The start of a new year is generally an appropriate time for the Board and senior management to review its strategic plan. The purpose of this review is to assess whether events of the past 12 months have impacted on the performance of the organisation to the extent that priorities for the new year should be amended or expanded to cater for the circumstances at hand. In this article, we identify 5 key areas that should be exercising the minds of board members as they prepare to welcome the “year of the rooster”
Firstly, a critical review of “what have we learnt from this year’s activities “is always a good place to start. Whilst what happened in the past is not necessarily an accurate predicator of what will happen in the future, we most certainly can learn from both our successes and failures and factor in such learnings into our decision making processes in the new year. More importantly, we are looking for systemic issues rather than one off occurrences and trying to identify early warning signals that may help us in our endeavours to practice good governance on a continuous basis.
In terms of the key issues that should be occupying our thinking during this planning session, we offer the following for your consideration:
Sustainability and relevance continue to be at the forefront of our thinking. 2017 has not created a new external environment that has mitigated any risk in this area. Boards must remain vigilant in their analysis of the internal and external environment and their organisation’s capacity and capability to deliver its Mission. Words must be replaced with evidence to provide surety to the Board that their business is viable and sustainable – good governance practice demands such accountability.
Your organisation’s culture – the use of this word has almost reached saturation point during 2017. If it is not the Banks talking about how they must improve their culture to remove bad behaviour then its football clubs taking about creating the right culture to create a high performing team and club. Nevertheless, despite this over usage, such an approach does have merit and it is generally accepted that creating and sustaining the “right” culture is fundamental to long term success. The Boards’ role is to define what long term success looks like (and let’s hope it is not just financial parameters) and then create a framework, allocate accountability and establish performance management criteria to imbed the required culture within its organisation. The Board must take a leadership role in all the stages of this approach as it is fundamental to good governance and a core foundation of a sustainable business strategy.
Cyber security –again in 2017, it would seem that there are people out there intent on a new form of” highway robbery “– the incidence of identity theft, deliberate system crashes, raids on databases and corporate computer systems, and deliberate attacks on personal computers for the purpose of extracting financial reward appear in our mainstream media on a weekly if not daily basis. The attacks are becoming more sophisticated, the risks greater and we seem to playing catch up on an ongoing basis. How you manage these new phenomena is dependent on a range of issues, including your own risk assessment, internal capability and available resources, however a simple but effective means is to have a robust back up system and make sure it is followed to the letter, no exceptions. At the very least, the Board should include Cyber Security in its strategic planning process and annual agenda for review and take expert advice when available.
The Environment –if we don’t look after the environment, who will? Once upon a time it may have been ok to say that” the business of business is business” however society has changed and now expects that organisations will be good corporate citizens and “do no harm”. Again, it’s a Board responsibility to take a leadership role in this area and establish expectations around environmental management, impact and contribution. The easiest way to do this is to include the environment in the organisation’s strategic and business plans, sitting alongside marketing, operations, human resources , the finances and service /product delivery. If not for the environment, then do it for the business case, as both “stack up” as a basis for implementation.
Board renewal/Succession/Diversity-we have written about diversity in a previous article and the value such a strategy creates at both the strategic and operational levels of an organisation. Suffice to say that if your board is not a diversified group of members, then collectively you are depriving your organisation of access to skills and capabilities that are not found in a homogenous group of directors. A board should devote time and thought to its board renewal and succession program and each year re visit the resultant plan and take appropriate action. The Chairman takes a leadership role in this area of good governance and will set the tone on how the board itself manages this responsibility.
In summary, undoubtedly 2018 will again present its usual challenges around sustainability, resource management and the alignment of people and organisation goals. And undoubtedly, we will witness bad behaviour from people and organisations we expect more from and from those whom we expect to little more from during this time. In addition, as our world evolves, so does the type and quantum of new challenges that are presented to us, such as cyber security and social media. One thing however remains constant – if we apply the principles and practices of good governance and strive for excellence in all that we do, then we give ourselves the best chance of success – good luck in all that you do in 2018, the path you take is yours to choose.