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Should boards have a role in the design of an organization?

Some would say “absolutely not”; it’s their role to guide, direct and hold senior management accountable. Others would say “absolutely” since the design of an organization is critical to strategy execution. There is not necessarily a right answer. The degree of Board engagement and their role in organizational design will depend on a number of factors: the overall purpose of the organization; the board itself and how it prefers to operate; the capacity of the senior management team; the conditions in which the organization and Board are operating; and potentially several other internal and external factors that could drive a particular approach at a given point in time.

The Board is a key stakeholder that should certainly have some input, if not final authority, over the design of the corporate management structure. The questions become, how should they be engaged, how much control should they have and how far down should they go in the design of the organization? The answers to these questions are typically addressed as part of the planning for any organizational review. But they should also be considered in defining the ongoing working relationship between the Board, in particular the Chair, and the administrative head of the organization. This definition is not only critical in the successful design of an organization but in its ongoing management. One approach that we have found to be successful in this regard is analyzing the respective roles of the Board Chair and administrative head from a perspective that considers strategic, policy-related and operational responsibilities and includes the definition of lead accountabilities in organization design (more detail on approaches to assessing and defining these respective roles and the level of board engagement is available through ismith@strategycorp.com).

Experience indicates that the right approach is usually a negotiated solution that aligns the Board and administration on their respective roles, and the appropriate approach, in the design and ongoing management of the organization.

 

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