Elevating board effectiveness: How to improve purpose, strategy and board priorities

By Nicholas Barnett BEc, CA, FAICD Executive Chair, Board Benchmarking  

Elevating board effectiveness: How to improve purpose, strategy and board priorities

Nicholas Barnett, Executive Chair, Board Benchmarking and Insync, led an interactive discussion at the Governance Institute’s annual conference in Melbourne on 4 September 2024. Nicholas shared a robust framework for board effectiveness. Additional topics covered included getting purpose strategy and board priorities right.

Seventy-five people responded to a short survey about the subjects covered by the conference. This article draws on these survey ratings and written responses.

Get exclusive access to the complete survey insights. Please sign up here to receive the full report, ‘Measuring and Improving Board Performance and Effectiveness’, for further analysis and ideas.

Better boards means better organisations

Conference attendees overwhelmingly agreed that better boards means better organisations. The contrary is also true; poor-performing boards will eventually lead to poor-performing organisations. This agreement underlines the importance of boards setting a high bar for their performance and effectiveness and increasing the value they add to their organisation.

Several conference attendees emphasised that one of the board’s most crucial responsibilities is ensuring their organisation effectively embodies a clear and compelling purpose, strategy, and values. These foundational elements are pivotal, as getting them right can significantly enhance stakeholder support, customer and employee engagement, and overall organisational performance.

It was also noted that the ISO Standard 37000, released in 2021, places purpose—not profit—at the core of its governance framework. The standard highlights the importance of ethics, stakeholder engagement, and sustainability, as illustrated below.

Growing compliance burden and board engagement

Several attendees observed that boards face a growing compliance burden, making it increasingly challenging to balance strategy, performance, and compliance in their meetings. Additionally, some noted that too many directors become overly involved in management tasks, which detracts from the board’s ability to focus on strategic matters.

Relevant comments from survey respondents:

• “Let the management do their job and have the board stay out of the minute details” – Director
• “Keep board discussing big topics throughout the year, and less compliance and policy checking” – CoSec/Executive

There was also a productive discussion on the importance of directors bringing diverse perspectives, challenging various areas, and adding rigour to the strategic plan. Nicholas shared a quote by Oliver Wendell Holmes Sr.: “I couldn’t give a fig for simplicity on this side of complexity, but I’d die for simplicity on the other side.” Similarly, a simplistic strategy that lacks thorough review or debate holds little value. However, a simple, straightforward, and compelling strategy, rigorously challenged and debated before being approved by the board and executive team, is invaluable.

Alignment on key priorities

Achieving alignment between the board and executive team on the few key priorities that will add the most value to the organisation over the next decade is also to die for. If directors hold differing views on what matters most, the boards and the organisation’s efforts will become scattered. Progress can be significantly accelerated by focusing deeply and investing extra energy in an agreed-upon short list of critical issues. Survey respondents believe that boards can improve in this area.

Relevant comments from survey respondents:

• “Earlier involvement of directors, clarity of priorities from directors earlier” – CoSec/Executives
• “Focus on the main game” – Director
• “Board calendar is shifting to provide more in-depth discussions on key issues” – Director
• “Priority goal focus/deep dive at every board meeting” – CoSec/Executive
• “Have the board hold a deep dive session for determining the upcoming year’s strategic priorities” – CoSec/Executive
• “Understanding of how success should be measured and how that information can then be used” – Director

Transformation projects and board oversight

Many organisations undertake large transformation projects, often with a significant technological component. However, these initiatives are frequently viewed as merely technological transformations rather than strategic ones. As a result, the customer and productivity benefits and the cultural changes needed to realise these benefits are often under-emphasised.

There are many examples of inadequate board oversight of large transformation programs. Survey respondents believe boards could improve in this area, with executives generally holding a more critical view than directors. The contrasting perspectives are illustrated below.

Capability and capacity

Even with a robust strategy, lacking the right capability and capacity in key areas to execute it effectively will hinder the organisation’s success. Survey respondents also believe that boards have room for improvement in this area, as reflected in the following survey responses.

Checklist to help get your purpose, strategy and priorities right

Here is a brief checklist that picks up several points made during the conference, as set out above.

• Board and management aligned on purpose and vision
• Directors understand their role – and how it differs from the role of management
• The board engages and provides input into the plan – broad parameters set early by the board
• Big picture external factors considered
• The board understands the challenges, competition and key drivers of performance
• Board undertakes a rigorous review of the plan, ensuring it is realistic and well-resourced
• A clear understanding of the key steps to achieve the plan
• Rigorous oversight of execution, including any cultural transformation
• Extra focus on the success of major projects
• Forge unity around the most important matters and the areas of most significant value-add
• Deep dives into the most critical issues.

Get exclusive access to the complete survey insights. Please sign up here to receive the full report, ‘Measuring and Improving Board Performance and Effectiveness’, for further analysis and ideas.

About Board Benchmarking

Board Benchmarking is Australia’s leading provider of world-class Board Effectiveness Surveys and expert governance advice, with over 500 boards in its database. Boards are benchmarked against those of organisations of similar size in the same sector, ensuring relevant and insightful comparisons.

About Nicholas Barnett 

Nicholas Barnett, Executive Chair of Board Benchmarking and Insync, is a seasoned governance expert with over 35 years of experience. 

Nicholas Barnett 
Executive Chair, Board Benchmarking
nbarnett@insync.com.au
0407 175 551