The board develops and monitors the strategic direction of the public entity through a strategic plan.
It reviews and approves the public entity’s long-term strategy (three-year minimum, updated annually). It must prepare an annual business plan with achievable and measurable targets and milestones based on the strategy. All decisions should be consistent with the agreed strategic direction.
A strategic plan assists a public entity to do a better job. It may also be a legislative requirement. A plan is a practical way to ensure the board fulfils its duty of care, which includes providing strategic direction. The content and approach to strategic planning is usually a matter for the board, although some portfolio departments may issue guidelines.
A practical issue for many boards is determining the roles of the minister, portfolio department, board, management and other stakeholders in the strategic planning process. The plan each public entity adopts should make these. roles and inter-relationships clear, including the timing of each party’s involvement and expected contribution.
Strategic planning may involve the public entity’s stakeholders. The board should agree on a vision, determine strategic priorities in response to a comprehensive environmental analysis and ensure that all members of the public entity are working towards the same objectives.
The strategic plan and business plan ensures the board’s work is accountable and transparent. Once developed, it should be communicated to stakeholders. In some cases, the establishing legislation requires that the strategic plan or any of its parts must not be published or made available without the prior approval of the board, Treasurer and relevant minister.
In addition, a board may consider that the business plan is commercial-in-confidence and therefore only make the statement of corporate intent available to all stakeholders.
The board’s involvement in the planning process typically includes the following:
- formulating and/or confirming the public entity’s strategic and business plans:
- for the applicable time horizons (consistent with policy and directions, agreed risk appetite) for internal and external purposes
- to ensure accountabilities are clear (and utilising an appropriate range of inputs, such as environmental scans, employee and stakeholder surveys)
- to verify the relevance of planned activities compared to the public entity’s mandated purpose (including stakeholder/communications plans)
- formulating and/or confirming the public entity’s budgets (in line with guidelines/directions), ensuring consistency with plans for internal and external purposes and ensuring accountabilities are clear
- ensuring that the individual performance plans, such as those for the chief executive officer, are consistent with agreed plans and budgets
- ensuring that the board sets the appropriate ‘tone from the top’ for organisational culture
- ensuring appropriate internal and external communication according to stakeholder mapping.
Statement of Corporate Intent
Many boards prepare a statement of corporate intent that details how they propose to address their stewardship obligations.
Section 42 of the State Owned Enterprises Act describes this document, which is required for state business corporations.
The statement of corporate intent can be part of the strategic plan for the public entity and consists of:
- objectives of the public entity
- nature and scope of the activities to be undertaken by the public entity
- accounting policies to be applied to the accounts
- performance targets and other measures by which the performance of the public entity may be judged in relation to its stated objectives
- information to be provided to the Treasurer and relevant minister by the public entity during the course of those financial years, including the information to be included in each half-yearly report
- other matters agreed by the Treasurer, relevant minister and the board.
There is no single model or approach for strategic planning, but most public entities follow a common set of activities or steps that:
- define the purpose and mission of the public entity
- identify the current aims, objectives and strategy of the public entity
- conduct an environmental scan to identify how changes in the environment can indirectly influence the public entity
- analyse resources
- identify strategic opportunities and threats
- identify strategic choices
- strategic decision-making
- develop and implement the most appropriate strategy
- evaluate the effectiveness of the strategy’s implementation.