Operational Planning

Once the board is satisfied that it has made clear its desired strategic direction, and the chief executive and board, in partnership, have agreed on the performance measures, the chief executive is then charged with the task of developing a business or operational plan. This might be for one year or could cover a wider time span.

Some boards will want to ‘sign off’ or adopt the operational plan. It is recommended that boards should pause and think before doing this. By ‘signing off’ or adopting the operational plan, a board, in effect, takes ownership of it. This then means the chief executive cannot make changes to the plan without board approval. To all intents and purposes it has now become a board document.

It is far better that the chief executive presents the operational plan to the board, even walking it through the various plans and objectives, providing board members with the comfort that sound planning has been undertaken, based on clear thinking. Provided the directors are comfortable that the operational plan is sufficiently robust and is directed towards the achievement of the KRAs, etc., then all they need to do is to say, “Well done. Keep us informed about changes that you make to this plan and why. We recognise that this is your day-to-day plan and that you will need to make changes in response to changing circumstances. We don’t want to inhibit you in doing this. We just want to be kept informed, to be taken on the journey as this unfolds. But we do remind you that you will be held to account for the achievement of the KRAs and Key Results, not for doing the things in your operational plan.”

This last point is important. Many chief executives report against their operational plan rather than against the strategic plan. The result is that they report ‘activity’ rather than ‘outcomes’ and the board is subsequently pulled down into operations rather than remaining at the governance level where it should be.