The value of a company’s board of directors can be defined through the kind of support, expertise, and insight they bring.
How well they work with the CEO of the company and add value is essential. On paper, a board’s most important role is to provide oversight and challenge the CEO in steering the company strategically. By assessing the board’s strategic planning and seamless flow of board deliberations, you can understand how valuable the board’s contribution is to the organization’s sustainable success.
While it is vital to a company’s success for the board to help steer the company strategy, several challenges are to be overcome in practice. Boards must find a way to be active (providing oversight) and maintain high credibility with their CEO. Achieving this will allow the board and its members to fully contribute to strategy discussions. Although the focus of the board is governance, it can help you innovate, improve organizational performance, and even lead the company through challenges. Therefore, it is crucial to understand the value of your board and turn its oversight role into a strategic asset.
Here are some insights on how a board can better understand its responsibilities to make meaningful decisions and improve its strategic contribution to the company.
What is Corporate Oversight?
Corporate oversight can vary across different companies. The core of it is the timely action taken to review and monitor a company and its performance. This is done through periodical reviews of the company’s policies, plans, and projects to ensure that they meet their goals and achieve results. This review also looks at aspects such as value for money, compliance, and ethics.
How do Boards Achieve Strategic Impact?
An organization’s strategy is one of the key drivers in achieving results. However, there can be challenges in understanding the depth of the board’s role in the company’s strategy. It is commonly assumed that a company’s strategic thinking lies solely on the shoulders of the CEO and other executives. As a result, there can be the general notion that boards are either just acting as a rubber stamp or get too actively involved and conflict with the executives.
There is no one solution for all in this scenario. The approach in understanding how boards can achieve strategic impact is case-by-case. To begin with, the board and the company need to understand the meaning of strategy to their organization. This will also help clearly define the roles of the board and the CEO regarding strategy.
It is essential to define the board’s involvement in different contexts and scenarios. For example, if the context is simple, the board may support the executive’s strategy. However, in a more chaotic or challenging situation, the board may need to have a more dynamic approach in guiding the executives and the overall strategy.
Providing clear communication and information will also help the board understand situations better. As a result, the board members will be able to provide more insights into navigating the strategy at the time. Clearly defined roles and situations, along with effective communication and understanding of the significance of the board, will help achieve a significant strategic impact.
Effective CEOs Acknowledge the Board’s Strategic Role
CEOs realize that boards are a strategic asset. A board that is of good value comes with years of experience and learnings. Any strategic CEO will want to borrow knowledge from these types of boards. As a result, a strategic CEO will need to be more open about what they expect from their board and understand what the board wants. Establishing this connection requires clear communication and blunt transparency.
CEOs also need to remember that conflict is all part of the game. If any tensions arise during strategic discussions, the CEO must take over and make these discussions more constructive than destructive.
Finally, bearing in mind that expressive communication is the most important of all, the CEO needs to ensure that they are not limiting their conversations with the board only during meetings. The CEO should remember to keep the board informed and try to interact with them every two weeks. This helps avoid any surprises and keeps everyone on the same page.
Boards are a critical strategic tool that can propel your company forward. It is essential to understand the board’s role beyond oversight and clearly define when and how they can be involved with its strategy. With unbiased and transparent conversations between the CEO and the board, a company can reach new levels of strategic development and growth.