The role of a board is to provide direction and oversight to the executive management team, making sure that company policies are implemented and that all fiduciary obligations are fulfilled. While some boards grant too much power to their executive management but the majority of boards do not take their responsibilities to the fullest extent. Unfortunately, the media is flooded with stories of business catastrophes that are caused by corrupt or incompetent management teams.
To prevent such disasters from happening it is crucial to ensure that your board includes a wide range of perspectives and skills. It must also function together as a unit. This is why you should establish certain management principles for your board which include embracing diversity when building your board and taking on leadership roles, fostering an agile structure (e.g., forming committees to deal with new dangers) and engaging in ongoing evaluation of both the board as a whole and the individual members.
Another important principle of management for boards is to not get too involved in operational issues, especially when dealing with the day-to-day operations of your company. This is due to the fact that a large part of a board’s job is to create a long-term direction for your business and how it can fit into society.
Although this might seem like a straightforward idea, many companies struggle with this concept. For example, some board members start meeting directly with management without the CEO’s knowledge, or make quick judgments in an effort to be helpful. This could put the CEO in a difficult spot. The CEO must collaborate with the chairman of the board and other directors in order to resolve the issue and regain trust.
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