Highland councillors have been challenged to provide greater leadership by Audit Scotland.
The council welcomed the "positive nature" of the report
However, the local authority was also praised in a study by the watchdog.
The report, prepared for the Accounts Commission, said Highland Council delivered "appropriate and effective" solutions to residents' problems.
However, it called for stronger corporate direction from elected members and better management from those supporting the chief executive.
The council's "strong community engagement" was highlighted, as was its joint work with health services and "increasing public satisfaction" with service delivery.
However, Alastair MacNish, chairman of the commission, said: "There is a need for stronger corporate direction from councillors.
"This should focus on making the council more cohesive, improving its centralised activities, such as workforce planning, and setting fewer, clearly articulated priorities."
The report was prepared to assess the council's efforts to meet its legal duties to pursue best value.
The auditors noted that typical council tax bills had been kept below the national average, despite the high cost of delivering services across Scotland's largest council area.
However, they urged the council to consider putting some of its local services out to competitive tender to help deliver value for money.
The report said elected members provided strong local leadership and participated enthusiastically in council-wide debate.
It added: "However, local issues can predominate, resulting in the council having too many priorities that are difficult for the council to sustain.
"Council services are generally well managed and there have been significant performance improvements in many parts of the council over the past year.
"Driving further improvement into the council's performance will require the sustained efforts of all elected members and senior managers combined with a more corporate approach to strategic development."
Councillor Alison Magee, convenor of the council, welcomed the "positive nature" of the report and said work was already under way on most of the areas identified for improvement.
She said: "The comprehensive review of our performance has highlighted many examples of good practice and I am very pleased about comments in the report recognising the public's enhanced satisfaction with our services during the current term of this council.
"We will endeavour to maintain and build upon this.
"We acknowledge the constructive criticism that you would expect to find in an audit and will present an improvement plan to the council on 4 May."