There are hundreds of thousands of companies receiving board papers every month; surely most CEOs are getting it right? Perhaps they are, but the more I work with company directors, the more they tell me that better board papers will help them to focus on governance, leave management to manage, and improve their productivity. Two common complaints are:
- Management struggles to get the timeliness of papers right. Boards need time as well as good information to make their decisions. Too often, material arrives too late for good reflection. Proposals to augment or change the strategic, operations, or business plans need to be raised with considerable time to consider the consequences.
- Poorly focused board papers require directors to spend more of their time raising and discussing issues that could have been covered in the paper. It is not a good use of directors time, and reduces board productivity.
Because we have a hierarchical model of corporate governance, the board often blames the subordinate CEO when things go wrong, when in fact the problem often lies at the board table. If boards have clearly defined structures and systems, the job of governance is made pretty straightforward for all concerned.
We tend to emphasise the strategic plan like its a roadmap that would make everything clear if we just followed it. However, the strategic plan has to be accompanied by an operations plan that sets out what will be done to achieve the strategy.
A CEO of an Australian multinational had the desire to launch a project in Vietnam. The company already had a similar successful project in Singapore, so he wanted to expand the business reach in Asia by launching in Vietnam. He thought it was a logical thing to do, so he pitched the idea with the aid of photos of Vietnam and its people. For him, it was a sales task to get the board to sign on. He argued that they would simply replicate the successful Singapore project there.
The company had a vague strategy of expansion and a budget built on activity assumptions that had not been reviewed adequately for some years. If the board had formed a strategic plan and developed an operations plan, the proposal to launch in Vietnam would have been clearly identified within it or would have been clearly an amendment to it.
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