The role of the board is to govern the company’s operations by providing rigorous and thorough oversight in key areas like strategy and risk. But it cannot also manage — or even micromanage the company’s operations by encroaching on the management’s responsibilities, which are designed to help the executive and CEO create value for shareholders.
Boards need a clear structure and framework to do their job effectively. This includes a clear definition of roles that extend from the chairperson to individual directors, as being able to use a standardized decision-making method for determining priorities and making decisions.
A sound board governance framework also requires a well-practiced process to plan meetings, including the agenda items. It also provides a solid governance framework that defines clearly the purpose of the board as well as its relationship with management. The framework also includes a description of the board’s governing principles and values, which include integrity and transparency.
Additionally, the board should have a clear and concise plan to select and develop the CEO and overseeing succession planning. It should have a plan to deal with urgent issues and be prepared to change its focus if it is required. The board’s governance procedures must be in line with the business and the board must be able to anticipate and react to changes that occur in the current fast-paced and complex environment. For these reasons, board members must make an intense commitment of time and energy to their work on the board.
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