Staying on track
A key aspect of the board’s stewardship responsibilities is to ensure the organisation’s performance is scrutinised and kept on track.
The board must monitor against pre-established criteria.
Unless the board establishes criteria for what it wants achieved, monitoring is likely to be disorganised, uninformed and unfair – leading to lost time, staff confusion, inefficiency and an adversarial board-chief executive relationship.
Monitoring should focus on outcomes or results, rather than how the outcomes are to be achieved.
Monitoring versus evaluation
It is important to distinguish between monitoring and the process of evaluation.
Monitoring involves observing, recording and reporting information. It is retrospective.
Evaluation is making a judgement, mainly to improve future performance.
Board meetings should primarily be used to create the future, not rehash or review the past.
Clear expectations need to precede performance measures.
Poorly expressed expectations will foster poor performance measures. The two main elements in establishing performance expectations are:
- desired outcomes: results to be achieved.
- planned actions: ways in which results will be achieved.
The board’s job is to specify what the organisation is to achieve.
The chief executive determines the actions required.
Common errors in creating performance agreements
- Reliance on feelings, instead of using demonstrated evidence
- Misuse of adjectives like ‘appropriate’ and ‘excellent’ that are imprecise
- Misuse of verbs like ‘promote’, ‘coordinate’ and ‘facilitate’ that direct attention to the action instead of the intended outcome
- Use of comparative words like ‘increase’, ‘improve’, and ‘more’ which need a fixed reference point
- Failure to be exact
- An unreasonable expectation, e.g. ‘ensure the government increases funding to the organisation’.
Scanning the environment
Many boards are inclined to focus inwards and backwards instead of forwards and outwards.
Being strategic is not something that an effective board is, or does, occasionally. The external operating environment is constantly changing and the board needs to keep focused on the future.
Periodically the board needs to:
- check the organisation from the outside
- see what’s on the horizon
- define the main strategic challenges.