator to oversee the integration of board members into the strategic planning process. This is especially helpful when blurring the lines between board oversight and executive management function.
The facilitator’s role is to guide the process in a safe forum, allowing for open dialogue between strong, driven personalities. A good facilitator will create space for the team to operate outside of their titles and status. Leveling the playing field between board members and senior executives is a critical function of a skilled facilitator.
Achieving Strategic Planning Objectives with the Board’s Participation
A collaborative approach between the board and executive staff is critical to optimizing strategy.
Companies only fully benefit from board member involvement in the strategy planning process once trust is established. Board members and senior management must have confidence that they are working toward the same vision for the benefit of the organization.
Synergistic collaboration between a board of directors and corporate management will result in a strategy plan reflective of the company’s values and culture while promoting the advancement of its objectives.
Comentarios