Governance v Management

This moth, I'd like to look at the issue of governance versus management.

This month, I'd like to look at the issue of governance versus management.

This can cause frustrations to non-executive directors and management alike, and the tension can be negative, destructive, and entirely counterproductive. Before the issue can be addressed, there needs to be two key elements in place - alignment and trust.

If there is a lack of consensus or understanding of the organisation's future direction and strategy, alignment is well nigh impossible to achieve. If management is heading in a different direction from the board of directors, there will be an inevitable clash of objectives.

If the board has a destination that is at odds with the management's understanding of the strategic plan, confusion and confrontation is likewise inevitable.

So here's the Laird's take on how to proceed. 

Management is usually required to present the board with a budget for the year, which also contains the proposed plans on how these income and expenditure metrics will be achieved and applied. Once that has been thoroughly discussed and agreed, management should be allowed to get on with delivering on the budget content, reporting periodically to the board on progress, and reporting by exception where progress is not going according to plan. The intrusion by directors in management matters only serves to confuse and distract and should be avoided - after all, if non-executive directors are engaging in operational matters, why bother employing executive managers at all? Similarly, where such intervention occurs, it's hard to hold management accountable for the outcomes.

So my suggestion is to thrash out the alignment issue, establish consensus, leave management to get on with the job in hand, and deploy the wisdom, experience, and knowledge of the directors in matters strategic.

With good intent and willingness, the exercise of reaching consensus will, in itself, be a catalyst for developing the necessary trust that management and directors need in order to deliver the commonly held objectives.

Your aye

The LairdThis can cause frustrations to non-executive directors and management alike, and the tension can be negative, destructive, and entirely counterproductive. Before the issue can be addressed, there needs to be two key elements in place - alignment and trust.

If there is a lack of consensus or understanding of the organisation's future direction and

s well nigh impossible to achieve. If management is heading in a different direction from the boar, there will be an inevitable clash of objectives.

If the board has a destination that is at odds with the management's understanding of the strategic plan, confusion and confrontation is likewise inevitable.

So here's the Laird's take on how to proceed.

Management is usually required to present the board with a budget for the year, which also contains the proposed plans on how these income and expenditure metrics will be achieved and applied. Once that has been thoroughly discussed and agreed, management should be allowed to get on with delivering on the budget content, reporting periodically to the board on progress, and reporting by exception where progress is not going according to plan. The intrusion by directors in management matters only serves to confuse and distract and should be avoided - after all, if non-executive directors are engaging in operational matters, why bother employing executive managers at all? Similarly, where such intervention occurs, it's hard to hold management accountable for the outcomes. 

So my suggestion is to thrash out the alignment issue, establish consensus, leave management to get on with the job in hand, and deploy the wisdom, experience, and knowledge of the directors in matters strategic.

With good intent and willingness, the exercise of reaching consensus will, in itself, be a catalyst for developing the necessary trust that management and directors need in order to deliver the commonly held objectives.

Your aye

The Laird