How can non-executive Board members manage change and gain assurance?
NED’s and Change Management
In order to perform and grow, organisations need to have the capacity for change. They need to be able to support market developments and design products and services that meet the requirements of their customers. If focus is on only remedying current issues, there is a real danger an organisation will always be underprepared.
When working with Boards in the public, third and corporate sectors we commonly see the same challenges. Despite a Board having a dual focus, (business as usual and growth), business as usual governance often takes 90 per cent of Board meetings with ‘changing the business’ agenda items falling into ‘any other business’, if at all.
Why is this the case? Assisting with business as usual is the strength of many board members. Often they will have been appointed based on operational or functional expertise, rather than their ability to enable change. Typically, change leadership sits outside of a Board’s collective comfort zone.
What is the Board’s duty relating to change? The Board is principally responsible for two things:
Run the organisation: includes operations, services and functions. It will focus on business unit objectives, line management objectives, opex targets, and operational KPIs. Change the organisation: initiatives, projects and programmes. Why should Boards should increase their focus on change? Failed programmes and projects cost organisations in time and effort as well as money. So the ability to judge whether a programme is likely to succeed, be confident it’s on the right track and deliver on completion are all skill for Boards.
Boards therefore need to ask the right questions when they are managing change. This helps with consistency and is the foundation of good best practice. These questions include:
1 How can each change initiative contribute to strategic objectives?
2 What is the capacity for change?
3 What is the likelihood of achieving expected benefits?
4 What is the remaining cost of each change initiative?
5 What are the earliest and latest completion times for each change initiative?
6 What is the total exposure to risk arising from change?
7 What is the impact on the ability to achieve strategic objectives if any single initiative is cancelled, deferred, slowed down or accelerated?
Ellie Acton – Associate Director RSM 8th October 2019