26 June 2017 by Ibi Eso
The forward plan is an indication of a well-organised company and can help avoid penalties for non-compliance
Most C-suite executives will be familiar with Benjamin Franklin’s observation ‘By failing to prepare, you are preparing to fail’. So it is perplexing why so many organisations of all sizes, from SMEs to blue-chips, lack a forward plan.
A forward plan (also known as a board work plan) is a critical component of good corporate governance. Typically looking 12 months ahead, it specifies what needs to be done in terms of compliance matters or board agenda items, and states the relevant deadlines. The forward plan can take many forms. A few approaches I have used in the past include:
This is particularly useful in forward planning board and committee agenda items. There will be certain topics that are so integral to the business they need to be scheduled and discussed at every meeting, with additional items included on an ad hoc basis as required.
Agenda items are matched to a particular company objective. For example, the corporate goal ‘maximise growth within existing resources’ might include items like ‘growth strategy’, ‘people strategy’ and ‘human resources director’s report’.
The objective ‘deliver first-class customer service’ might encompass agenda items such as ‘customer focus group findings’, ‘customer services director’s report’ and ‘customer services improvement plan’.
Topics for an organisation wanting to reduce costs might include ‘supply costs audit’, ‘change management’ and ‘supplier agreements evaluation results’.
The idea here is that some thought is given to what reports the board would like to discuss or approve during the year, and in order to ensure the relevance of these topics they are matched to the agreed corporate objectives.
Items are grouped by category, which could also include some specific to the relevant industry sector or into general corporate groupings. For instance, board agenda items could be grouped into strategic, governance, financial, and resources. This ensures all relevant items are planned and scheduled-in for the board to consider.
There is no right or wrong way of drawing up a forward plan – it depends almost entirely on the way the organisation prefers to work. The important thing is to have one, whatever form it takes. Usually, I find spending time with the directors and board chair before the year starts, to consider items for the year ahead, helps to ensure some thought has gone into preparing board agenda items.
The consequences of not having a forward plan and missing a key deadline are obvious. Thinking ahead and planning for the year to ensure relevant deadlines are met can go a long way towards helping ensure the organisation is prepared.
Hefty fines can be issued for late filings or non-submission, with an increasingly litigious Companies House collecting £81 million in late filing penalties in 2014. Directors can be fined up to £5,000 in the criminal courts for failing to file company accounts on time, and face a further charge of £500 a day for additional compliance delays. Private companies also face penalties of up to £1,500, with the penalty doubled if accounts are late two years in a row.
Added to this, if the organisation is sufficiently high profile or the breach particularly spectacular, sanctions arising from non-compliance may well hit the news headlines, leading to reputational damage.
But focusing on penalties for non-compliance is a rather negative way to look at meeting statutory or compliance obligations. Adopting a more positive viewpoint, the discipline of working to a preordained forward plan can have many business benefits.
Forward plans encourage board directors to think about strategic, high-level issues, rather than become bogged down in the minutiae of operational matters. They support a planned approach to workloads and avoid last-minute firefighting to meet deadlines.
A forward plan gives structure to meetings, so important aspects of the business are not overlooked, and they result in better time management as agenda items can be allocated for discussion evenly across scheduled meetings.
They also allow board directors to have input into the agenda and help keep discussions on track, while enabling report writers to schedule time and produce their best work without being put under unreasonable time pressure.
A scheduler is a useful accompaniment to the forward plan. Starting with the drop-dead date for a report submission, it works backwards to identify dates for key milestones along the way that must be met to achieve the ultimate deadline of getting reports to the directors at least seven days before the meeting.
For example, if reports are to be circulated on a set date, an agenda will need to be agreed and circulated at least four to six weeks before the circulation date. Report writers could then be given about two or three weeks to write their reports and, if the reports need to be checked, time could be built-in for this before the report is handed to the company secretarial department for circulation. Some people may find it useful to insert deadlines in the calendars of the individuals responsible.
Although professional project planning software can be used to create such a schedule, a simple Word document with all processes and dates clearly stated will usually do the job perfectly well. As we all know, allowing directors sufficient time to read reports and to prepare for board meetings is an essential ingredient for good governance.
In my experience, the discipline of working to a forward plan, backed up by a scheduler, helps board directors work more productively. Yet far too many organisations treat it as an inconsequential administrative detail, when it has potential to be a powerful tool that can be used to their advantage.
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