Boards are unique leadership structures with substantial power. They are accountable to people who are both inside and outside the organization. They operate within a spherical framework that is governed by state-by-state guidelines and the collective will to alter their own composition and structure.
While boards have many responsibilities but they should concentrate on governance and oversight decisions while leaving operational matters to the CEO and executive team. This means establishing the framework for governance and creating guidelines for their actions and the actions of managers. It also involves focusing on legal and regulatory issues including compensation, conflicts of interests as well as community benefit and the evaluation of CEOs.
A solid governance system is essential for the board’s work and it should include clearly defined roles and responsibilities of each director and committee. It must also be readily accessible to all directors through a board portal. This will allow directors to prepare efficiently for meetings and keeps board discussions focused on the main issues of the meeting. It also facilitates better communication between members and the smoother transition of board members rotate.
A sound governance system includes the appointment of a lead or the presiding director, an independent board member who is responsible for the effective running of a meeting, and establishing the agenda. Additionally, it should include the scheduling of executive sessions in accordance with the requirements of the stock exchange and a time limit for directors to meet individually with the CEO in the absence of management.
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