Roundtables.

• Author: Means, Grady E.
• Position: Brief Article

Directors participated in small, interactive roundtable sessions, facilitated by expert leaders, on four of their top responsibilities--Assessing Strategy, Effective Risk Management, Rationalizing Executive Compensation, and Measuring Company Performance. Directors left these sessions with strategies and ideas to positively impact their board's and the company's success.

Roundtable sessions were designed for directors to share practices candidly and discuss concerns openly with fellow directors. For this reason, roundtable sessions were not recorded and only limited excerpts of the discussions are provided.

Grady E. Means

Managing Partner of IBM Business Consulting Services

How Do Directors Review and Monitor Strategy?

In an environment of complex, rapidly changing business models, traditional strategy development processes and board interactions cannot succeed. The days are long gone for boards, highly controlled by management, reviewing already finished strategies and for boards whose managements were inflexible about discussing strategy decisions. Today, boards of directors are actively discussing, reviewing, and approving the strategic approaches of the companies they serve--although most directors probably would agree that the board's contribution to strategic planning has great room for improvement.

Strategy roundtable participants agreed that they are accountable for strategic performance and must be very active in review, oversight, and monitoring. They shared ideas on how they have dealt effectively with these responsibilities. Some proven practices:

* Periodically the board re-evaluates its composition to ensure that it has the right skill set to reflect the company's new strategies and new market conditions.

* The board previews proposed strategic deals, allowing an opportunity to constructively challenge them as they are formulated, not when they are almost complete.

* The board influences strategy decisions through discussions outside board meetings with the CEO only or with executive and management groups.

* A board committee or an advisory group convenes in a separate strategy meeting, to ensure effective and timely discussion of the company's strategy.

One director noted, "It's very difficult to do a good job in four hours once a month. Consultants and advisors will make presentations favoring the strategy--law firms, accounting firms, investment bankers. I talk a lot and ask a lot of questions--I bet the directors at Enron...