The role of the board is to provide direction and oversee the executive management team. It ensures that the company’s policies are followed and that all fiduciary obligations are adhered to. Some boards give too much power to executive leadership. The majority of boards don’t. Sadly, the media abounds with stories of business failures that are caused by improper or unqualified management teams.
One of the best ways to avoid disasters is to ensure that your board members have a broad range of skills and perspectives and functions well as a whole. This requires setting up the principles of management for your board, such as embracing diverse perspectives and taking on leadership roles, creating an flexible structure (e.g. setting up committees to deal with new risks) and engaging in continuous assessment of the board and its individual members.
Another key principle for a board of management is to stay clear of getting too involved in operational issues, especially when dealing with the day-to-day operations of your company. This is because a significant part of the work of a board is to establish the long-term vision for your company and how it is integrated within the wider society.
Although it might sound like a simple idea, many companies struggle with this concept. Some board members, for instance hold meetings directly with the management team without the CEO’s knowledge. They also quickly make conclusions that could be helpful. This can put the CEO in a precarious position. The CEO should work with the board chairman and other directors to address the issue and regain trust.
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