A board’s role is to provide guidance and oversight to the executive management team. They also ensure that company policies are implemented and that all fiduciary duties are fulfilled. While some boards grant too much power to their executive leadership but the majority of boards do not take their responsibilities to the fullest extent. The media is brimming with stories about business catastrophes caused by incompetent or corrupt management teams.
One of the best ways to avoid such disasters is to ensure that your board members have a broad range of expertise and perspectives and is able to work well as a whole. This means establishing certain board management principles that include welcoming diversity into your board and taking on leadership roles, fostering agile structure (e.g. setting up committees to tackle new threats) and engaging in ongoing evaluation of the board as well as individual members.
Another important principle of management for boards is to avoid getting involved in operational issues, particularly when it comes to the day-to-day operations of your company. This is because a significant part of a board’s job is to determine the long-term direction for your business and how it fits within the wider society.
Although this might seem like a straightforward idea, many companies have a hard time with this idea. Some board members, for instance hold meetings directly with the management team without the CEO’s knowledge or quickly make conclusions that could be helpful. This could put the CEO in a bind situation. In the ideal scenario, the CEO will work with the board chair and other directors to work out a solution to this issue and build trust again.
