The board’s role is to oversee the business by exercising a rigorous and arduous supervision of key areas, including strategy and risk. But it can’t also manage — or even micromanage the business of the company by infringing on management’s responsibilities that are designed to assist the executive team and CEO bring value to shareholders.
Boards need a clear structure and governance framework to carry out their work effectively. This includes a clear division of responsibilities from the chairperson up to the individual directors as well as a process for decision-making that is established for determining priorities.
Additionally, a sound board governance system requires a well-planned process for planning meetings and agenda items. It also includes a solid governance system that clearly defines the purpose of the board, its purpose, relationship with management, as well as the authority it has. The framework also includes a description of the board’s governing principles and values, such as integrity and transparency.
The board should also have a well-defined plan for selecting the CEO, preparing that person and overseeing succession. It should also have a strategy to address urgent issues, and be ready to shift its focus when it is required. The board’s rules of governance must be in sync with the business needs and the board should be in a position to anticipate and respond to the changes that are happening in today’s fast-paced, highly complex environment. This is why board members must be able to make a strict dedication of their time and effort to their duties on the board.
