Strategy should be the very essence of the board.
The remit of directors – executive or non-exec – should be to identify corporate objectives and put in place actions to achieve them. And in many boards, this is the case.
But all too often, boards can get bogged down in the detail, to the detriment of the strategic.
This is something addressed in a new article by Deloitte. Titled ‘Seven steps to a more strategic board’, it identifies actions CEOs can take to help make their own boards think and act more strategically.
Characteristics of successful, strategic boards
To research the article, Deloitte conducted over 50 conversations with Fortune 1,000 CEOs, board chairs, directors, academics, and external board advisers. They were asked to share their experiences of board practices and behaviours.
Today’s board, the article concludes, is expected to get ‘actively involved in interpreting complex market dynamics and shaping a vision for the company’s future’.
A group that agrees with the CEO and simply rubber-stamps proposed courses of action won’t cut it as a value-adding board in today’s world. And indeed, asking them to limit themselves to this role is doing a disservice to the levels of experience and expertise, and the diversity of thought, contained in the average board.
As the article says, ‘Boards represent a unique wealth of strategic and leadership experience that CEOs should want to tap into’.
The role of the board in supporting the CEO
The CEO’s time is limited. Making best use of the skills around them to help with decision-making should be high on their to-do list.
How they do this can be the challenge; the board is – or should be – a diverse group of people, all with significant influence and experience. Getting them to agree a congruent path for the organisation can therefore be difficult.
And of course, you need a certain degree of varying opinions and debate on your board.
So, how can CEOs harness the latent power of their board members to build a more strategic board?
- The CEO needs to take the lead. As the article says, they need ‘to take an active role in shaping their board’s role and effectiveness’.
While many Chief Executives may be more accustomed to taking a passive role in the board’s duties towards governance and other areas, the research says that this must change when it comes to strategy. In this instance, many boards are instead seeking guidance and leadership from the CEO.
One reason given for this is that ‘board members might not feel as adequately informed or educated on the issues as senior executives, and thus feel less qualified to opine on strategy’.
To prevent this, make sure you give your board members the information they need to prepare effectively for meetings, while avoiding information overload.
- CEOs need to be open and transparent. Those spoken to in the Deloitte research wanted their CEOs to be self-aware as well as self-confident; to be open to (and actively seek) feedback.
The CEO should ‘do as I do, not as I say’ in terms of modelling good behaviour when delivering feedback, and responding positively to feedback they are given.
They should encourage debate and diversity of views to ensure rounded, fully-informed decisions.
- Use tension constructively. The report urges CEOs to ‘take advantage of tension’. With disagreement sometimes inevitable, a certain level of tension can in fact ‘drive higher-quality dialogue, and therefore higher-quality outcomes’.
To achieve this, you need to ensure that any tension remains constructive, rather than destructive. Don’t allow tensions to fester, or ignore them, pretending that issues don’t exist.
Maintaining mutual respect, trust, and support while debates grow lively is vital. A strong person in the role of chair can help here – read our tips on best practice chairing for more.
And remember that not every debate will result in a clear-cut decision. Sometimes, agreeing on ‘well-defined actions’ is as much as you can hope for – but this is an achievement in itself.
- Facilitate the whole board experience. The meeting itself is often thought of as the entirety of participation on a board – but this isn’t the case.
The report points out that ‘the board experience outside the formal board sessions is equally important—or even more so’.
The CEO can help boards take a more strategic role by continuing their interaction between meetings, ensuring board members are kept up to speed with corporate plans, objectives and challenges. One-on-one conversations are just as valuable as dialogue with the board as a whole.
For the CEO, it’s important to take on board the varying communication preferences of their members here. When do your members want to receive information – inside or outside office hours? – and how do they want to be communicated with?
One board member interviewed as part of the research, for instance, disliked group emails, saying ‘If the CEO shoots an email, then everyone is reacting to the email. Use the board portal’.
- Curate, prepare and share board information carefully. The report calls this ‘one of the most critical aspects of facilitating the board experience’.
Directors interviewed as part of the research complained the most about ‘the seemingly impossible volume of information that board members are expected to digest’.
Sharing key information with board members is essential. But how you present and disseminate this information can make a huge difference to the way it is received and used.
There is a range of different approaches here. One CEO interviewed has introduced a self-imposed three-page limit on papers to be discussed, with pointers as to where directors should focus their attention.
The report also suggests that CEOs should ask for feedback on the information directors currently receive, asking “What’s working? Are you getting the right information? If not, what do you need? What information should we be taking out?”
Many boards are turning to portals to deliver the information they need to share with directors.
A portal can deliver information in a variety of ways, catering for different preferences; enable directors to read board packs on the move or away from the office; and allow background information – like corporate policies, previous board papers and minutes – to be shared without creating a paper mountain. Read more about the benefits of board portals.
- Decide whether the CEO should chair the meeting. The relationship between the CEO, chair and board of directors is crucial – and the question of whether the CEO can optimise this relationship if they take the chair’s role is an interesting one.
Some of the interviewees felt strongly that there was a conflict of interest if the CEO also held the chair role – others were happy to see them do so. It’s clear that a different approach will suit different boards. Making the right choice for your directors will be a very board-specific decision.
- Make sure you have the right people on your board. Identify the blend of skills and qualities you need and review your current members to see if they deliver this mix. Diversity is important – you need an ideal mix of perspectives to ensure that all viewpoints are taken into account in decision making.
A lack of turnover on boards was cited in the research as an issue – getting people ‘off’ a board can be as difficult as finding good new people to join it.
The report says that the CEO should take a proactive role in identifying and signalling the capabilities and experience needed on the board.
Why the strategic board is vital now
The strategic board, Deloitte believe, would be a ‘nice to have’ if it wasn’t for the relentless pace of change and disruption across all industries.
This continual change means that CEOs, boards and organisations need to be more adaptable than ever. CEOs ‘need every last resource at their disposal not just to stay in the competitive game, but ideally to shape what the rules of the game are before another player writes them to everyone else’s disadvantage’.
Boards must therefore ‘transcend their oversight role to be a tremendous strategic asset’. The CEO plays an important role in helping them achieve this; we hope this article has helped to identify some ways they can do this.
Giving board members the information they need to deliver on strategy
We mentioned board portals as a way to give directors the background they need to make informed strategic decisions.
Using technology to support your board pack delivery can help with information overload and ensure that directors get the essential information they need.
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