Overseeing the course CEOs chart for businesses through an uncertain economic environment is a top responsibility for corporate boards. And time-crunched directors recognise that they need to pay more attention to this duty.
Three-quarters of board members indicated that they would like their board to devote more time in the coming year to oversight of strategic planning, which was rated the duty most in need of additional attention, according to a PwC survey of 860 US corporate directors. That’s an increase of 15 percentage points over the previous year.
Meanwhile, an FTI Consulting survey asked corporate directors what type of information their board needs most to be effective in 2012. Strategic planning, identified by 88% of board members, was by far the most common response.
All but 1% of the corporate directors surveyed by PwC reported discussing the continued viability of the company’s strategy at least once a year, but just 42% do so at every board meeting. Directors at smaller companies, whose business model may be less mature, were twice as likely as large company directors to report that they would like to spend “much more” time on strategic planning.
Despite the desire to spend more time on strategy, many board members already are spending significant time on their oversight duties. Fifty-six per cent of the PwC survey respondents have increased the time they spend on board work during the past year, and two-thirds of those directors report a rise of 10% or more in time spent attending to board duties.
Mary Ann Cloyd, leader of PwC’s Center for Board Governance, said one of the most important parts of board oversight of strategic planning is to integrate it with the discussion of risk and the board’s responsibility for overseeing risk.
“You always have to have the link between the two,” Cloyd said.
Cloyd said strategy should be set by the CEO and overseen by the board. Part of the board’s oversight includes making sure strategy is communicated and executed throughout an organisation, Cloyd said.
The best strategy in the world is useless if it is not executed, she said. Methods for making sure strategy gets acted upon include:
Having board members visit company operations in different locations.
Keeping up with surveys of customers and employees that provide information on whether strategy is being carried out.
Getting members of the leadership team, not just the chief executive, to describe at board meetings the ways that the organisation is implementing strategy.
Meeting managers from key parts of the company was ranked No. 3 on the list of activities board members would like to spend more time doing in the PwC survey. Sixty-five per cent of board members would like to devote more time to this task.
“I’m not at all suggesting that the board would in any way overstep its role of oversight,” Cloyd said. “It’s really just trying to get broader visibility into what’s going on in the organisation.”
—Ken Tysiac (email@example.com) is a CGMA Magazine senior editor.