Are you frustrated with your public sector or not-for-profit board discussing operational issues, like the number of executive parking spots or the colour of staff uniforms?
Do you want to lead them down a more strategic path to focus on what will really help achieve organisational goals?
If yes, you may be wondering how you can explain to your fellow board members the consequences of not maintaining a strategic focus. You know in your gut it’s the right thing to do but you don’t have the right wording to convince them.
Well, read on because help is below.
In a nutshell
Board members’ engagement is only part-time so deliberations should be focussed on what really matters, which is the organisation’s ability to meet strategic objectives and key legislative requirements. Otherwise, you may not meet your mission and you may even be shut down.
In addition, organisational management may see the board’s ‘meddling’ in operations as a lack of confidence. They may become dissatisfied and decide to leave.
Impact on performance
Organisational performance is defined here as the organisation’s ability to achieve desired/required core business outcomes and to ensure organisational sustainability.
An insufficient focus on strategic issues impacts performance because:
Strategic risks (risks to achieving strategic objectives) are not adequately managed.
Organisational-level performance issues are not adequately or timely identified and addressed.
Due to its excessively insular/operational focus, the board loses sight of external factors, which are key to setting and adjusting strategic direction.
The above could ultimately lead to poor core business outcomes, reputational damage and loss of community confidence, missed opportunities to further enhance organisational performance, secure additional funding or retain current funding.
How does this happen?
Some of the common causes are:
lack of clarity over the board’s purpose, roles and responsibilities
lack of induction and refresher training provided to board members
significant operational events drawing the attention of the board away from strategic issues
ineffective organisational management or high management turnover, leading to diminished board trust
lack of policies, processes and delegations, requiring the board to frequently intervene and/or make decisions on a case-by-case basis
low risk awareness / risk maturity of board members and organisational management
high turnover of board members with inadequate succession planning.
Impact on accountability
The situation could also negatively impact on organisational conformance, such as the organisation’s ability to meet key obligations related to:
financial statements
budget management/allocation
grants management
significant expenditures/purchases
employee-related obligations.
The above could ultimately lead to penalties, legal proceedings, reputational damage and loss of funding.
How does this happen?
Some of the common causes are:
lack of Board members’ awareness of the obligations that apply to the organisation
ineffectiveness of organisational management in communicating the obligations, reporting on them or involving the board
poor compliance culture of the organisation
changes in current legislation or introduction of new legislation
poor reporting capacity due to system or data collection constraints.
Impact on organisational management
The risk could negatively impact on organisational management and lead to their:
feeling of distrust or lack of confidence by the Board
poor job satisfaction
frustration due to the inability to take advantage of operational opportunities as a result of inflexible decision-making
increased workload caused by overreporting.
The above could ultimately lead to increased turnover within the organisational management team.
How does this happen?
The causes are similar to the ones already listed above. This means that if you address the issues relating to performance and accountability, you will have systems and practices in place that will give comfort to the board and also allow operational management to get on with their work.
Sounds good, right?
Thanks for taking the time to read the post.