• Categories: General
  • Published: Oct 13, 2022
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Each month we sign post for you some good reading on governance from around the web

What is the most important question in strategy? 

According to Roger Martin, named the #1 management thinker in the world in 2017, the answer is: What would have to be true?  

To create context for his conclusion, Martin explains that the world is obsessed with a similar looking but significantly different question: What is true? The seeds of this question are sown in a formal education system that rewards students for coming up with the right answer.  

In an age of ‘alternative facts’, a significant task for news media is fact-checking, particularly in relation to anything that is controversial. But, Martin says, the ‘truth’ is always elusive, and evaluations of truthfulness tend be divisive even in relation to strategy. Managers differ on what is true about customers or competitors, or capabilities, or costs, or just about anything. 

From Martin’s perspective ‘what would have to be true?’ is a better question for three reasons that he says make it the most valuable question in strategy. It’s worth exploring Martin’s thinking on why the question helps to: 

  1. decompose analysis into logic and data 
  2. focus on creating the future 
  3. evaluate your strategy on an ongoing basis. 


Board work planning
 

We constantly urge boards to be more intentional in how they use their most valuable resource: their time and, particularly, their attention. Scott Baldwin’s recent blog is a great place to start if explicit planning of the board’s work is not yet an ingrained process at your organisation.  

We are often shown examples that are no more than a calendar of meetings. That’s still a good start. A well-constructed board calendar is a necessity and not just for those who must juggle their time between multiple boards. A practical, concise, iterative board calendar facilitates everyone's ability (including management and staff) to plan their commitments to the board and committees. It ensures that board and committee meetings are held in sufficient time to provide the decisions that are needed, in the right sequence and in a timely manner. 

However, a board workplan (sometimes also referred to an ‘annual agenda’) goes beyond a list of meeting dates. It lays out the work and issues the board needs to complete or address during the year. With such a workplan in place, successive meeting agendas are more than half done. 


Why a board should be interested in staff turnover
 

Staff retention is a particularly important issue for many organisations in the post-COVID employment environment. Churn (staff turnover) is a subject Patrick Dunne recently explored in ‘Churn, Churn, Learn!’  

As Dunne suggests, some might feel this is an operational matter and not something a board should be concerned with. However, because people are a key resource for most organisations, Dunne understandably takes a different view.  

A board must ensure that the organisation has the resources as well as the right strategy to fulfil the organisation’s purpose. Therefore, whether staff turnover is at an acceptable (or even desirable) level at a point in time must be a matter for board consideration. It is not just the numerical loss of staff and the direct cost of replacement that are potentially problematic but the consequences for productivity, customer satisfaction, organisational momentum, and ultimately performance. A high churn rate may also point to an issue with organisational culture. 

So, in terms of its oversight and support role, the board should be actively interested in churn. It should know what the churn rate is, what’s driving it, and consider the impact and the consequences of churn on the decisions it makes. Particularly useful in this article is Dunne’s exploration of many of the reasons for staff churn. He underlines that these go well beyond any dissatisfaction with how much departing staff were being paid, which may be a surprise to many directors and managers: 

The starting point is to recognise the importance of knowing what’s happening within the organisation and in the markets for your talent. It is also important to finely tune your “Churn Antennae”, to know where the major risks lie, to have robust “Flight Risk” analysis and to get behind the real reasons why people are leaving.  

 

Why just ticking the diversity box is not enough  

In Is Your Board Inclusive - Or Is It Just Diverse?, Randall S Peterson and Heidi K Gardner acknowledge that many boards have made substantial progress in increasing diversity. Their research suggests, however, that simply increasing representation of women or ethnic minorities isn’t necessarily enough to ensure that diverse perspectives are integrated into decision making.  

They report new research that goes beyond representation to explore both how boardroom behaviours change when boards become more diverse, and what boards can do to ensure that increasing diversity has a positive impact on both the board and the organisation at large. They found that diversity can substantially benefit boards—but only when all directors’ input is heard, valued, and truly incorporated. 

The value in this piece is the authors’ exploration of the challenges of moving beyond mere representation and the strategies they list that have proven successful. 


Strengthening the board/management working relationship 

The board/management dynamic is unsatisfactory in the eyes of many directors and executives. Executives believe they spend too much time preparing for board meetings, yet fail to receive the strategic guidance they need, while directors often feel both overburdened and underutilised.  

How to overcome this is the subject of 10 Steps to a Better Board Partnership by Scott Engler and Evan Grossman. Quoting the 2022 NACD Public Company Board Practices and Oversight Survey, they say that directors rank information flow issues between the board and management, and poor communication of the board’s expectations of management as the second- and third-largest barriers to becoming a high-performing board.  

With this dissatisfaction as the backdrop, Engler and Grossman offer a range of suggestions of simple tools and techniques that have been used successfully by directors and executives to address the divide between them before, during and after scheduled board meetings. There will likely be at least one useful idea for your board among those listed.  

One that particularly resonated with us concerns something we see happening all the time: Don’t let ambiguity follow presentations (or, we would add, any board discussion). Too often directors and executives walk out of board meetings with quite different understandings and interpretations of what was discussed and on what should happen next. 

 

New edition of the Nine Steps to Effective Governance 

BoardWorks is delighted to continue its association with Sport New Zealand’s popular and widely used publication. 

As creators of the original content and editors of the fourth edition, we have included opinion pieces from thought leaders and added new sections to reflect recent changes and challenges in sport, recreation, and the wider for-value sector.  

Currently available online only at Nine Steps.