MrAligning Strategy and Governance

MrAligning Strategy and Governance

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Aligning Strategy and Governance

Many organizations view strategic planning for their organization as a linear process that is the responsibility of the Board of Directors and therefore is determined by the Board and communicated to the staff to implement. According to the report, "Building on Strength: Improving Governance and Accountability in Canada's Voluntary Sector", there are approximately 175,000 nonprofit organizations in Canada, two-thirds of which have annual revenues of less than $100,000. The implication is that the work that is completed within most organizations is driven primarily by volunteers (including the Board of Directors) with little or no paid staff. As such, the Board of Director's becomes a key driver in the ability of the organization to implement its strategic plan, at both the volunteer and governance levels.

While process in developing the organization's strategy is critical to obtaining buy-in, the ability for the organization to achieve sustainable improvement requires that the strategy has to be effectively implemented. It is the desire to ensure sustainable improvement and facilitate implementation of the organization's strategy that underlies the concept "structure follows strategy". The concept that "structure follows strategy" is derived from the work of Chandler that was conducted in the 1960s. His work essentially stated that strategy is "the determination of long-term goals and objectives, the adoption of courses of action and associated allocation of resources necessary for carrying out the goals", while structure is "the design of the organization through which it is administered". (Chandler, A. D. 1962. Strategy and structure. Cambridge, MA: MIT Press).

Chandler's idea is that when an organization changes its strategy it usually also needs to change its structure in order to most effectively administer the allocation of resources necessary to achieve its long-term goals. Although Chandler's work is now considered seminal in the field of strategic management, when it was completed in 1962 Chandler was thinking of the for-profit enterprise. So how then is this relevant to the non-profit organization?

If we accept Chandler's concept that the effective implementation of an organization's strategy requires an alignment of that organization's structure in order to effectively administer the allocation of resources towards its stated goals, then we need to view our organization's structure and how it administers the allocation of resources to carrying out its goals. The primary organizational structural component for most non-profits is the Board of Directors. So now strategic planning becomes not just a linear process from the Board of Directors but also requires review of the roles and structure of the Board of Directors to ensure that it can most effectively administer the allocation of resources towards its stated goals.

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So if that's the theory and research behind the concept of "structure follows strategy" and it has an implication on the Board of Directors, what do you need to do to ensure there is alignment? As many smaller nonprofit organizations have a series of committees to carry out much of the "hands-on" work of the Board of Directors, it is at the role and structure of the Board and committees that we should focus our attention.

Many nonprofit organizations have a series of committees that facilitate, or actually deliver, the programs or services that are offered by the organization and are critical in providing value to those the organization serves. Yet as the organization undertakes a change in strategy these committees and even the Board itself can be an impediment to successfully implementing the organization's strategy. In some cases these impediments are deliberate but most of the time they are just doing exactly what they have been set up to do. The problem is that what they do isn't what needs to be done.

To help determine if your Board and committee structure facilitate and support the delivery of your organization's strategy, ask yourself the following questions at the end of your strategic planning process:
• Do the terms of reference for each committee help support the delivery of the strategic plan? If not, do they need to be changed and/or committees added or deleted?

• Are the skills and knowledge of the Board members consistent with the skills and knowledge required to successfully implement the new strategy? If not, does the organization have a sufficiently robust board recruitment process to ensure they are obtained within a reasonable time period?

• Are there sufficient Board and/or committee members to drive and lead the work that is required to implement the new strategy?

• Does the Board culture support the changes that will be needed to Board membership and committee structure in order to facilitate implementation of the strategic plan?
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