H. Pierson

Strategic development is a joint board-management responsibility. It is the key stage of the strategy process where the board and senior management team work together to develop the organisation’s strategy. At this stage, the attention is on the top-level strategy; the overall corporate strategy and, depending on the size of the organisation, the business strategies of the major divisions.

It is now common for the board and management team go off-site for a board retreat to discuss the current strategy in detail. If the strategy is working and is well understood by both directors and managers, this stage might involve nothing more than an annual review of progress, discussion of changes in the strategic landscape and a reaffirmation of the core strategies. On the other hand, if current results are poor or if major changes are forecast for the external environment, a far more searching review and re-evaluation of strategy might be required. This may take a longer than one retreat and may require a number of follow-up workshops.

The advantage of the retreat is that by isolating the board from regular distractions and spending a significant time delving into the organisation’s strategy, the quality of any decisions is likely to be enhanced. A strategy retreat also provides an ideal opportunity for team building and encourages active participation from all board members. It is also a major opportunity for discussion and development of shared views about strategy both among directors and between the board and senior management.

The decision to hold a retreat is an important one, because it represents a significant time commitment for board members and in many cases management. Retreats commonly occur over one or two days, generally on a weekend. If directors are to spend this much time dedicated to strategic issues, it is important to plan the weekend to ensure that optimal results are obtained.

The importance of planning

But strategy retreats do not always live up to their potential and can fail to meet the board’s objectives without proper planning and commitment from both the board and management. From personal experience, boards that are not engaged in the planning and committed to the process can very easily derail a board retreat. For example, it is not productive to have three directors delay the start of the afternoon session by an hour on the first day of a retreat because they were unhappy with the lunch menu approved by the CEO without board input and demanded alternate meals be prepared for them.

As such, planning should include:

Date – it should be in the board’s calendar at the earliest opportunity, as having all directors attend can be vital to the acceptance of the decisions made during the retreat;
Objective(s) – this will depend on whether it is it an annual strategy retreat to develop a new strategic plan, review the current strategic plan or in response to a major change in the organisation’s environment, e.g. funding cuts, loss of a major customer;
Duration – this will depend on the objectives;
Budget for the retreat – this will influence many of the other decisions;
Responsibility – allocate responsibilities, e.g. organising bookings, preparing discussion papers or presentations;
Attendees – will it be the board only or the board and management? Are spouses invited?
Facilitator – an external facilitator can often help to keep the agenda on track; ensure all attendees are given a chance to participate; and deal constructively with any conflict that arises without becoming emotionally involved;
Location:
- Meeting facilities – size of the room (it should allow participants to spread out for group work), whiteboards, projector, internet access, printing, photocopying, etc.;
- Accommodation;
- Catering; and
- Recreational activities;
Data – what input/information is required from directors and managers prior to the meeting?

As noted above, I have witnessed a number of board retreats go awry for a variety of reasons. Too much to drink at the previous evening’s dinner or during lunch can see directors or senior managers falling asleep or obviously intoxicated during a session. Lower level managers may be reluctant or not interested in participating because they have not had previous exposure to the board and have no idea what they are doing there. Directors being rude to the managers present or each other. Just as in regular board meetings, clear ground rules about what is expected for the retreat in terms of behaviour and participation is a good start, so too is gaining buy-in from the attendees to the outcomes of the retreat so that it adds value to the organisation rather than draining its resources, which are often scarce in the case of not-for-profits.

To ensure that optimal results are obtained. Board retreats are most effective if the following steps are followed:

Before the retreat – management should collate and develop materials such as competitor analyses for discussion well in advance of the retreat, while both directors and managers should do pre-work (see below for the benefits of pre-work).
Conduct targeted analysis prior to the workshop, and then develop a clear agenda focused on achieving specific outcomes and resolutions in key decision areas.
During the retreat – management presentations at the retreat should be concise and factual. The objective of the retreat is to stimulate discussion of strategic issues, not to spend your time listening to lengthy presentations by managers or invited guest presenters. A note taker should be appointed to capture agreement succinctly.
After the retreat – management will incorporate the decisions made at the retreat into strategic options, detailed objectives and strategies for board review and approval. This will then be followed by the annual implementation plan and budget.

For those organisations without the time or resources to conduct a retreat, there are other options. For example, a review of the board’s strategic plan can be included as part of the yearly board agenda, and has the added advantage of regularly concentrating the board on strategic issues. Another option for the board is to hold a number of special board meetings to review particular strategic issues. As part of this process, the board may wish to consider a one-day facilitated session with senior management to consolidate previous board discussions and decisions to guide management.

The benefits of pre-work

The benefits of pre-work include:

Sets the ‘climate for strategic change’ within the organisation;
Establishes a ‘strategy mindset’ for participants prior to attending the workshop. They are now ‘ready to learn, listen, contribute and participate’ – after all, they are the ones who have to make it work;
Frees up the retreat for discussion;
Saves time – reduces the threat of ‘time-pressure’ facilitation;
Enables facilitators to present the ‘group view’ or ‘invisible group consensus’, rather than their own views;
Participants are more likely to respond openly in pre-work than in front of their peers;
Identifies topics for debate.

Compiling a databook

To get the most from a strategy retreat, the board must ensure there is a real understanding and agreement as to the major issues facing the organisation that is based on facts. As noted above, a solid understanding of the organisation’s strategic landscape comes from gathering relevant data and allowing directors and senior managers to consider and discuss this data using a sound framework. I always recommend compiling a databook that includes the results of the survey (collated and themed) and the information developed by management. For example:

External data
- Industry trends
- Competitor analysis
- Market trends
Internal data
- Current strategy and goals
- Financial
- Operational
- Markets

The data book will be used in conjunction with this workbook to guide the discussion throughout the retreat. The databook should be circulated to directors at least seven days before the retreat to give them time to prepare.

Incorporating risk into the strategy retreat

Risk and strategy are totally interrelated. Consequently, any discussion or decision by the board concerning strategy also involves a discussion of risk. The challenge for boards and management teams is to integrate these two essential roles of the board. For example, considerations of alternative strategies should use the organisations approved risk approach as one technique for analysing these strategy alternatives. Workshops or retreats devoted to risk can be conducted in tandem with a strategy retreat, but at the very least the major strategic risks to the organisation should be considered.

Conclusion

Holding a successful strategy retreat can be a key factor in the achievement of an organisation’s strategic objectives. As discussed, the preparation for the retreat will be the difference between a retreat that achieves little in the way of genuine strategic planning and one that provides a solid basis for management to formulate the detailed strategic, business and implementation plans, and budgets that the board will be asked to approve.

Source: effectivegovernance.com.au

Genius Boards, UK and H. Pierson Associates Limited are delighted to formally announce their Boards Development partnership. This combines H. Pierson’s industry-leading management consulting services with Genius Boards over 2 decades of empowering directors to perform better through the provision to them of cutting-edge governance solutions.

The partnership is focused on supporting boards of organizations in Africa and select emerging market institutions.

Speaking on the partnership, H. Pierson’s Executive Vice Chairman & Founder Mrs. Eileen Shaiyen had this to say: “we are delighted with the Genius Boards-H. Pierson partnership, and are certain that t will deliver very superior solutions to our clients’ boards of directors across Africa and other select emerging markets.”

While speaking on the partnership, the CEO of Genius Boards, Sharon Constacion said that both firms were very aligned in the type of work they do – “we are thrilled to partner with one of the continent’s leading firms, H. Pierson, to support their clients’ Boards in accelerating positive change”.

Tomorrow’s boards of directors will face a host of new issues and challenges. How should today’s CEOs and boards plan appropriately for the future?

Tomorrow’s boards of directors will face a host of new issues and challenges. How should today’s CEOs and boards plan appropriately for the future? Chief Executive sat down with Peter Gleason, the incoming CEO of the National Association of Corporate Directors, who will take the reigns later this month. Here, he provides insight on the dramatic change to come in corporate governance as a result of constant business disruption and why boards need to value diversity, information flow and long-term vision.

Q: What are some of the biggest issues boards are currently concerned about?
A: According to our survey, the greatest concerns, in order of importance, are global economic uncertainty, increased regulatory burden, significant industry changes, business model disruptions, and cybersecurity threats. The recent election seems to have reduced fears about regulation and taxes, but the other issues are likely to linger or even grow as concerns.

Q: How do you foresee boardroom leadership changing over the next five years?
A: It will be one of the most challenging periods in the history of corporate governance. The hallmarks of the current century are volatility, uncertainty, disruption and risk. Directors and boards collectively need to help companies meet these challenges head on. In response to the volatility, they need to be able to see the long term and the big picture, and ensure good information flow. They’ll also need to strengthen their oversight of risk and know their role in crisis response. At the same time, boards will need to help management look for new opportunities through market expansion and innovation.

Q: What are some trends you’re seeing in board recruitment and retention?
A: Our 2016 survey found that boards are turning more often to professional recruiting firms when looking for new directors. For the first time since NACD began probing search sources, more respondents indicated that the last director their board recruited was identified via a third-party search firm.

Q: Tell me about the importance of all types of diversity, not just along the lines of gender and ethnicity, but also in background and experience.
A: It’s important because without it you can get a think-alike board that lacks a well-rounded perspective. I would also add personality type as a goal, as well as candidates who have the skills needed to fulfill the strategy of the company. To achieve this, a board can proceed step by step. Start with your strategy. Write a wish list and then match your current board against it. If there are skills you need and do not have, then recruit as widely as possible and remove any biases. Directors may believe that only a large company CEO can fill this requirement. By removing this bias and looking more widely, it is likely that the pool of candidates will become more diverse.

Q: Tell me about NACD’s role in corporate director education and the need for standards.
A: NACD educates 20,000 directors every year, through a variety of programs, including our annual Global Board Leadership Summit, our fellowship programs, and regular monthly programs in our 22 chapters around the country. We also just launched our virtual Director Professionalism course and will be introducing a new virtual course on cyber risk in conjunction with Ridge Global and Carnegie Mellon University.

Source: chiefexecutive.net

Governance professionals recently gathered at the Corporate Secretary Forum – Winter in New York, hosted by Governance Intelligence, for discussions highlighting the variety of challenges they face in the coming year and offering practical solutions.

An array of experts, both on panels and in the audience, shared their insights on areas such as boards’ agendas for 2024, preparing next year’s proxy statements, risks facing companies in 2024, building a successful team of directors and how boards should be using and overseeing artificial intelligence (AI).

Boards’ 2024 agendas

The forum began with a discussion about the issues that will feature on boards’ agenda in 2024. As usual, there is a lot to consider.

Kimberly Simpson, COO, general counsel and corporate secretary with the National Association of Corporate Directors (NACD), highlighted the potential effects on some boards of the current geopolitical landscape. NACD members had recently received a high-level security briefing at the Pentagon, followed by a discussion with a recently retired four-star general who described the situation as the most dangerous period in his lifetime.

Simpson noted that Russia’s war in Ukraine and Saudi Arabia being located near conflict in the Middle East raises concerns for boards, particularly energy companies, in areas such as supply chains and economic stability. Elsewhere, inflationary pressures appear to have eased slightly yet there remain fears of a potential recession and how that would affect companies, she added.

She also pointed to the continuing focus on cyber-security, which has been enhanced by the recent introduction of new SEC rules. Those rules, which go into effect at the end of the year, require companies to provide information to investors about material cyber-security incidents and the controls they have in place to protect against such attacks. They have been a source of discussion for audit committee chairs and there remains confusion about what best compliance practices will emerge, Simpson told attendees.

Among issues for boards to consider are other new SEC rules, including potential requirements about climate-risk disclosures, while shareholder activism has not gone away and the universal proxy remains relatively new, added to which is AI, she said.

Fellow panelist Brady Long, executive vice president and general counsel at Transocean, said boards should approach AI in the same way they oversee other risk areas. Boards are hopefully bolstering management’s and their own expertise to ensure effective oversight, he said. Most companies probably don’t have too much in-depth AI expertise and there is an opportunity for boards to bring in expertise or acquire it through learning, he commented.

There is discussion in the governance profession about the extent to which boards should recruit subject matter-specific experts on risk issues such as sustainability, cyber-security and AI. Simpson noted that members of nominating and governance committees say that having bespoke experts on the board may be less preferable than having members who are smart and more generalist. She advised boards that wish to include an AI or cyber-security expert to look for a current chief information officer (CIO) as their knowledge becomes outdated very soon after their retirement. She noted the challenges of finding a CIO who also possesses the necessary board-member skills in areas such as strategy and finance.

Long commented that new risk areas will arise every year. ‘If the way to solve the problem is to always add expertise to the board, you’re either going to run out of seats or you’re going to radically change the nature of governance,’ he told the audience.

Technology, cyber and AI top concerns

Asked to rank the significance of risks facing companies, audience members most frequently named by a large margin technology/cyber-security/AI. This was followed, in descending order, by geopolitical risk, environmental and sustainability risk, regulatory risk, shareholder activism risk and supply-chain risk.

With that array of issues in mind, Brian Short, partner with Ballard Spahr, urged governance professionals to have regular engagements with their boards on risk matters as part of their scheduled meetings. From a reporting perspective, he noted companies’ general obligations to disclose risks, to which have been added the new SEC rules on cyber-security.

Fellow panelist Seth Gastwirth, deputy general counsel and assistant corporate secretary at JLL, also urged corporate secretaries to not only obtain risk assessments for their companies but also comment on them and be flexible with them because they can quickly become out of date.

As an example, he noted that few if any companies would have had pandemics in the top 10 list of risks under their enterprise risk-management programs before the outbreak of Covid-19. Governance professionals need to be conscious that new risks will emerge during the year and should focus on their companies’ systems of controls so that people are ready to respond to new risks as needed, he advised.

Staying on track with diversity

Panelists at a later session discussed the importance of diversity in building an effective board, not just in terms of thinking and skills but also in terms of gender and race/ethnicity. In the wake of the US Supreme Court decision to essentially bar affirmative action in university admissions programs, conservative legal groups have been taking action against corporate diversity programs. A group has also challenged – thus far unsuccessfully – Nasdaq’s board diversity rule.

Leahruth Jemilo, vice president and head of ESG advisory at Corbin Advisors, said she was not concerned that such moves would upend companies’ efforts. She anticipated that the pushback would be short-lived and unsuccessful because younger generations of Americans support increased diversity. Young people want to see diversity on boards and in management, and companies that want to attract the best talent will have to focus on those areas, she told attendees.

Fellow panelist Tina Carew, associate general counsel with Invesco and general counsel and corporate secretary with Invesco Mortgage Capital, also said the pushback has not been a concern for her firm as it focuses on diversity in board recruitment.

A corporate secretary in the audience commented that her board has stopped using search firms for director recruitment because they have ‘limited thinking’ in terms of selecting diverse candidates. Instead, the board has been attending NACD and other events and using its own networks to ask specifically for creative thinkers and women of color as potential director candidates. This has led to a diverse slate of candidates, she said.

Carew said her board is also considering no longer using search firms for director recruitment.

Safety and use-case first on AI

Governance teams and boards are giving a great deal of thought to the opportunities and risks AI presents. Part of the discussion is about how to get started with the technology. Jonathan Yellin, general counsel, executive vice president and chief compliance officer with Charles River Associates, noted that for his firm there had been concern about being left behind as a business by not using AI, but that he was concerned about getting ‘over their skis’. ‘We had to understand what the goal was,’ he explained.

An AI policy is about mitigating risks the technology poses, Yellin said. As part of that, his team asked company department heads about how they wanted to use AI. They now meet regularly to discuss the ways in which it is being used and the developing regulatory framework. He described his biggest fear as confidentiality, but said he was also concerned about ethical issues such as bias in hiring. He acknowledged, however, that people are using the technology, which means he needs to engage with them.

Fellow panelist Marion Lewis, CEO of Govenda, stressed that any use of AI should be tied to a use-case. It poses a risk-versus-reward question and certain uses are inherently riskier than others, she said. For example, using AI in a medical context poses much greater risks than using it as a tool for customer services, so different standards should be applied to different use-cases.

Lewis commented that some of the key questions that need to be asked as part of developing a risk-management system include: where does the data reside? Who owns the data? What’s the track record of the vendor? Asked about uses for AI in corporate governance, she noted that a feature of a tool her firm offers is the ability to take transcripts of board meetings and create drafts of minutes that are added to the workflow. This enables what has previously been a weeks-long task to be completed in hours, she said.

Source: overnance-intelligence.com

As a matter of effective corporate practice, the board is responsible for spearheading the positive growth of an institution. This calls for a strategic outlook that will efficiently meet the overall vision of the organisation while delivering profitability and returns to shareholders as well as balancing the needs and requirements of a wider group of stakeholders.

With at least quarterly meetings to discuss the affairs of the institution, it is paramount that it appoints a competent CEO alongside a Senior Leadership and Management team that will run the day-to-day operations and lead in the growth strategy implementation.

Beyond this, the board should ensure that there is a clear succession plan for each of the leadership positions, including the CEO, and review the plan regularly. To ensure the stability of the organisation, it is advisable to groom successors to these key positions from within the organisation. Only occasionally and when necessary should these positions be filled by people from outside the organisation.

As such, it’s the board’s responsibility to ensure that there is a pool of trained staff ready to fill these positions within different time frames. This includes providing them opportunities to participate in board meetings to allow for a first-hand assessment of their readiness when these positions fall vacant.

Some may be ready for promotion immediately, while others may need capacity building and exposure to be able to perform optimally at senior levels-hence the board need to take charge of the process of developing capacity for future leadership of an institution.

Grooming senior leaders from within is important as it provides hope for career growth within the organisation and motivates staff to work hard and more productively. It also reduces the risk of losing good employees.

There is also the aspect of culture integration which is not necessary with internal promotion as opposed to when recruitment is done from outside the organisation. Lack of culture fit of a senior leader can be detrimental to the goals of an organisation. As Simon Sinek, the venerated leadership expert and author of multiple leadership best-sellers, says, “Corporate culture matters. How management chooses to treat its people impacts everything for better or for worse.”

Other than the leadership aspect, internal controls are key, especially during the various growth phases of a company. When these are overlooked or breached, the growth trajectory could turn out to be a backlash mirage, especially for companies operating in regulated industries.

To mitigate breach of controls, it behoves the board to ensure that there is a competent risk team monitoring existing and emerging risks, both internally and externally. In addition, a strong internal control function and a competent external auditor are key as they provide an independent position. At the governance level, an Audit and Risk committee should be put in place to provide oversight of the company’s internal controls and compliance with laws and regulations.

In the current digital era, the board cannot ignore the role of technology in achieving a growth strategy. It thus has to ensure the acquisition and inculcation of relevant and flexible technology to accommodate the overall future growth of the organisation.

While the roles identified here may not be exhaustive, they certainly form the fundamental qualitative aspects of an effective Board in ensuring sustainable growth and stability of an organisation.

Source: IOD.com

What do we mean by a great risk culture?

Risk culture is the encouraged and acceptable behaviours, discussions, decisions and attitudes toward taking and managing risk within a business or organization.

A great risk culture binds the stakeholders, risk management framework and process together to reflect the values, strategic goals and practices and embed these into a business’ decision-making processes.

Organisational Culture

The overall organisational culture affects an individual’s values, beliefs, and attitudes towards risk. It’s helpful to employ the sociability vs solidarity model (Goffee and Jones, 1998), also called the “Double S” model, which considers culture with two dimensions:

sociability (people focus – based on how well people get on socially)
solidarity (task focus – based on goal orientation and team performance)

The model identifies four distinct organisational cultures described:

Networked (high people focus, low task focus)
Communal (high people, high task)
Mercenary (low people, high task)
Fragmented (low people, low task)

Risk culture

Risk culture can be hard to understand because it covers an organisation’s ability to manage risk.

It may seem like a background concept but business culture influences risk culture. Risk culture is a broad topic because it covers an organisation’s collective ability to manage risk. Still, the more general case of a business’s culture is also influenced by its risk culture, including:

Attitude – the way an individual or group perceives and deals with risk, influenced by perception, predisposition, and mindset
Behaviour – observable, risk-related actions, including risk-based decision-making, processes, communications, etc.
Culture – values, beliefs, knowledge and understanding of the risk a group shares with a common goal. In particular, it is the values, beliefs, knowledge, and understanding shared among leadership and employees

One of the many cultural issues is that people naturally head towards others who share the same culture. An organisation’s culture can self-propagate if recruitment processes and environment remain unchallenged.

Every organisation has a risk culture, or indeed cultures and the question is whether that desired culture effectively supports or undermines an organisation’s long-term success.

What impacts an organisation’s risk culture

The right people

Behaviour

Behavioral risk management refers to controlling and mitigating employee and organizational behaviour risks. Individual risks are the behaviours of employees and leaders that could open the business up to risk.

Organizational behavior is collective behaviour and some of these behaviours could be too high a risk for the business.

Compliance

A robust regulatory compliance system within effective risk management will considerably impact a business. It will make it less likely to experience risk threat events and ethics violations.

Employees

From a health and safety viewpoint, employees have rights and responsibilities for their and colleagues’ well-being. This is expanded into the risk culture to include risk associated with the business ensuring the company culture is in and maintains a healthy position.

Senior management involvement

The Board must make effective risk decisions about what they expect from the business. They need to communicate their attitude towards risk-taking and risk tolerance and explain the difference in impact between a successful and unsuccessful risk as measured by target metrics.

Governance

What is risk governance?

It’s the rules, methods, processes, and measures by which we make decisions about risk. It’s negative and positive because it analyses and formulates risk management strategies to avoid (threat) or achieve (opportunity) risks.

Senior management involvement

Accountability

Accountability is a term known to many but not appreciated for the value that it can bring to an organization’s long-term success, including safeguarding against irreversible damage and reputational risk. To make risk accountability practical, the business line must know the acceptable limits on risk-taking.

The accountable person must have the resources and authority to manage the risk.

Issues and escalation

Escalation is the progressive increase in the intensity or spread of risk.

A risk management system must have a process where an increasingly higher level of authorization is required to approve a continuous tolerance of increasingly higher levels of risk.

A contingency (plan) is designed to reduce the impact if a risk materializes. Consideration should be given to developing contingencies for threats and opportunities against the business risk attitude and risk tolerance.

Assessment and Evaluation

An excellent risk culture will improve risk management performance. Because risk culture often evolves as an organisation grows, it may make sense for organizations to self-assess, survey and use focus groups and other techniques to understand the current state of risk culture.

The tone of the organisation

The term tone is the combined impact of all stakeholders on risk management. Communication from the Board level will have little effect if the business employees and other stakeholders hear a different message from line managers, supervisory interaction and other contacts daily.

Information often gets distorted as it moves from one management level to another. There is always a greater possibility for contradictions in communication between team members at the organisation’s top, middle, and bottom. Equally, the risk of executive management being unaware of profound financial risks, operational risks and compliance risks that may be of common knowledge to one or more middle managers and employees.

Physical mechanisms driving risk culture

It’s essential to think about the tone of an organisation and how tangible physical mechanisms can help control it. These mechanisms include a risk governance structure, corporate values, code of conduct and ethics statements, policies, procedures, risk oversight activities, incentive programs, risk assessment processes, risk indicator reporting, performance management reviews, reinforcement processes, etc. Companies and boards must examine various risks, including strategic, operational, financial, IT, etc. They must also consider the organisation’s appetite for risk, how the different risks can interact and how they are managed daily.

Internal attributes driving risk culture

These internal attributes include the attitudes, belief systems and values that drive the organisation’s behaviour, activities and decision-making.

They demand attention while not as quickly seen and understood as physical, tangible mechanisms. For example, how a business handles risk management, control and audit often manifests in addressing weaknesses, escalating issues, and resolving problems. The method and timely nature, or not, in which such activities are carried out provide information regarding a business’s risk culture. So, too, does leadership’s reaction, or lack of, to warning signs offered by the risk management process.

External attributes driving risk culture

These external characteristics include regulatory requirements and expectations of customers, investors and others.

How an organisation seeks out these requirements and expectations and aligns business processes through actionable improvements reveals its resilience.

Subcultures that impact risk management

In response to a changing business environment, a subculture permits a business to be agile in solving problems, sharing knowledge, and serving customers.

However, they can also lead to rogue actors and risk-taking behaviours that harm the organisation.

Relationship to the overall business culture

A positive risk culture does not operate in a vacuum. As previously mentioned, the business’s culture influences it in many ways. Many argue they are the same thing.

How to improve risk culture

As risk is about future uncertainty, it would seem logical that a desirable risk culture would position the business to be proactive and agile. It should quickly recognise a threat or opportunity and use that knowledge to evaluate its response.

Such a risk culture would give leadership and management a time advantage and better decision-making.

Another example of an attractive risk culture might be maintaining a healthy tension between the business’s activities for creating value and its activities for protecting value. Ideally, one activity must not be disproportionately stronger than the other activity.

Once the current risk culture is assessed, executive management should consider whether any organizational changes are needed and define the steps required to implement change.

In transitioning to the desired risk culture, management should try to achieve the following:

Strategies for Achieving the Desired Risk Culture

Embed the change in the organisation

Risk culture should be affected through a business’s overall risk governance process. For example, risk management accountability should be reinforced through committee charters, policies, job descriptions, limit structures, and escalation protocols. To illustrate the importance of responsibility, accountabilities for risk management should be reinforced through committee charters, policies, job descriptions, and limit structures. Procedures and escalation protocols can also support the desired cultural risk behaviour.

Make it a priority for all stakeholders

All stakeholders must support the positive and desired risk culture by demonstrating the desired behaviours through actions and decisions over time and periodically communicating the value contributed by the organisation’s risk culture.

Undertake an integrated approach to the change

If addressed as a stand-alone initiative, change programs with intermittent communication, awareness promotions, and training strategies are mere surface dressing and provide little in the way of a positive cultural change.

When integrated into a comprehensive program that aligns performance expectations, roles, responsibilities, and operational structures with appropriate risk attitude and tolerance, they reinforce the critical aspects of the desired risk culture.

Periodically evaluate progress

Regularly evaluate stakeholders during the change process. Before commencing, it is important to assess the business and understand the pitfalls to provide a baseline for the initiative. Some of the key strategic considerations in this regard to consider before putting things in place are as follows:

Leadership support – Is leadership driving this initiative?
Ownership of the business’ risk management process – Who is responsible for risk management including the controlling and mitigating actions?
Effectiveness of risk management and governance processes – Have the strategies been proven effective?
Evidence of crucial business decisions taking risk and solvency into consideration – Consider the consequences of high-impact events and contingency plans
Quality of leadership discussions on risk issues and escalated matters – Are these discussions honest, open and transparent?
Is there a risk appetite statement and risk tolerances in decision-making? Do you measure how many risks were taken in the past year? How does this compare with how many were tolerated?
Is there alignment and incorporation of risk into strategic planning and direction – Is this aspect handled with care?

Every organisation is different. It is crucial to evaluate the business risk culture and make necessary adjustments to shape it over time in response to internal and external change.

Conclusion

What should now be clear from the article is that any approach to changing risk culture must be carefully planned within the overall business strategy.

The recipe and mix of tools adopted within a business depend on the current situation. There is no perfect answer to how these elements are combined to address the risk culture and maturity of an organization. Several techniques can drive risk management adoption and embed a great risk culture.

Creating a strong risk culture that encourages honest, open and transparent disclosure of risks is an important starting point. What can be measured can be managed and, in many ways, is the first step in recognizing that risks are real and we need to take this on board. Accountability is critical in ensuring leadership acts upon this information and makes the most of these insights. These approaches can be reinforced by effective performance risk management.

It’s not about being risk-averse. Great risk culture also enables individuals to take suitable risks in an informed manner. However, as seen in the run-up to the financial services crisis of the late noughties, taking inappropriate and unsuitable actions can create immediate and systemic risk.

Finally, communication and training programmes are pivotal in reaching the broader organisation and stakeholders to raise general risk awareness. Clearly defined goals are required for these programmes to ensure they deliver benefits within the overall culture change programme. Goals imply that performance should be tracked over time, hence a move to developing risk culture dashboards.

Business leaders must recognise that changing to a great risk culture requires strong organisational change and risk management skills.

Published by: M.Salman Khan

As the year 2023 steadily draws to a close, it’s an opportune moment to pause and reflect. For businesses, this prompts a critical question: how successful have we been in executing our strategic plans? In the fast-paced realm of strategic planning and execution, success transcends lofty visions and boundless ambition. It hinges on setting a clear course, continuously monitoring progress, and making data-driven decisions.

Vital to this journey are Key Performance Indicators (KPIs) and metrics, which bridge the gap between your strategic objectives and the path to achieve them.

In the following article, we will explore the essential elements of mastering KPIs for strategic success, offering you valuable insights to conclude this year on a high note and step into the next with even greater confidence.

Establishing Impactful KPIs within your Strategy:

When it comes to using KPIs in strategic planning, two extremes often emerge. Some plans lack metrics entirely, relying solely on immeasurable qualitative descriptions, while others become swamped with metrics, lacking a clear strategy for their effective use.

The key to success lies in striking a balance. At the pinnacle of your strategic plan, you’ll find overarching goals or lagging metrics, representing your ultimate destination—outcomes you can’t directly control but can improve over time with diligent effort. Supporting these lagging metrics are leading metrics, elements within your control that provide immediate insights and the power to drive change.

Imagine it as setting a New Year’s resolution to become healthier. You could trust your instincts or overwhelm yourself with countless health metrics. The optimal approach involves setting a clear lagging metric, such as losing 20 pounds, and pairing it with actively measurable leading metrics like exercise frequency, calorie intake, and sleep hours. An effective plan encompasses both elements, turning strategic planning into a journey where you monitor not only your destination but also the progress along the way.

Selecting the Appropriate Metrics and KPIs:

One common pitfall in metric selection is emphasizing leading indicators at the expense of lagging ones. While leading metrics are essential for immediate progress, an overabundance of them can lead to a tactical focus that misses the big picture.

Imagine diligently tracking your exercise routine to lose 20 pounds but neglecting your calorie intake. Similarly, focusing solely on driving website traffic without converting visitors into customers won’t fulfill your overarching goal of revenue generation.

To avoid these pitfalls, strive for clear alignment between leading and lagging metrics. If your chosen leading metrics don’t contribute to your overarching goals, you’re on the wrong track. Ineffective plans often blur the line between objectives and execution or get lost in activity-based metrics that don’t drive strategic success.

Recognizing these missteps and ensuring a strong correlation between selected metrics and strategic goals enhances your organization’s planning and execution processes.

Measure the Success of Your KPIs and Strategy:

In strategic planning, many organizations spend excessive time selecting metrics. It’s crucial not to get bogged down by this decision. What matters most is getting started and ensuring your chosen metrics serve one of three primary purposes: increasing, decreasing, or maintaining a specific value.

Begin with your current state and aim for incremental improvements. For instance, aim to improve your revenue by 10 percent. This provides a benchmark to adjust throughout the year.

Avoid overcomplicating the process; focus on setting realistic goals. We suggest a goal to achieve around 80 percent of your metrics. Aiming for an 80 percent success rate allows you to maintain momentum and refine your strategy. Reaching 100% may imply your goals weren’t demanding, while achieving just 20% could be discouraging, hinting at excessively difficult objectives.

When assessing the effectiveness of your plan, focus on completion of initiatives, KPI tracking, timeliness of updates, and project timelines. These aspects collectively contribute to measuring the success and effectiveness of your strategic plan.

Conclusion:

Remember, it’s not about finding the perfect metrics but about taking the first step, continuously improving, and making informed decisions on your strategic journey. With the wisdom shared by H. Pierson’s Strategy team, you’re well-equipped to master KPIs for your strategic success.

Author: H. Pierson Strategy Team

Choosing the right board member for your organization is more than simply selecting someone who is knowledgeable and highly qualified. It’s about finding an individual who can bring a unique perspective, insight, and skillset that can help you reach your business objectives. When making this important decision, there are a few key factors to consider when evaluating potential board members.

Experience & Expertise

When considering a new board member, it’s important to evaluate their experience and expertise. Are they well-versed in the industry? Do they have a comprehensive understanding of regulations and best practices? These qualities will help them make informed decisions that will benefit your organization long-term. However, don’t just settle for experience alone; look at each candidate’s track record. Have they achieved success in similar organizations? Are they known as an innovator or problem-solver? These qualities are what will truly make them stand out from the rest of the crowd.

Personality & Behavior

It’s also essential to consider their personality and behavior when making your selection. Does the individual have good communication skills? Do they display leadership traits? Are they able to collaborate with others effectively? These qualities are just as important as technical expertise when it comes to choosing the right board member for your organization. A great board member should be able to foster relationships with existing members while also bringing something new to the mix. Additionally, look for signs of commitment such as volunteer work and active involvement in other organizations. These behaviors demonstrate that the individual is passionate about helping others succeed and could be a valuable asset to your team if chosen as a board member.

Ethics & Integrity

Finally, look for a candidate who has strong ethical values and integrity. Ask yourself if this person would make decisions that are consistent with those of your organization’s mission statement and core values. Would their actions reflect positively on your brand? An individual’s moral compass speaks volumes about their character even before considering qualifications or experience—so it’s worth taking into consideration when searching for potential candidates.

Making sure you select the right board member can be daunting but also rewarding if done correctly. To ensure you pick someone who fits all aspects of what you need, take into account experience & expertise, personality & behavior, and ethics & integrity when evaluating candidates for consideration – all these together will greatly increase your chances of success! Ultimately – having an engaged Board Member can bring substantial value to any organization so choose wisely! With careful consideration and analysis of potential candidates based on these characteristics – you can be sure that you have made an informed decision when selecting your next Board Member!

Source: BoardTable.com

In the public sector, the need for ongoing professional development is just as crucial as it is in the private sector.

Training programs can help public sector employees stay informed on best practices, adapt to changing demands and serve their communities more effectively.

In this blog, we’ll delve into the reasons why you should develop a training program for your employees, types of common training programs in the public sector and top tips on how to develop a successful one for your organisation or team.

Three Reasons Why Your Organisation Needs an Employee Training Program

1. To improve service delivery

Public sector organisations are responsible for delivering a wide range of services to the community. Training programs can help employees understand the needs of the community and develop the skills and knowledge needed to provide high-quality service.

2. To build capacity

Public sector organisations often face challenges in recruiting and retaining qualified employees, particularly in specialised areas such as IT, data or finance. Training programs can help build the capacity of existing employees and ensure that they are equipped with the skills and knowledge needed to take on more complex roles and responsibilities.

3. To foster a culture of continuous learning

It is important for all public sector employees to stay up to date on the latest policies, procedures, and best practices in their field. Training programs can help create a culture of continuous learning and ensure that employees can develop their skills and knowledge on an ongoing basis.

Our In-House training statistics from 2022 told us that employees who attended a training course found that their skills grew by 33%. This means that if employees can see the growth and change from the time and effort spent learning, they’re more likely to want to continue learning.

Four Types of Employee Training Programs for the Public Sector

There are many different types of employee training programs, but as the UK’s trusted public sector training provider, we’ve seen four specific types that are the most common for many organisations in the public sector:

1. Soft Skills Training

From verbal communication to written, soft skills training can cover various topics including how to give a strong speech, produce an engaging presentation, write an effective report or respond to complaints efficiently.

2. Compliance Training

Compliance training can differ depending on who needs it, but it can cover HR training (e.g. Equality and Diversity), business compliance training (Cyber-security awareness) or compliance for leaders training (Bullying and Harassment).

3. Specialised/Technical Training

Specialised or technical training often means hard, practical skills gained from in-depth training and hands-on practical education. From data analytics to financial reporting, this type of training can be for various job titles depending on the needs of the organisation.

4. Leadership and Management Training

It’s up to leaders and managers to ensure employees meet targets, maintain a healthy well-being and create an engaging, happy culture, all of which can be tricky, even for those who are experienced. Leadership and management training can teach various elements, from strategic planning to developing agile teams or even how to coach and mentor staff.

Five Tips for Building a Successful Employee Training Program

1. Identify the learning objectives and needs

Before designing the training program, it is essential to identify the training’s specific goals, objectives and needs. One of the most effective ways to do this is through a thorough skills gap analysis. This will help ensure that the training is targeted and focused on the areas where the employees need the most support.

2. Involve employees in the planning process

Involving employees in the planning process can help ensure that the training meets their needs and addresses any specific concerns or challenges they may have. It can also help increase buy-in and engagement with the training. Ask your employees questions such as:

What learning methods work for you?
What specific skills do you want to focus on or improve?
What kind of training will help you perform your job more effectively?

3. Use a variety of training methods

To keep things interesting and ensure the training is effective for all types of learners, consider using a variety of training methods such as workshops, group learning (In-House), half-day courses, case studies and practical face-to-face learning.

4. Use technology to your advantage

Technology can be a powerful tool for training, particularly when it comes to virtual training. Consider using online learning platforms, video conferencing tools or interactive simulations to deliver training.

5. Follow up and provide ongoing support

Training shouldn’t end when the programme is over. It is important to follow up with employees to see how they are applying what they have learned and to provide ongoing support as needed. This could include additional training sessions, coaching, or E-Learning that employees can use to continually develop their skills.

Now your training program has been completed, it’s time to evaluate how effective it was at reaching the intended goals. Here are five proven models to help you evaluate your learning and development initiatives.

Public Sector Training Program Q&A:

1. Why should you invest in a training program for employees?

From improving retention rates to boosting service efficiency, investing in a training program means you’ll be investing in your employees and the services they provide. An employee training program can also help your organisation meet its goals by building highly skilled and performing teams that are equipped for any challenge or opportunity.

2. What are the benefits of training programs for employees?

Training programs give employees the opportunity to learn a new skill, develop a current one, gain confidence and even gain a promotion. Some training topics may be dryer (or even boring) compared to others, but it’s important to highlight the benefits of learning and how it will help them improve the efficiency of their day-to-day tasks.

3. What’s the best way to identify the most effective training program for employees?

A skill gap analysis and feedback. These two things can unlock insights into the needs of the organisation and what employees want to learn. When you combine these two, you’re bound to have a successful training program. Get a free skills gap analysis using the button above.

4. How can you get key stakeholders on board with a professional training program?

You may have key stakeholders or senior staff who need convincing about the benefits of an employee training program. Two ways to gain buy-in are by:

Setting out clear objectives and the benefits for the organisation when employees achieve them
Showing feedback or input from employees to champion the idea

Source: https://blog.moderngov.com/

61% believe their organization is not keeping pace with the private sector in adopting and implementing modern technologies.
36% believe that government will never catch up with the private sector in terms of technology.

Granicus Survey

According to a recent report by McKinsey, digitization has the potential to unlock over $3.5 trillion of economic value for the government and public sector.

Governments all around the globe are relying on digital transformation to stay current with the rapidly evolving digital landscape. The process of employing digital technology to restructure and enhance government services is known as “government digital transformation.”

Useful tips for implementing government digital transformation:

Define your Digital Transformation Goals: What should your project for digital transformation look like? What are you aiming to accomplish? What issues are you seeking to solve? Your projects will be prioritized, and everyone will be on the same page with the aid of your responses to these questions.
Be explicit about your success criteria right at the beginning: Define the measures to be employed in evaluating the effectiveness of your digital transformation project, then track your progress as the project progresses.
Early and frequent communication with citizens and government employees: Describe the initiative’s purpose and the impact it will have on them. Regularly provide progress updates to keep everyone informed and involved.
Be ready to modify your organization’s procedures and structure: Changes to the way work is done will be necessary as government becomes more digital. Make sure you have a strategy in place to deal with these developments.
Invest in staff training since new technology and procedures will be required of them. If you want instruction on a certain subject, think about utilizing outside specialists.
Before widely implementing new concepts and technology, use pilot programs to test them. This will assist you in avoiding expensive errors and ensuring that new solutions satisfy your agency’s requirements.
Persevere: the digital transformation of government takes time and cannot be completed quickly. Be prepared for roadblocks and be ready to modify your ideas if necessary.

The digital transformation of government can have numerous advantages, such as increased efficacy and efficiency, but there are drawbacks as well. To fully take advantage of digital transformation’s opportunities, it will be crucial to keep these possible advantages and difficulties in mind as governments continue to go digital.

Newer Posts

Older Posts

The importance of planning

The benefits of pre-work

Compiling a databook

Incorporating risk into the strategy retreat

Conclusion

Boards’ 2024 agendas

Technology, cyber and AI top concerns

Staying on track with diversity

Safety and use-case first on AI

What do we mean by a great risk culture?

Organisational Culture

Risk culture

What impacts an organisation’s risk culture

The right people

Behaviour

Compliance

Employees

Senior management involvement

Governance

Senior management involvement

Accountability

Issues and escalation

Assessment and Evaluation

Physical mechanisms driving risk culture

External attributes driving risk culture

Subcultures that impact risk management

Relationship to the overall business culture

How to improve risk culture

Strategies for Achieving the Desired Risk Culture

Embed the change in the organisation

Make it a priority for all stakeholders

Undertake an integrated approach to the change

Periodically evaluate progress

Conclusion

Experience & Expertise

Personality & Behavior

Ethics & Integrity

Three Reasons Why Your Organisation Needs an Employee Training Program

1. To improve service delivery

2. To build capacity

3. To foster a culture of continuous learning

Four Types of Employee Training Programs for the Public Sector

1. Soft Skills Training

2. Compliance Training

3. Specialised/Technical Training

4. Leadership and Management Training

Five Tips for Building a Successful Employee Training Program

1. Identify the learning objectives and needs

2. Involve employees in the planning process

3. Use a variety of training methods

4. Use technology to your advantage

5. Follow up and provide ongoing support

Public Sector Training Program Q&A:

1. Why should you invest in a training program for employees?

2. What are the benefits of training programs for employees?

3. What’s the best way to identify the most effective training program for employees?

4. How can you get key stakeholders on board with a professional training program?

Find us

Services

Follow Us