Governance Bites #117: The board’s role in strategy, with Julie Hood

Boards are often misunderstood, but they are crucial for an organisation's success. In this episode, I talk to Julie Hood about the board's complex role in strategic planning for sports organisations. We discuss how boards can go beyond oversight to actively shape strategy, avoid common pitfalls, and align plans with organisational values. This episode provides practical advice on gathering diverse perspectives, monitoring implementation, and navigating the unique challenges of passionate board members. Tune in for essential insights on creating a robust and successful strategic roadmap. 
Links: 
Sport NZ Futures – Relevance to any organisation and sector - https://sportnz.org.nz/futures/
Sport NZ Governance Resources - https://sportnz.org.nz/sector-guidance/governance/
Strategy specific resources and content - https://sportnz.org.nz/resources/step-4-provide-strategic-leadership/
Online tutorial -good governance = https://sportnz.org.nz/resources/new-governance-101-online-training-now-live/
Julie Hood a nonprofit governance consultant with specific expertise in membership-based organisations, including sporting organisations working in complex federated structures.  She is currently an Independent Director at the Wellington North Badminton Association, gaining hands-on experience in voluntary governance and brings executive leadership experience from the public, private, and not-for-profit sectors. 
In 2024, Julie began a PhD focused on how sport CEOs can develop their governance capability to better support effective board (and their own) performance. A Chartered Member of the Institute of Directors and MBA graduate from Victoria University of Wellington, Julie has a consultancy practice helping boards and executives deliver the right results sustainably.
#governance, #leadership, #corporategovernance, #boardcraft, #decisionmaking, #makingadifference, #ceo, #governancebites, #boardroom, #director

Transcript

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Kia ora tātou [greetings everyone]. Ko Julie Hood toku ingoa. My name is Julie Hood. I'm a governance and planning consultant, and I'm here to have a chat about the board's role in strategy. I'm going to bring a sport-specific focus, I think, to this. Yep, sport and rec [recreation], but also some general principles that are particularly useful for all boards. But mainly my focus is in non-profit, membership-based organisations and specifically now non-profits boards. Hi, welcome to Governance Bites. My name is Mark Banicevich and as you just heard today, I have the pleasure of spending time with Julie Hood. Julie, thank you very much for your time. Nice to be here. The conversation, as you said, is around the board's role in strategy. My first question for you is, what role should the board of directors play in setting a strategy for a sports organisation? Well, they've got a key role to play, and many don't probably understand what that is. So, there's a continuum of elements that make up a good strategy and the most important part is the board does its bit first, and mostly it's a thinking role. And they have to think about things like vision, purpose, values, and particularly the results that they want to deliver at the end of a strategic period with measures. And not so much now, but certainly in the past, the boards were either not clear about their role in strategy or abrogated their responsibilities by delegating it to the chief executive. So, we're seeing, everyone working in the sector were seeing strategies that were basically operating plans. So, and while they might have been very good operating plans, they had no direction to set the plan to. So, they could have been heading in any direction. So, the board's job is to set the direction clearly. So, by the end of 2030, we wish to see, let's say it's a sporting organisation, this many more participants in this demographic participating this amount more, and this is how we're going to measure it. So, we'll measure it by either numbers increases or percentage increases. And then if there are organisations that have got a high-performance bent, then they'll

have a high-performance outcome: 2:28

this many medals, this many PBs [personal bests], and they make it very specific, as many measures that can be quantitative rather than qualitative. You want to know when you've met it, right. You do want to know when you've met it. And most importantly, the chief executive needs to know where he or she is heading with the initiatives that they're going to develop to get there. And measures like that are really helpful. Yeah. Yeah. What's the board's role in the, or how does the board's engagement look in this process of planning the strategy? We've seen it done a range of ways. Some boards, particularly if the board members are really familiar with the sector and there are a number of elected members who can bring grassroots experience, can set the top end of that strategy. There's a range of names: we tend to call it 'statement of strategic direction', 'statement of strategic intent'. They can set the bones of that themselves and then use that before they start. So they do the 'what' and the'why', and before they start thinking about the 'how', they can go out and canvas widely with their stakeholder groups, typically members. Yes. Especially if they're in a federated structure because there's an opportunity then for everybody to play their part into the end results for the game. We are seeing some sports now setting 'whole of sport' targets and then, together with their membership associations, they all line up to the same target and do their bit. Yes. And we've also seen organisations that have done the stakeholder engagement first. So, had a wide canvassing with the stakeholder organisations to get a feel for where everybody is, what the issues might be, where the strengths and weaknesses are, and then build it from the bottom up. One of the risks of doing that is that you can end up with a shopping list of things that everybody wants you to deliver and you can't. But if you're applying a Te Ao Māori [Māori world view] lens, then that is definitely how it's done: wide stakeholder engagement and then, together, it's built up to the more specified, high-end results and measures. Right. What are some of the misconceptions that boards have about their role in strategy and, you know, what are the potential pitfalls and the misunderstandings? I think there's quite a lot of disagreement between the board and the chief executive about the component parts that they each do, and I think the boards are not typically clear. Many boards, many people when you talk about results or outcomes nod knowingly, but when you ask them to set an outcome, they typically set the ways and means to get there rather than the outcome. So, there's not a clear understanding of what an outcome-based measurable strategy is, and how to set an outcome with measures that is, in fact, an outcome with measures. and I think, if boards... I'm digressing, but if boards don't do that, then, they do end up diving into operational busyness and winding the chief executive up. So, not really knowing their role and not really understanding what each component part is, and getting confused about the difference between the results, or the outcomes, and the initiatives, or the projects, or programs that get them there because we all want to do stuff. So, boards tend to dive into that bit. And you've got an additional challenge, often in sports organisations, as you said before, where some of the board members, or in some cases all of the board members, are passionate participants, as well. So, they tend to dive into those details a lot. And another thing I find in sport, particularly in New Zealand, probably overseas as well, I just don't have the experience there, is that we have this really wide continuum of maturity levels in sport. The high-end sports tend to have a lot of support and a lot of maturity, and then when you get down into the more minor sports, they're kind of catching up, I think, in many cases. How can the organisation collect these diverse perspectives? You you've talked a little bit about this before, but you'll often have various stakeholder groups. Membership is just one. So, during this process of strategic planning, how do they ensure that all the stakeholder voices are heard? Well, the thing about strategies I find is, whether they're board, the board's part or the chief executive's part, is often they're done in a rush. Someone, it's not quite like this, but it's like, 'Oh gosh, our strategy's'coming to an end, we've kind of forgotten, we better quickly do it'because we've got the annual planning cycle coming up or the budget to be done.' So, I think the most important thing is to give yourself at least six months, and I would argue 12 months, to start planning the process. Who do you want to have involved? At which point do you want to engage who, for what? And get a proper plan in place and have someone around the board, ideally not the chair because they've got a pretty big job anyway, to lead that process with the chief executive as their main adviser, but also making sure that the chief executive understands that the first part will be for the board and they then can agree who will engage with which stakeholders. And if you want a wide range of stakeholders involved, then you need more time to be able to do that. And not only initially, but as you draft up what you're doing, the engagement takes place through the whole thing. And in a federated structure, if sports are going to have, say, a 'whole of sport', if the national sporting organisation is going to have a'whole of sport' view like a framework, this is where we're heading for participation and winning, and everyone else is going to develop their strategies to line up with that, then you need constant engagement because people have questions, you want to get refinements done. So, lots of time, and I think a year... I'm just doing one now for a regional sporting organisation and we started nine months ago. Yes. And we'll finish it in December. Right. And it's been... it's allowed us to take our time. We've had a look at values along the way. We've refreshed those so you're not in a great rush. And the chief executive in the meantime has got an operating plan and an annual plan that they're delivering. So, there's no great drama. There have to be some importance in setting a a fair amount of budget aside for this too, right? Because you got to get a lot of face-to-face contact and bring people together. So, there'll be a fair amount of cost, which will be harder for some organisations than others. Well, I'm doing one at the moment that's all online. So, and I'm giving my time pro bono. So, the only cost for the board will be time - Right. - to think and review documents. And then the other end of the scale is that you pay for a facilitator. Yes. And you have face-to-face sessions and everyone has to rock up to those. But I think there are ways of doing it that are pretty cost-effective, particularly if you can plan well, which is what we've done for this regional sport organisation I'm on. And we diary time in each board meeting. So, we're not having separate meetings. Right. We're having one or two separate ones, but we bring it to the board meeting. And given that the board's role is to think about the future and carve out time in their agenda to do that, then it's a natural place for it to sit. Yeah. So, it's not like an imposition. Right. Right. How can the board then ensure that the strategic plan aligns with the organisation's values and their purpose and the needs of the organisation? So, how does that strategic alignment happen? Yeah. The if you think about a statement of strategic direction, my view, and those that I respect and read about, is that values sits in your top-end part of your strategy. So, you've got vision, purpose, values, because if your values aren't clear and if they're not lived, you can have the best strategy in the world, but it will come unstuck in its application because the people involved in rolling it out, they don't have aligned values to that, then it's not going to work. Right. Culture eats strategy for breakfast. Yeah. They won't buy into it. Kind of thing. They won't buy into it. So, values are essential. They're also essential when it comes to making really important big strategic decisions about what you'll fund and what you won't fund as part of the initiatives and programs that you're going to develop to get you where you want to go. Yes. And values can come into those decision-making processes. So, I think they're fundamental, they're a fundamental part of it. Yeah. And on a similar vein, how can the board effectively incorporate external factors? You've got things like demographic changes. In the sports arena, you've got things like changes to funding, particularly where government funding is concerned. You've got legal and regulatory change. How do you bring those factors in? Again, if you're not rushed, you've got plenty of time to take a look at that at the beginning, through the middle and at the end. So, there are a range of ways to take a look at the future. Now there was, you know, PESTLE [Political, Economic, Social, Technological, Legal, and Environmental] and SWOT [Strengths, Weaknesses, Opportunities and Threats], and I think people, if they don't do anything else, they're not bad things to do still because they do do give you a pretty broad view of what's happening in your external environment that you can either take as an opportunity or see as a risk. So you can do that. You can engage futurists if you're really interested in sport futures. You can pop onto the Sport New Zealand website. [https://sportnz.org.nz/futures/] There's some amazing resources there including templates for guiding boards through a future session before they start. Right. Really useful. Which is what I did for the small RSO [Regional Sports Organisation]. So, it's size, it can be size-specific. Yes. So, I think definitely do it before you start thinking about setting up your longer term goals, purpose and outcomes. But I think the other opportunity is once you've got those outcomes locked in, and before what people typically, organisations typically do is that they get this lovely framework all developed and then they bolt in what they're already doing. Right. Into a new revised strategy. And the risk of that is that, you know, if you always, what is the expression? "If you always do what you've always done, you'll always"get what you've always got." Right. So, my view is that you pause there and then have a good look, almost start a blank sheet of paper. If we didn't have a plan at the moment and we want to get there, what could we do? What new things could we do? Who could we partner with? What are other people doing that's been successful? And create your plan, your operating plan and then your annual plan from scratch, and then take a look at what you're already doing and decide what you might bring across or stop doing. Right, yes. And doing another external review of the key opportunities and threats and how you might leverage technology, for example, to turbocharge your strategies. It's a good time to do it there, I think. Okay. And once the strategy is in place, what's the board's role in ongoing monitoring and so forth? Yeah. Well, it's not to be put on a shelf, is it. And some are. Yes. So when the board develops their annual board calendar, it's got a really great opportunity to implement into that, diary into that calendar, at least a look at each outcome once a year. So, let's say the outcome is 'more people participating' then in, and let's say they're January to December, in March they can take a look at participation and the chief executive knows, so that the chief executive can bring the relevant information to the board about how that outcome is tracking, not the busyness that they've got going on, but what's getting in the way or what's going well, so the board can then adjust strategy. Well, 'actually that project's a waste of'time, let's stop it and do something else'. Yes. They have those decisions. So, every outcome should have a deep dive. And every board paper that's brought to the board should be in the context of one of the outcomes. Right. And a chief executive's key performance agreements should be in those outcomes. So, rather than a chief executive having a three-page KPI [key performance indicator] document with complex measurements about how they're going, you could arguably say, 'deliver the statement of'strategic direction, year 1, two, three, four, comply with policy, be nice to people.' That's about it, really. Yes. You know, stick with our values. So, it's a powerful, powerful document and it's particularly powerful for organisations who want third-party funding because they can take it to someone and say, 'this is'what we're going after. Are you keen to have the same result? Happy to take your'funds to help us.' So, it's a great document. Yeah. Great. How can the board then ensure that it dedicates sufficient time and attention to strategic discussions on their, in their ongoing board meetings? You tend to get a lot of organisations, particularly when you've got an inexperienced board or a board that doesn't have a lot of governance background, a lot of operational stuff gets pushed in. So, how do you lift that focus up to strategy? Well, I think in the first instance board members need to get some training and some education on how to structure up a board meeting well. And there's some great technology platforms that can help boards do that automatically. But the board is there for, in a very part-time capacity, for full-time accountability for organisational results, typically using other people's time and money. So, it behoves them when they come together to set up a structure in, a structured agenda, that has at least 70% of the time talking about things that have not yet happened. That's their job. Yes. Talking about them, thinking about them, and making decisions about them in their strategic contexts. So, all those things come first. And a really simple way to do it, let's say you're meeting for two hours, is to structure up your agenda and then put times across it and add up the times. And if you're not spending 70% of your time at that board meeting on things that are related to the future, then you redo your agenda until you are. Right. And you refine the documents that are going in and people prepare properly and they come with good questions. AI [artificial intelligence] is amazing. 'Ask me a good question about this.' Yes.'I only want to ask two in the meeting. What are my most important questions?' Yes. Absolutely. 'I don't want to be the person talking the whole time.' Like it's... Yeah. So, preparation. And the chief executive plays a key role in that if the board's got a great relationship with them, and together they can structure up an agenda that when people leave they feel they've genuinely added value to the organisation's future. Yeah. Yes. Is there a risk in sports organisations, given that you have, when you've got the members of the board who are also passionate participants in the sport, there is a tendency sometimes for the those people to drag the board back down into details or to things that are really not relevant to board discussions. How should those be managed? I think the most underutilised tool that boards have got in their toolbox are board policies. So, they either sit along, sit outside, they either have a bunch of board policies, or they sit in a board charter. Because policies help the boards think about the things that they are there to do and they elevate the thinking up and they allow the, and they make it very clear to the board what their job is, and what the management's job is. Right. And so, for elected members... not all elected members are operationally focused. Some are excellent and have got good governance experience. But any board member with no governance experience is going to have to be taught the difference between coming to a board meeting and thinking and talking and making decisions about the future and in a governance context versus helping the chief executive do their job. So, the chair has a key role to play. You'll know this, too. In (a) making sure that board members understand the fundamentals between governance and management. Yes.(b) Making sure the chief executive understands the role of the board as distinct from their own because I think role creep can go both ways. Yes. So, boards can creep into the chief executive's business, being 'helpful'. Yes. But chief executives can creep into the board's work, being 'helpful'. So, I think they all, both of them agree their roles, and then the chair and the board members call each other out when they... I mean, a while ago I found myself saying to the chief executive at a board meeting, 'Oh, it'd be a good way, the'good way to do that would be this.''No, that's not my job.' Yeah. To tell the chief executive how to do what they're doing unless they ask for advice. My job is to decide what we want them to do and then support them to do it. So, yeah. Okay. Okay. In your experience, what are some of the best practice? You you've mentioned a couple of these already, but some of the best practices you've observed in boards effectively shaping and overseeing the strategy of sports organisations? If I was going to recommend one to a sporting organisation in a federated structure, any sporting organisation, probably any board, I would at the top end say, 'who is going to lead this project?' Don't let it be the chair. Have that person know what they're doing and then have an agreement with the chief executive about the key role that the chief executive will play in the process. Because many chief executives, particularly experienced ones, I think, feel somewhat annoyed when boards start to do their jobs properly because it feels like they are taking their job away from them. Yes. So, there's quite a lot of work up front. I think I'm probably repeating myself, in helping everyone understand what their roles are and then playing those roles out consistently across the process, including the stakeholder engagement. Yes. So, have a board member who's leading it. Have the whole board engaged. So, if there's any dissension about even doing it, then get that sorted before you start. Don't do a strategy refresh if there are major strategic issues being dealt with by the board. If the board thinks the organisation is insolvent. They've had a major complaint. One of their strategic projects has gone way off beam and they need to get, if they've got anything clouding their cerebral cortex, get those things sorted first, and then refresh the strategy, and not, in a planned way. Right. Yeah. Well, my final question for you was going to be about advice you would give to a sports organisation who's got a refresh and I think you've already answered that. So, I'll ask you a different one. What is the best governance advice that you've heard or received? Oh, I'll probably go to my mentor, Graeme Nahkies. You need to interview Graeme Nahkies. Ooh, I'd love to. He's amazing. Wow. Since he... Yes, I'll tell you his pedigree later. I'm just trying to think of all the bits of advice he's given me. I think the one thing is, it's related to, if the board is complaining about what the chief executive isn't doing, the board hasn't made clear at the outset what the chief executive should be thinking or doing. So, don't ever as a board member take a pot shot at your chief executive unless you're absolutely sure that you've made very clear what it is that you want them to do. And a classic is information to the board. If they're complaining about the board papers, it's quite likely that they haven't made it clear enough to the chief executive what it is that he or she is required to bring. So, they're having to second guess, guess the board. And if you're second-guessing a board about information, you just give them as much as you can in the hope that something in there is what they're wanting. Right. So, be very clear through policy about what the board's role is, how you want the chief executive to operate, what the delegations are, how you want them to communicate with you, write it up, get some agreement on it, and then follow the process. Yes. Yeah, that's what I would do. Julie, amazing. Thank you so much for your time today. That's all right. I really... It's been my pleasure. It's been a great conversation. I'll hopefully catch up with you again soon. Yes. And talk some more. And we'll see you next episode. Thank you. Thank you for watching this episode of Governance Bites. We have more episodes on YouTube and your favourite podcast channel where I interview directors and experts on various topics relating to boards of directors and governance. We'd love to see you back, and please like, subscribe, and share the videos and podcasts.