Whose strategy is it anyway?
Under UK charity law, trustee boards are responsible for setting a charity's strategic direction, but there is little guidance about how to divide this responsibility between trustees and their executive teams.
In practice, there is often a tension between trustees, who are ultimately legally accountable, and executives with expertise and day to day responsibility.
Charities are at risk when the ownership of strategy is unbalanced. Trustee-driven strategies can present management with nothing more than “choiceless doing”. Executive-led processes can lead to “strategy theatre”. Both are frustrating and present significant risks.
In the end, setting a charity's strategic direction has to be a shared responsibility. Boards and staff - especially Chairs and CEOs - need to make time for conversations about how they will strike that balance.
Whose strategy is it anyway?
Under UK charity law, trustee boards are responsible for effective delivery of a charity’s objectives. They set a charity's strategic direction and ensure legal compliance. The legal obligations of trusteeship are more serious than many trustees realise, and breaches of duty can lead to regulatory action, fines, disqualification and even criminal prosecution.
However, charity law does not offer guidance on how trustee boards and their executives should work together to set strategy in order to deliver those objectives.
In theory, the difference between trustees and executives is simple. It is the difference between governance and management. Governance is about overall direction, accountability and compliance. Management is about operations, organisation and resources.
But this distinction is like the old joke: “In theory, there’s no difference between theory and practice, but in practice, there is.”
“Strategy” is often where the distinction between governance and management breaks down.
In theory it’s clear. In practice, it’s not.
In a way, this should be no surprise. The charity governance model entangles authority and expertise, especially in larger charities. Trustees are ultimately accountable, but staff are practically responsible. Trustees are often generalists, whereas staff might be world-leading experts. Trustees are volunteering and at arms-length from operations, whilst staff are paid and deep in the details every day. There are many opportunities for disconnect, especially when it comes to questions of strategy, risk, culture and ambition.
Avoiding “choiceless doing” and “strategy theatre”
The worst outcomes arise when there is no balance and the strategy conversation is dominated by one side - either the non-executives or the executives.
When boards impose strategy without considering operational reality, the executive team are left with what Roger Martin calls "choiceless doing," which can compromise service quality. This is based on the idea that there is a bright and obvious line that distinguises “strategy” from “execution”. It’s a false distinction. Strategy is about choices. Boards can’t hand down strategies on stone tablets for execution by staff. There needs to be a dialogue.
Conversely, when the executive team dominates strategy, a board’s input can be no more than "strategy theatre," rubber-stamping decisions without meaningful input. The staff control information, agendas and options in a way that closes down meaningful debate and scrutiny. This model is all management and no governance, leaving trustees exposed and the charity at risk.
Finding balance, sharing responsibility
The best outcomes come when the governance and management are integrated in a way that everyone understands.
A healthy organisation will take time to find a way to develop strategy that balances everyone’s contributions to ensure oversight and impact.
In our experience, these outcomes arise when the following conditions are in place:
There is a healthy Chair/CEO relationship: The strongest indicator of a healthy Board/Executive relationship is the relationship between the Chair and CEO. When it comes to strategy, ownership is shared - often the strategy development process is led by the CEO, but the process of approving the strategy is led by the Chair. There is mutual trust, respect for each other’s contribution, and commitment to adopting a shared direction. There is a constant discussion about the right level of detail versus the right level of oversight. Adversarial relationships are rarely sustainable. Trustees should ask themselves if their Chair/CEO relationship is working.
A clear Board “identity”: Less functional boards can often feel like a dozen eminent individuals who come together occasionally to critique an organisation in which they have a passing interest. They might ask some good questions, but they do not feel like a group with a common identity, nor do they feel like partners of the executive team. Strategy conversations can feel less than the sum of their parts. Good boards have a common identity and common values. They encourage regular communication and collaboration between trustees, and create opportunities for connection outside board meetings. Training and development opportunities will help them understand their roles and responsibilities.
There is diversity of skills, experience and perspectives: Trustee boards should comprise of individuals with a range of skills, experience, and perspectives. This can help to ensure that the board has a comprehensive understanding of the charity's operations, and the ability to make informed decisions that balance financial sustainability and charitable objectives.
Mutual Respect: Staff are experts, but trustees are accountable. Good strategies will be grounded in the expertise of staff, but trustees have an important role in challenging them - even from first principles. Staff should work to present information in a clear and accessible way, and trustees should do the reading. It’s often helpful for trustees to engage with staff beyond the management team, but this has to be structured - it can’t be seen as a way to undermine leadership.
Clear expectations: Set clear expectations about the respective roles in setting strategy, including when and where the trustees will engage with the executive team, how the process will work and when the big decisions will be made. Document when big decisions are made. Spend time building a shared understanding of roles and responsibilities in a way that is right for your charity.
Shared understanding about risk and ambition: Good teams have honest conversations between the trustee board and executive team about ambition, culture, and values. They work together to understand the operational realities, identifying potential risks and opportunities, and align the charity's strategic direction with its values. These conversations can sometimes be too abstract to be useful, so often scenarios are a helpful way bring this life: “if X happened, would we do 1, 2 or 3?”. This can reveal what people really think, and set clear guardrails for management teams.
Open Communication: There must be open communication and collaboration between the trustee board and executive team. Both parties should work to understand each other's perspectives, ask meaningful questions, and work together to develop a shared vision and strategic direction.
In the end, setting a charity's strategic direction has to be a shared responsibility between trustee boards and executive teams. This needs to an explicit and deliberate process, because tensions can arise when people assume everyone is already aligned.
Only by working together to develop a shared vision and strategic direction, charity boards and executive teams can better serve their beneficiaries and ensure their long-term success.