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Look Who’s Not Talking

Both company directors and senior managers place a premium on strategic planning. So what keeps them from collaborating on it?

Merrill Lynch CEO E. Stanley O’Neal knows what happens when a CEO’s priorities differ from those of the company’s board of directors. Subprime losses notwithstanding, O’Neal got the ax in October after the board learned he had launched merger discussions with another bank before asking for the board’s approval.

When it comes to boards versus senior management, “you’d expect, and want, some amount of disconnect,” says Linda Barrington, research director at The Conference Board. “Because they have different jobs, they are two different funnels that meet in the boardroom.”

But neither directors nor managers seem eager to acknowledge any disconnect. Strategic planning and execution ranked high on the lists of priorities in both The Conference Board’s recent “CEO Challenge 2007″ survey and the “2007 National Association of Corporate Directors (NACD) Public Company Governance” survey. But while both camps place a premium on strategic planning, that doesn’t mean they know how to approach it collaboratively. “It’s a complex subject on which CEOs and boards are trying to find the right level of discussion,” says Elise Walton, a partner at Oliver Wyman–Delta Organization & Leadership, which worked with the NACD on the survey. Only 16 percent of NACD respondents, in fact, said that management and the board work together to develop strategy — far from a collaborative effort.

There is also a disconnect regarding the importance of succession planning. Directors in the NACD survey and in one conducted by PricewaterhouseCoopers and Corporate Board Member magazine cited succession planning as one of their top concerns, but CEOs ranked it much lower. Part of the reason: CEOs still control the board’s agenda, and few want to talk about their successors. Small wonder.

CEOs’ Top Priorities

  1. Sustained and steady top-line growth
  2. Excellence in execution
  3. Consistent execution of strategy by top management
  4. Profit growth
  5. Customer loyalty/retention

Board Members’ Priorities

  1. Strategic planning/oversight
  2. Corporate performance and valuation
  3. CEO succession
  4. Board leadership
  5. Financial oversight/internal controls

Sources: The Conference Board, NACD, The Center for Board Leadership

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