How to involve your board at the right level in company strategy

So, how should the board be involved? How should it interact with the executive management team, which is also deeply engaged with strategy creation and implementation?

There is no one-size-fits-all solution. Examples exist of boards that have been the primary creators of the company strategy and those that more or less rubber-stamp what executive management suggests. Many board members we speak to are unsure how they should be involved, so we have written these suggestions as a starting point.

A good way to handle the topic is for the board to first discuss and agree on how they would like to be involved. Given the company’s history, the culture of past interaction with the executive team, and how the company is performing with the existing purpose, strategy, and goals, the board may agree it should be involved to a greater or lesser degree.

Dividing the strategy sessions into at least two per year is often helpful.

The purpose of the first session, together with key executive team members, can be to look outward and evaluate what is happening in the world that might affect your business. You should look at trends in your market, your industry, competitors, and customers as a context or backdrop for assessing what the company should do. Often, this session occurs early in the financial year, long before the overall strategy is discussed or action plans are set for the coming year.

The second session is often held (again, together with the executive team) just past the year's midpoint (after the summer for companies that close financials at the end of December). At this session, the directors and executive team might choose to have a working session to agree on the implications of the external trends and findings from the first session – is there a need for any change in strategy, of HOW the company plans to deliver on its mission and meet the needs of its customers? (We assume the long-term vision and mission of the company are stable, and don’t need to be discussed annually unless there is a severe market disruption.) Does the company’s existing strategy adequately address the long-term opportunities and challenges, and does the company possess the required financial and managerial resources and competencies to execute the plan? Boards should also be asking and reporting on how any changes to their strategy may impact each stakeholder group.

It is common practice for boards to be involved to some extent in these strategy discussions, but to ensure value creation in the company, the board must be deeply involved. It should make time for at least these two meetings and discussions per year. Moreover, it is crucial that every board meeting has key strategic questions on the agenda. Suppose a board member experiences that the company strategy lacks clarity, strength, or alignment. In that case, the board member must articulate and bring that opinion into the boardroom. Do not wait until the following formal, annual strategy session. It might be too late.

If you’d like to have further discussion on this topic, don’t hesitate to contact us at reception@LeadershipAdvisorGroup.com