High performing boards: going beyond compliance

Abstract

Purpose

Delivering performance is the primary accountability of the board. To perform boards need to integrate strategic thinking with strategic planning and strategic execution. Directors need to ensure, for successful roll out of their strategy, that the enterprise has the relevant decision‐making structures and skill sets needed for implementation and pertinent communication systems for the timely and complete execution of the activities required to achieve the objectives that derive from the strategy. Most enterprises do each of the three independent of the other and spend much time and energy attempting to bring the disparate, disconnected and often conflicting pieces together. The paper aims to outline a tested method for integrating the three elements by design and to demonstrate, in practical terms, the benefits that accrue. It outlines a strategic approach to development and deployment of strategy. It further outlines a framework to cascade the thinking, planning and execution down to the levels that deliver.

Design/methodology/approach

The concept of a performing board, as distinct from a board focused on compliance, is clarified. The paper develops a nested set of rules – three rules of three. The first set of three integrates performance, conformance and compliance, all three of which are central and required for effective governance; the aim is to provide a structure to guide the thinking processes, at the board level, so essential for the development of strategy aimed at execution. The second rule of three is designed to ensure effective deployment of strategy, which is viewed as the core index of board performance. It comprises and combines strategy with structure and structure with systems to facilitate the planning for execution by the directors. This approach helps crystallize the key result areas of strategic outcomes desired. Policy, people and process combine to form the third set of three and are aimed at efficient implementation of the outcomes derived from the thinking and planning process. All three in this set are derived from the second set of three. The paper discusses how these three rules feed into and off each other and the benefits of a structured, replicable process for development, deployment and implementation of strategy.

Findings

This article leverages the finding of the author that directors seldom, if ever, see their roles as overseers of enterprise performance. The usual tick box approach to ensure that statutory and regulatory corporate governance reports are filed in time has failed to deliver the revised expectations of directors. Many rules and regulations have been added to improve board accountability since the last decade of the twentieth century. Yet most boards continue to under‐perform. The integrated approach, while demanding, ensures that directors can oversee a well governed, proactively directed and well managed enterprise without having to micro manage the firm.

Originality/value

Many of the concepts and terms used are industry standard and referred to frequently in governance literature. The originality is set in enunciating the concept of performance governance, differentiating it from compliance and conformance and detailing its implications for directors in full. The value is embedded in the structured expose of the various relationships which enables real time real world execution.

Citation

Ramakrishnan, V. (2012), "High performing boards: going beyond compliance", Journal of Business Strategy, Vol. 33 No. 2, pp. 38-48. https://doi.org/10.1108/02756661211206735