New NACD Report Targets Board Oversight of Strategy Execution 

Effective board oversight doesn’t end with approval of an organization’s strategic plan.

By Michael W. Peregrine, Executive Fellow, SullivanCotter

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Both boards and senior management of hospitals and health systems should be aware of the 2026 Blue Ribbon Commission Report from the National Association of Corporate Directors (NACD). These annual reports are comprehensive analyses of a major corporate governance issue and reflect the input of a large panel of experienced corporate directors. As such, they are important governance resources and worthy of consideration by boards across industry sectors, whether not-for-profit or for-profit in orientation.

The 2026 Report, Board Oversight of Strategy Execution, observes that while directors increasingly recognize the value in greater engagement with the strategic planning and execution process, the path forward for many is simply increased engagement/’time on task.’ Following such an undefined path could result in a needless and destabilizing collision with management, however.

The Report thus recommends that effective oversight of strategic challenges is more likely to be achieved through a more focused or disciplined process by which boards engage with their company’s strategic plan – not a process that requires more board engagement, but rather engagement with a more clearly defined purpose. A more disciplined process would affect how boards focus attention on strategic execution, collaborate with management on execution, and allow for flexibility when circumstances impact strategy.

Supplementing this core recommendation are nine specific recommendations allocated in three different categories:

1. Align on Execution

• Anchor oversight on strategy, execution priorities and outcomes.
• Confirm strategic assumptions that matter most.
• Define signals for monitoring and pressure testing.

2. Monitor Execution

• Establish disciplined board practice for execution oversight.
• Structure information flows around signals, not status.
• Leverage committees as an early warning system.

3. Calibrate Engagement

• De-escalate heightened engagement.
• Calibrate the board’s response to the issue.
• Diagnose when signals suggest a strategic inflection point.

Before moving forward with these recommendations, however, the Report encourages boards to confirm, in an honest and candid process, the presence of three specific governance building blocks that it views as essential for shaping intra-board discussions on more engaged oversight.

These building blocks include:

• A healthy board culture that encourages an atmosphere in which directors may constructively challenge one another and raise uncomfortable questions with fellow directors, management and advisors – as opposed to a ‘go along and get along’ culture.

• A high-trust relationship between the board (and particularly its chair or lead independent director) and the CEO that creates the necessary candor for strategy execution issues to be presented to the board while there is still time to react.

• Board composition that places a premium on directors with strategic skills and orientation, and the experience necessary to support organizational growth.

The Report also contains a detailed toolkit of suggestions for implementing the nine recommendations.

SullivanCotter Perspective

A principal value of the NACD Report is, first and foremost, a reminder of the important role that boards are expected to play in the oversight of the company’s strategic direction; that their strategic responsibilities do not end with approval of the strategic plan, but that they remain ongoing and are to be exercised in collaboration with executive management. Grounded in this important reminder, the Report provides an equally valuable roadmap for hospital and health system boards on how to actively engage in that oversight without micromanaging. This is the concept of oversight grounded in discipline and focus, not simply on ‘time on task.’

There is no legal obligation for boards to implement the recommendations of the NACD Report. Yet thoughtful internal consideration of detailed thought leadership, such as the NACD Report, can demonstrate to stakeholders and interested third parties the good faith effort of the board of directors to exercise its fiduciary duties. 

With this in mind, there is value in organizational leadership recommending the adoption of an internal process, such as an ad hoc committee composed of board and executive team members to review the Report, consider its relevance to the organization, and make suggestions on whether, and if so, how leadership may proceed to implement some or all of the Report’s recommendations. The basic governance goal is to educate the board on the importance of its effective oversight of the execution of organizational strategy, a concept that can sometimes be lost amid a board agenda distracted by more tactical concerns or the challenges of emerging technology.