Principle 3: The board has a strategic focus
The board sets the overall strategic direction of the public sector body and monitors performance against the intended outcomes.
Strategy is one of the key functions of the board. In most circumstances, the identification of strategic direction and holding management accountable for progress is a fundamental corporate governance role. Maintaining a focus on these two tasks will help boards avoid being unnecessarily distracted by operational matters. Often boards choose to take a more substantial role in strategy, taking into consideration the internal and external environment.
Determining an appropriate strategic focus for the board requires careful consideration of the following factors.
An appropriate board role and engagement strategy is defined
This will require consideration of the board's role (as defined through application of Principle 1: Roles and responsibilities are clear and understood) alongside the board's preferred style of engagement with strategy.
The board should engage in discussions and decisions on organisational direction. Boards may also engage in the design of the system for discrete strategic planning and more fluid, regular and emergent discussions on strategic issues.
Advisory boards often are not directly responsible for organisational strategy. However, these groups should still undertake a strategic role, for example, by understanding trends relevant to their scope and offering positional advice in light of these trends.
The board understands the strategic environment
The board should operate with awareness of the broader strategic environment. The strategic environment has many internal and external considerations. Government boards should be familiar with and actively consider:
- internal and external trends
- WA Government goals
- relevant government policies and priorities.
The board should ensure sufficient time is allocated within the board agenda to discuss issues of strategic relevance.
The board understands the core operations of the public sector body
The board should understand the core operations of the public sector body to allow informed oversight and evaluation of proposals. An understanding of core operations will also assist the board to undertake the desired strategic role.
The board understands key risks
Risk is a key strategic consideration. Changes to strategy may have implications for the organisational risk profile. The relationship between risk management and strategy should be understood by the board. The board’s expectations in relation to risk should be communicated to management.
The board contributes appropriately to strategy
The board's required contribution to strategy will depend on its role. For some boards, this may be limited to approving strategic direction, whereas others may desire more extensive input in the development process. The appropriate level of contribution is often dependent on the level of assistance effectively used by the CEO.
The agreed strategy is appropriately documented
The strategy should be documented adequately. Once completed, this documentation needs to be reviewed and updated regularly to meet government requirements, remain relevant and add value to the public sector body.
Strategy is effectively monitored
Progression towards the public sector body’s strategic goals requires regular oversight by the board. The board should receive regular reports on progress against the strategic plan. This may include the use of strategic reviews, audits or formal planning sessions. The board should also remain informed of issues relevant to the strategy as they arise.
Quick review – Strategic focus
- Does the board understand the strategic environment within which it operates, including the key risks?
- Is the board clear on its role and scope of engagement in strategy?
- Has the board set aside time in its yearly calendar for focused strategy development?
- Is strategic alignment considered a key factor in all board decision making?
Does the CEO or chief employee regularly report to the board on the progress of strategic plan implementation?
Further information is available under good governance guides.
Page last updated 23 May 2017