Developing Measurable Strategic Goals

A governing board is responsible for the organization’s strategic planning process, including measurable strategic goals. Great goals are SMART goals. They are specific, measurable, achievable, reach requiring, and time-bound. Three common reasons that boards don’t develop measurable strategic goals are that the task requires hard mental work, board members often don’t know what to measure, and the board isn’t sure what level of achievement is reasonable.

Executive Director Ineffectiveness is a Board Problem

So many times in the past month board members have told me that there are no problems with their board. Then they proceed to tell me that the biggest problem in the organization is that the Executive Director is not moving the organization froward or achieving the organization’s goals. My immediate thoughts are “Your board has a big problem!”

The most important role of the board is often considered to be ensuring that the organization has an appropriate senior staff person. To this end the board is responsible to hire an individual with the attitude, skills, and knowledge to move the organization forward by achieving its goals. That is just the first element in the board’s job regarding the senior staff person. The board is also responsible for ensuring that there is a current strategic plan with appropriate, measurable and time-specific objectives. The board ensures that resources and training are made available so the operational side of the organization is equipped to achieve the goals. Then the board asks for specific monthly or quarterly reports from the senior staff person to monitor progress towards the goals. The board gives feedback on the progress, praising work that is on track and asking for improvement regarding goals that aren’t being met. An effective board holds the senior staff person accountable by insisting on seeing corrective action plans quickly after noticing underachievement of a goal and by monitoring progress more frequently in underperforming areas that are critical to the organization’s future. If the business environment has changed so that the goals are no longer appropriate, the board changes the goals to provide redirection. If the senior staff person is not able to lead operations to achieve the current goals, then he is the wrong person for the job. Now the board is responsible to remove him from the position and start the hiring process again.

Encouraging an Engaged Workplace Culture

Yesterday, when I shared with a former employee of a large corporation that I am a governance consultant, she had an immediate heartfelt response. “Boards don’t care about employees”, she declared. “They make decisions without any regard to how they will impact the employees’ work life.” Unfortunately that may be a common employee opinion. When the workplace culture drains energy rather than generating energy, the organization achieves less and has weak financial results. This should be of grave concern to the board.

One of the board’s key roles is to direct the organization in the interests of the owners. Directing includes developing the strategic plan and involves stating clear organizational values. Some boards identify the concept of employee engagement – a proactive, mission-focused staff team – as a value. This tells the senior executive that he is expected to create and maintain a positive, rewarding workplace culture. It also sets the expectation that the board will set policies and make decisions that enable a fulfilling employee experience.

Another key role of the board is to protect the interests of the owners.

Monitoring Financial Results

The board’s responsibility to protect the interests of the organization’s owners includes monitoring financial performance. Many boards request financial reports on a monthly basis. Others might review finances every quarter. Some CEOs provide the board with a sparse one-page financial report that provides inadequate information. Others compile an inch thick package in which the board-relevant numbers are buried.

Many boards simply ask for a financial report and leave it up to the CEO and CFO to determine what to include. However, a proactive board is very specific in its request. It might ask for a one-page balance sheet showing this year’s figures to-date and last year’s figures at the same date; a two-page income and expense statement with this year’s and last year’s year-to-date figures as well as this year’s budget year-to-date; and a report explaining every line on the income and expense statement that varies from budget by more than 5%. Some boards ask for a cash flow report monthly, others ask annually. This statement allows the board to review the organization’s ability to meet its financial obligations. The board might also ask for some key financial ratios such as profit as a percentage of gross income. The report should include the numbers that quickly allow the board to determine if the budget parameters are being met.

Budget Approval

In many organizations the board approves the detailed line-item budget for the coming year, often engaging in exhausting discussion about small differences in preference. There are other approaches to board leadership and oversight of the organization’s finances that position the board to focus on the big picture and empower staff to manage the details.

A helpful concept for clarity of authority and responsibility is that only the person or group that makes a decision has authority to change that decision. Applying this practice to the budget process can greatly reduce board micro-management of finances while releasing staff to adjust expenditures in response to changing circumstances.

Evaluation – A Leadership Best Practice

Many leaders know about evaluation, such as staff performance reviews, post-project debriefs, and feedback to volunteers. However, remarkably fewer have the skills and commitment to carry out regular evaluations.

Too often the first formal performance review given to industry association senior staff is their pink slip. Many senior executives sense when the board is losing confidence in them, but board members don’t initiate a performance enrichment conversation until it is seen as being too late. Then the organization incurs the costs of searching for and orienting another qualified senior individual. I have seen organizations go through four CEOs in six years because they did not evaluate CEO performance frequently enough to coach or redirect, and did not evaluate their own hiring and empowering systems to build effective processes.

In the opinion of Bill Emmott, Board Chair of Dairy Farmers of Ontario, “The most important part of leadership is to evaluate every program to determine if they are having the desired impact. Then, eliminate those that aren’t getting the desired results.”

Set and Communicate the Desired End Result – Always

You have probably heard of Stephen Covey’s second habit “Begin with the end in mind”. Yet, you may be one of the majority who do not always practice this maxim. Its importance has been impressed on me from all sides this week.

The professional development program in which I participated this week started with a small group effectiveness role play. My group – and many others – were so focused on getting the seemingly straight forward task completed that we dove into the work without checking to see that all group members were on the same page. Our results? Dismal! We learned a lesson the hard way and didn’t repeat that mistake again during the ensuing two days. In subsequent activities we took time to be clear on the objectives and how we would monitor and adjust progress towards the desired end. Not only did our productivity soar; our group rapport and each individual’s support of our results skyrocketed!

Board Meetings at a Distance

Modern technology makes it possible for geographically diverse boards to reduce board meeting travel time and expenses for their members. Information can be shared and decisions made remotely. However, boards have to think about how they use technology to avoid misusing it.

Discussion on material issues is an important element in effective decision making. This is the reason that many boards only permit board meetings at a distance if all the board members can hear each others’ comments throughout the meeting. In essence, such boards restrict long-distance board meetings to conference calls and Skype. Other boards require that every board members’ perspective must be able to be shared with others during the meeting. This expands the allowable technology to web-conferencing with dialogue boxes and to chat rooms. These approaches require real-time meetings where everyone is interacting simultaneously with the topic at hand.

Must Board Meetings be Face-to-Face?

Dialogue about how the board can meet is taking place in many organizations. Are in-person meetings essential? Are electronic meetings legal? Are they effective? When is each type of meeting appropriate?

We relate more fully with people when we can see and hear them and appreciate the environment in which they are operating. Therefore, face-to-face meetings will generally enable the development of deeper relationships and stronger trust. As Stephen M.R. Covey purports, in his best selling book, The Speed of Trust, when there is trust we can accomplish our work more effectively and with more speed. Most boards hold at least some meetings face-to-face so they can reap the benefits of board members being meaningfully acquainted with each other.

When board members are geographically close to each other, face-to-face meetings are generally the norm. This is ideal for regular board meetings and to address complex urgent issues. However, when board members just need to touch base to confirm that they are all on the same page or when travel time is considerable, electronic meetings may be preferable. Boards can practice stewardship of limited resources such as time and money and still engage all the board members in board decision making.

Electronic meetings could include diverse media such as teleconferencing, webconferencing, on-line chatting, email or fax decisions, etc. Before using these technologies for board decision-making check your bylaws and policies. Some organizations only consider face-to-face meetings to be official board meetings.

Annual Meetings – Where the Board Reports to the Owners

All board-led organizations are required to have an annual meeting for the purpose of communication between the owners and the board. Quality communication is two-way, with the owners providing input and the board reporting back to the owners. By planning a quality annual meeting boards can exercise the discipline of respecting the owners.

It is at the time of the annual meeting that the members or owners elect the board members for the coming year. If the board members are elected by advance ballot the elected individuals are officially announced at the annual meeting. It is usually at the annual meeting that the owners make changes to the bylaws, constitution, or code which provides direction to the organization. Great boards value and heed these owner decisions.

The other part of two-way communication is the board reporting to the owners. This includes