contribute to the corporation’s ability
to achieve financial success. Therefore,
the Financial objectives comprising
the Board strategy map should be
drawn directly from the organization’s
corporate strategy map.
This will normally include an
overarching objective relating to
shareholder value, as well as objectives
that outline how the organization
will achieve the dual objectives of
increasing productivity (through
cost reductions and improved asset
utilization) and growing revenue
(from selling new products or
deepening relationships with existing
customers).
The customer perspective for this map
has been renamed to Stakeholder,
in recognition of the many groups
who have a stake in the Board’s
performance. Thus, the initial task in
crafting objectives for this perspective
is determining the stakeholder groups
who must be satisfied as the Board
works to fulfill its obligations.
From the objectives we might
infer that this Board has chosen
shareholders and employees
as the critical stakeholder
groups. “Ensuring compliance
and accountability” will allow
stockholders to sleep a little easier,
secure in the knowledge that the
Board has their best interests at
heart.
While not explicitly stated, society
at large will also benefit from
this objective, avoiding the high
costs of litigation, productivity
declines, and unemployment that
frequently result from corporate
shenanigans. Shareholders will also
be pleased to see the Board engaged
in “Approving and monitoring
corporate performance.” Finally,
all employees will benefit from the
Board’s “Counseling the CEO and
monitoring executive performance.”
The Internal Processes objectives
articulate how the outcomes in
the stakeholder perspective will
be achieved through efficient and
effective Board processes. In order to
achieve compliance and accountability,
as discussed above in the stakeholder
perspective, this Board must ensure
compliance with all laws and
regulations, make certain the company
has effective internal controls, and
diligently work to improve disclosure
practices, improving transparency and
visibility into the firm’s operations.
Stakeholders also demand that
the Board approve strategy and
monitor corporate performance,
thus internal processes must be
developed to achieve this significant
undertaking. In this example the
Board will monitor performance using
the company’s corporate Balanced
Scorecard, approve funding for, and
monitor strategic initiatives to ensure
that spending is aligned with wellconstructed.
Learning and Growth perspective
must contain objectives focused
on three separate but integrated
dimensions of capital: human,
information, and organizational.
Board members must possess the
requisite financial literacy and business
acumen to contribute meaningfully in
their capacity. Regarding information
capital, the Board must press the
company to provide access to strategic
information if they wish to provide
insight and effectively monitor
corporate performance.
Finally, it’s vital for the Board to
approach their work with a spirit
of advocacy and inquiry. Some
governance experts have suggested
that Board members don’t behave
effectively in meetings, demonstrating
an unwillingness to raise important
issues and challenge the CEO on
the firm’s current performance and
strategic direction.
Boards must rise to this challenge by
balancing the seemingly competing
demands of advocating on behalf of
the firm, acting as a tireless champion
for it, while also serving the needs and
preserving the trust and confidence
of stakeholders by encouraging
robust dialogue on challenging and
potentially controversial issues.
The strategy map paints a compelling
picture of the Board’s endeavors,
but for day-in and day-out tracking
of performance, the Board must
next translate the objectives into
performance measures and targets.
Strategic initiatives - the projects
relied on to achieve targets—must
also be brainstormed, funded, and
monitored for effective performance.
And what are the payoffs awaiting
Boards that are proactive enough
to make this leap of faith into the
Balanced Scorecard world? For
starters, effectiveness and efficiency
of Board operations will benefit
tremendously as Board members glean
new insights into their core activities
and are supplied with the ingredients
they need to divert attention away
from the perfunctory reviews of the
past and squarely on the dialogue that
will ignite the opportunities of the
future.
Stakeholders will undoubtedly applaud
this intrepid move as well, because their
interests are further highlighted with
public commitments to safeguard their
investments printed in black and white
on the Board’s Balanced Scorecard. This
transparency and enhanced visibility
not only ensures improved Board
functioning but may also have positive
financial ramifications for the company.
Dr. Kellen Kiambati holds an MBA
in Strategic Management from the
Kenya Methodist University and a
PhD in Business Administration with
a focus in Strategic Management from
JKUAT. She is a member of the Institute
of Human Resource Management
of Kenya. She can be reached via:
[email protected]