Boards are unique leadership structures that hold enormous power. They are accountable to those both inside and outside of the organization. However, they operate within a flexible structure that is limited only by guidelines for each state and the collective will of a board to alter its composition and structures.
While boards have many duties they should concentrate on governance and oversight decisions while leaving operational matters to the executive team and CEO. This means developing policies and a governance system to guide their decisions and those of the managers. It also means focus on regulatory and legal issues, compensation, conflicts of interest, community benefit, and the CEO’s evaluation.
A good governance system is crucial to the work of a board, and it should contain clearly defined roles and obligations of each director and committee. Directors should be able to access and use the board portal. That enables directors to efficiently prepare for meetings, and also allows board discussions to keep their focus on the key issues at hand. It also helps improve communication between members and more smoothly transitioning when board members rotate.
A good governance system should include the appointment of an independent director who is accountable for the smooth running of meetings and establishing the agenda. It must also include scheduling executive sessions in accordance with the requirements of the stock exchange and a time for directors individually to meet with the CEO if management is not present.
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