Good Governance Guides

Good Governance Guide: No 1.6

Category: Structure
Subject: Strategic Planning and Leadership
Source: Chartered Secretaries Canada

A pivotal role of the Board of Directors is to provide leadership in playing an active role in the development and execution of a Strategic Plan. Strategy oversight by the Board will assist in creating the conditions for success by fundamentally ensuring that there exists alignment with strategic direction,that expectations are realistic and that risks and opportunities are capable of being managed throughout the timeline of the plan.

What must be clear from the outset is the role both Directors and Management play in the process of developing the plan. The Board needs to confirm and endorse the CEO as being the responsibility centre for the process leading to the development of a Strategic Plan. The Chair of the Board of Directors must work with the CEO to develop ways of educating and engaging Directors so that the latter may be knowledgeable about this key process and can be constructive participants in the deliverable.

There are essentially five phases to a Strategic Plan that include: conceptualization, development, evaluation, implementation and continuous monitoring via follow-up reporting to the Board at regular intervals.

The Board will need to find a common ground with their understanding of strategy and strategic planning. They will need to agree the timeline or horizon for the Plan (e.g. 2 to 5 years). They will need to ensure a commonality of purpose and thought so that they are moving forward in synch with Management – that is they ought to share the same notion of vision, mission, goals, objectives and priorities. They must be capable of critical and lateral thinking in the context of challenging assumptions, ensuring understanding and making improvements.

Management must adhere to the guidelines and boundaries as defined by the Board and seek clarification where necessary. They must also present the Plan to the Board for review, input and approval. They should understand the Plan in detail and be prepared to respond in detail to reveal alternatives that were considered.