The Director’s Dilemma – August 2020 Edition
This edition of the newsletter was first published on The Director’s Dilemma website and the full newsletter is available for viewing here. To subscribe to future editions of the newsletter, click here
The Director’s Dilemma - August 2020
Our dilemma this month looks at the courses of action available to a board that wishes to rise above the political cycle and implement a long-lasting solution to a pernicious problem. I
Yvette sits on the board of a government-owned company in the health sector. She chairs the people and strategy committee and loves to see the impact that her company has in improving lives.
The company is about to embark on an ambitious project that will involve a major capital project as well as diversification into a new service area. The project will be contentious. Evidence from overseas suggests that it will be highly beneficial for the targeted beneficiaries but that host communities will be anxious and even overtly hostile to the location of the service in their vicinity.
The international experience is all from well funded independent not for profit companies that could push ahead with planning amid controversy. Yvette is concerned that the project will straddle two electoral cycles and will rely on government funding in the early stages.
The executive team and the board are very excited at the potential for major social impact. How can Yvette help her board to develop a robust stakeholder management strategy that includes the shareholder and takes account of the political sensitivities that will inevitably arise?
What Yvette has to do, more than anything else, is remember that the view from 30,000 feet is very, very different than the view on the ground. In a situation such as this, political leaders can be helpful, but listening only to them and their opinions and guidance can lead you into an echo chamber and a false sense of security that you have the answers you need.
The board’s stakeholder strategy here has to be centered around community engagement, particularly the constituencies being directly impacted. Politicians may say, “This will improve the lives of a lot of people,” only to find those “people” don’t see it that way at all. (Exhibit A: Amazon’s aborted plans to locate a second headquarters in New York.) How many well-meaning nonprofits have blazed a trail onto the continent of Africa, armed with promises and goodwill in terms of economic development, but failed because they never dug into the view of the citizens?
The board must be able to clearly and succinctly articulate how they think their project will improve stakeholders’ lives, and show where their data and projections come from.
History can also serve as a guide. Find some case histories. What were some of the other proposed changes in this community that failed to materialize—and why? What is the culture like, and can the board show how this project fits into and enriches that culture? Addressing community concerns head-on—and issuing an assurance that you are in it for the long haul—is the only path to bringing this fruition.
Yvette is alert to differences between an independent NFP and a government-owned NFP. That is a good start. She should know that the board, whilst ensuring that there is a strategy, need not get involved in the operational details.
She needs to consider some key questions:
- Is the project within the objectives and aims stated in her board’s enabling legislation?
- Is the project clearly within the government’s policy? What about the opposition parties’ policies?
- Is the project budget approved and included in government forward estimates?
- Have her Minister and relevant others been briefed?
- Have the local State and Federal elected representatives been briefed? Are they on the same party as the government?
- Is the host community aware of the proposed project or is it still confidential?
- Have management identified likely supporters and opponents and developed key messages for each?
Health and justice infrastructure can be viewed with suspicion by host communities. A well funded NFP can pursue a course of action even if vigorously opposed by the local community. Boards that report to an elected representative need to be very aware that the government of the day acts for the people of the electorate. A government business must build the support of all elected representatives and avoid placing the Minister in conflict with other members of the government. If the benefits are clear then support will be obtainable.
Finally the board needs to consider milestones, KPIs, and reporting, to discharge their duty of oversight as the strategy is implemented.