Unless you have the proper governance in place, there is an absolute assurance that the possibility of either starting from scratch or purchasing a new corporate venture will fail. In fact, 20% of newly established businesses fail during the first year of operation. Board service experts know that establishing strong board governance can be the difference between mere survival and success. Even the most experienced executives can benefit from assessing their board leadership strategies. Whether a corporate investor or as a young entrepreneur, this article will outline some valuable insights for leadership of a board.
Strategies To Enhance Board Leadership and Governance
Board Leadership Strategy #1: Clear and Measurable Targets
Establishing clear, measurable targets is essential for corporate ventures aiming to ensure alignment with strategic goals and enhance board governance. To set these targets effectively, start by defining your Objectives and Key Results (OKRs). Objectives should be broad and ambitious but in line with the corporate vision. The Key Results need to be specific, measurable, achievable, relevant, and time-bound (SMART). Employing the SMART framework helps in setting targets that are easily understood at all levels, trackable, realistic, aligned with the broader business goals. Having definitive deadlines maintains urgency and momentum.
Regular monitoring and review of these targets are vital. This involves continuous tracking of progress and adjusting strategies based on performance data to ensure the targets are met. Engaging team members and stakeholders in the goal-setting process is also important for securing buy-in and ensuring accountability.
From a board governance perspective, clear and measurable targets facilitate strategic alignment by ensuring that all organizational activities are in sync with strategic objectives, thus simplifying leadership for the board. These targets also serve as a foundation for performance monitoring, allowing the board to make informed decisions and necessary adjustments. Moreover, such targets promote a culture of accountability and transparency, crucial for maintaining stakeholder and investor trust. Risks are better managed as the board can identify potential issues early and take proactive actions to mitigate them. Ultimately, data-driven insights from measurable targets enhance decision-making, leading to improved governance and organizational success.
Reflecting on these practices, it is worth considering how your organization currently approaches goal-setting and governance. Search Partner’s International offers services to assist board leadership whereby areas for improvement are identified and tailored board governance strategies can be deployed. Ask yourself, how does your organisation currently approach goal-setting and governance?
Board Leadership Strategy #2: Objective and Active Board Involvement
Harvard Law School’s forum on corporate governance highlighted that 77% of c-suite executives believe that their board need to be more eager to challenge management. If your board leadership strategy is already monitoring results, it may be valuable to look at how involved the board really is. The traditional once-a-year conversation is simply insufficient these days. Boards must be equipped with timely analytics that can provide early and frequent signals when a plan isn’t producing the desired outcomes. Additionally, they must be prepared to start changes when they are needed.
In an era marked by a resurgence of shareholder activism, the importance of perspective in board evaluations cannot be overstated. Directors are often surprised by the insights an activist brings from an outside perspective, but this should not be the case. Reapproaching performance and strategy from the viewpoint of an activist can be invaluable for a board. Many directors I have discussed this with admit they do not consistently seek out such objective analyses, which compare their company to its competitors. This lack of perspective can hinder timely strategic adjustments, leaving their companies vulnerable to activist challenges.
Effectively formulating and implementing strategy is vital; failing to do so can be even more detrimental. Delays or failures in adjusting strategies can erode shareholder value rapidly. In the worst cases, companies may lose their market relevance or face failure.
Board Leadership Strategy #3: Be Openly and Effectively Tackle Responsibility Metrics
Environmental, Social, and Governance (ESG) is now a major focus in boardrooms. Directors report that it is the top issue shareholders wish to discuss. However, my conversations reveal that boards are still in the early stages of grasping ESG, with oversight approaches varying greatly. Some boards have only just begun integrating ESG into their strategies, while others have created specific committees for topics like sustainability and environmental concerns. Despite these efforts, there is often confusion about who should oversee areas such as workers’ rights and business ethics. Oversight responsibilities are frequently spread across multiple committees.
At present, many boards adopt an improvised approach to ESG oversight. Given its broad scope, it’s easy to get bogged down in details and miss the bigger picture, sometimes focusing on less critical issues. A significant challenge is the absence of a standardized framework to guide companies and boards in managing ESG.
ESG is relatively new for most boards, and it takes time to become proficient in a new area of oversight. This process is ongoing and will continue to develop. The importance of ESG is set to grow, especially with the SEC considering new regulations. The associated risks could impact shareholder value, brand reputation, customer loyalty, and employee engagement. Boards must be prepared to lead on ESG, starting with a clear strategy and framework.
Conclusion
We hope that these 3 board leadership strategies have been insightful and motivated you to approach your next board meeting with new found drive. Our board services can equip you with improved skills and knowledge to navigate board responsibilities effectively. Gain deeper appreciation and a more thorough examination of the fundamental goals, opportunities and risks, strategy, business model, performance, and sustainability of your company. Contact us today and let us assist you in taking your board governance further.