Governing Board Leadership Strategic Planning

Bill was recently asked to identify the most common problems boards have with strategic plans, and how to solve them effectively. Below are his top 6 problems and, more importantly, the solutions.

  1. Problem: Looking backward, instead of forward – The first responsibility of a governing board is to assure that the individual they have selected to safeguard assets and achieve the mission (the CEO, President, Superintendent, etc.) remains worthy of their trust (i.e. ultimately deciding whether to keep or dismiss the individual). This responsibility often leads, however, to a focus on auditing what has already happened rather than setting direction for the future.  National statistics bear out that boards of all types spend about 70% of their time reviewing what has already occurred (e.g. departmental and financial reports) when their real focus should be on determining how to make the future better.  The past can be instructive, but is most valuable only as it is used to assess and guide future actions.  W. Edwards Deming, the architect of continuous quality improvement, described running an organization by looking solely at financial reports as driving a car while looking solely at the rearview mirror.

Solution:  Monitor both your agendas and your use of time. 60-70% of the board’s time should be spent on determining and refining your future course, i.e. establishing your strategic plan, examining the data that tells you whether it is working and revising as appropriate.

  1. Problem: Accountability – Strategic plans lack content that enable them to be used as an accountability tool.  Most strategic plans have initiatives, one year and multi-year targets, but stop there.  Progress reports simply state (or show in a bar graph or color code) what % of the one-year target has been accomplished.  With only this information and no further data to tell you the % complete on the actual initiatives and the impact of the work to date, a board has no way of knowing whether the plan is on schedule or in need of problem-solving or revision.

Solution: Be sure your strategic plan includes quarterly milestones for each initiative that are tangible, i.e. you can know that they have been achieved or not.  For example, if a school board has a project to complete a remodel of a school in a year, what should be done in the first quarter? Demolition? Framing? Electrical? Map out the significant chunks of work for each initiative, then give each chunk a due date and assign an individual responsibility to assure the work is completed. The board can easily track the work and quickly assess progress on the plan.

  1. Problem: CEO Oversight – There is a lack of linkage between completion of the strategic plan and retention/compensation of chief executive.  If the message from the board is that completion of the strategic plan is important to retention/compensation, then more attention will be given to it.

Solution:  Include language in the employment contract that specifies what % of bonus compensation will be tied to completion of strategic plan.  It should be high, competing with financial performance and performance specific to your organization or industry.

  1. Problem: Regular reporting – Progress on the strategic plan is not presented routinely at monthly board meetings. Common practice instead is for progress reports on plans to be quarterly.  Quarterly updates, however, are too infrequent for boards to respond to problems effectively and craft solutions that keep the plan on track and meaningful. The infrequency of updates also sends the message that the plan is of lesser importance than those items that make the agenda every meeting.

Solution:  Progress reports should be at each meeting if you meet monthly. In cases where the board meets less frequently, the Chair and CEO should be in communication monthly on plan progress and should be prepared to call a special board session should it be warranted.

  1. Problem: Lack of involvement – Boards are not involved in development of the plan but instead simply adopt a plan developed by management.  If the board is not involved in creating the plan, members won’t understand it well enough to use it as an accountability tool.  The principle here is that you cannot control what you don’t understand.

Solution: The board should be involved in creating a vision for the future, determining what the priority initiatives are in the strategic plan and consideration of whether the first-year targets are too ambitious or not ambitious enough.  To carry out that responsibility, the board needs to understand why a project has become a priority.  What is the problem or opportunity being addressed?  Why is it more important than other potential initiatives?  Board members have to be able to answer those questions for themselves, not just adopt the reasons given them.  Further, what is the theory underlying the proposed solution or strategy for success?  Where has it been successful?  What is best practice in a given area?  Boards must ask question after question until they have certainty they are adopting the best course of action.

  1. Problem: No metrics – Lack of defined measures that indicate whether a strategy is working.  Boards need to know not only whether a strategy is being implemented (i.e. whether the target for the year is being met) but that the strategy is having its intended impact.  For example, if a problem is turnover and the strategy is to revise the compensation and bonus schedule, then the end target would be implementation of the new compensation program.  The board would get reports on what the % of completion is at any given time, but the real question should be is it working or did it work?  Is turnover decreasing?

Solution:  Insist that management define a measure of success for each strategy or initiative adopted and require that they provide statistical reports on those measures.  In the above example, the board should be presented with turnover statistics and possibly statistics on number of applications for new positions.

The board’s role in strategic planning is an essential one, which begins during the plan’s creation and continues after the plan is adopted and put into action. Sound use of the strategic plan by a board is a key indicator of a board that is fulfilling its responsibilities to the organization they serve.

What are your thoughts? Send us the issues you see most often with your board and the solutions you have employed to respond to them.