CICA 20 QUESTIONS Strategy - Institute of Chartered Accountants ...

More documents

Recommendations

Info

grounded in reality. Directors, therefore, need to ensure that thestrategic plan indicates the basis upon which the needs of eachstakeholder group were identified and selected (e.g.customer/employee surveys; comparative competitive positioning;benchmarking studies, etc.)Finally (as with the case of the organization’s vision), missionstatements, which are explicit, clear and widely shared have beenshown to have a powerful and positive impact on internal stakeholder(employee) behavior.Accordingly, directors need to that awareness,understanding and acceptance of the mission exists throughout theorganization.14. Does the strategy have a proper statement of values?For an organization, it is important that the actions and behaviors ofits employees – in striving to maximize shareholder value and achieveperformance targets - can withstand the test of public scrutiny.Valuesconstitute the internal ethical and cultural priorities (e.g., honesty,mutual respect, transparency, innovation, teamwork, etc.) that shape theway in which people behave and make decisions.When widely shared,they enhance especially an organization’s ability to focus employeebehavior. Directors, therefore, need to make sure that theirorganization’s strategy contains a statement of values which theyconsider important for the harmonious and ethical running of theiroperations. Organizations can then use their ‘statements of values’and ‘codes of conduct’ as vehicles for attracting the right stakeholdersto them.One notable example of an aspirational vision occurred in the early 1960s when USPresident John Kennedy challenged NASA to: (sic) ‘land a man on the surface of the moonand return him safely back to earth before the end of the decade’. Apparently, few personsin NASA actually believed that it could be done because it involved so many newtechnologies which had yet to be invented. Nevertheless, Kennedy’s vision made thescientists at the space agency excited about the prospects of actually making it happen‘during their watch’ and, of course, they eventually fulfilled it.6
15. Does the strategy contain objectives which are wellformulated and well stated?An organization uses objectives to measure and judge its progressin achieving its mission, vision and values goals.As a general rule,objectives should be established for each of the goals contained withinthe mission, vision and values. It is also critical that an organizationhas objectives which are both well formulated and well stated.Toaccomplish this, directors need to make sure that their organization’sobjectives are:• specific (to avoid ambiguity as to what is the organization istrying to accomplish);• measurable (to allow for the determination of the objectives’achievement or not);• acceptable (to ensure that the method for measuring progressagainst the mission, vision and values is perceived as fair); and• timely (as the great economist, Lord Keynes, once said: "In thelong run, we are all dead!")Organizational surveys asking if macro-level objectives are understoodand accepted by employees at each level are also useful for determiningthe reasonableness of objectives.Lastly, when employees feel connected to the organization’s strategicobjectives, they work more diligently towards their achievement. It is,therefore, essential for directors to assure themselves that those macroorganizational objectives (which have been designed to measure anorganization’s progress in implementing its mission, vision and values)have been translated, disseminated and aligned throughout theorganization – especially to the front line.“ If you have boarded thewrong train, it is of no userunning along the corridor inthe opposite direction. ”Regarding this last point, detailed organizational objectives are beststated for a time period of one to three years and revised at the endof each year as new information becomes available.A key consideration in setting objectives is the degree to which thespecific achievement targets contained in the objectives are perceivedas realistic by those responsible for their achievement.To determinethis, directors need to know the basis upon which the objectives wereestablished (e.g. customer/employee surveys; comparative competitivepositioning; benchmarking studies etc.) and whether the objectivesbalance the conditions in the external environment (especially theperformance of competitors) with the organization’s internalcapabilities (See also Question 16). Only when armed with thisinformation can directors judge for themselves whether the objectivesstated are realistic or not, and possibly in need of adjustment.Anon16. Are the business arenas specified in the organization’sstrategy the right ones?An organization should strive to identify and focus its resources onthose business arenas (existing or new) where (a) the potential marketopportunity exists for the enterprise to achieve its stated goals andobjectives AND (b) the organization has the internal resources – eitheron hand or quickly available - to pursue and capture the opportunity.When either (or both) of these conditions does not exist, anorganization is faced with the difficult challenge of determining if andhow the situation might be turned around and made more favorable -or whether to seek ‘greener pastures’.7
Page 1 and 2: 20 QuestionsDirectors Should Ask ab
Page 3 and 4: 20 QuestionsDirectors Should Ask ab
Page 5 and 6: PrefaceThe Risk Management and Gove
Page 7: With respect to ‘insight’, dire
Page 10 and 11: These detailed questions (i.e. 2-6)
Page 12 and 13: 10. Does this organization have the
Page 16 and 17: Making such business arena choices
Page 18 and 19: These risks should be spelled out i
Page 20 and 21: Appendix 1. Constructive Involvemen
Page 22 and 23: Where to find more informationCanad
Page 24: ISBN 1-55385-031-99 781553 85031120

CICA 20 QUESTIONS Strategy - Institute of Chartered Accountants ...

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?