A board’s job is to provide guidance and oversight to the executive management team, and to ensure that the company’s policies are in place and that all fiduciary responsibilities are fulfilled. While some boards give too much authority to their executive leadership however, the majority do not go far enough. Unfortunately, the media is overflowing with stories of business catastrophes that are caused by improper or unqualified management teams.
To prevent such disasters from happening To avoid such catastrophes, it is important to ensure that your board has a wide range of perspectives and skills. They should also work together as a unit. This means establishing guidelines for managing your board such as embracing diverse perspectives and assuming leadership roles, encouraging an flexible structure (e.g. creating committees to address new risk areas) and engaging in continuous assessment of the board as well as individual members.
Another key principle for a board of management is to stay clear of getting too involved in operational issues, particularly when it comes to the day-today activities of your business. This is because a significant part of the work of a board is to set the long-term vision of your company and how it can fit into society.
This may seem like something that is easy to implement however, many companies are struggling to implement this idea. Some board members, for example begin meetings directly with management without the CEO’s knowledge or jump straight to conclusions to be helpful. This could put the CEO in a tough position. The ideal scenario is for the CEO to work with the board chair and other directors to resolve this issue and build trust again.
