As the organization grows and hires more professional staff, Boards of Directors often struggle to understand how best to communicate the results it wants the organization to achieve to staff. Boards typically have three different systems for communicating priorities to staff:
- Resolutions of the Board
- Strategic plans approved by the Board
- Strategic directives developed and adopted by the Board
The chart shows how performance improves as a more effective system of communication is implemented:
Resolutions are an unwieldy tool for communicating goals. They can span everything from HR procedures (“The organization shall have a safety handbook”) to overall mission statement (“The organization shall increase the level of homeless housing in our community.”) Over time, the pile of policies and resolutions becomes very difficult to understand. Because they don’t fit within a larger framework, it is a cumbersome to refer to every single policy before making a decision. Staff needs an encyclopedia to remember them all.
A strategic plan offers a more comprehensive framework for understanding the organization’s overall vision, purpose, values, goals, and objectives. It can capture in a relatively few pages the important goals and objectives. The problem is that most strategic plans are developed by staff in consultation with Board members, and contain a mixture of elements that the Board should approve (e.g. long-term goals) and elements that the Board should not approve (e.g. specific action steps and timetables). Things that are short-term in nature should not require a Board voter each time they change. In short, a strategic plan is also unwieldy in that is leaves unclear
what the Board wants, and how staff envisions achieving those results.
The most effective form of communication is a set of strategic directives, developed and adopted by the Board. Each directive deals with one specific goal of the Board. Each sets a specific long-term result that the organization is to achieve, along with related performance measures and targets. One directive might say the “organization is to achieve a customer satisfaction rating of no less than 90% on an annual satisfaction survey of its customers.” Another directive might address the question of rates and pricing, e.g. “prices for our products shall be comparable to our competitors and on average be 5% less than our two leading competitors.” As brief and succinct as that it is, it is all that the Board of Directors needs to say on that point. How the organization achieves it is up to staff.
Benefits of Strategic Directives over the other systems:
- Resolutions can slip into micro management by Board.
- Strategic plans typically are developed by staff and so the distinction between what the Board is directing staff to achieve, and how staff plans to achieve it, is fuzzy.
- Strategic Directives, which the Board uses to define the results it wants to see (along with performance metrics and targets), keep the relationship between Board and staff clear.