The job of the board is to provide guidance and supervise the executive management team. It makes sure that company policies are implemented, and that all fiduciary obligations are adhered to. Some boards grant too much power to executive leadership. The majority of boards do not. The media is filled with tales of business disasters which are the result of improper or unqualified management teams.
To avoid the occurrence of such catastrophes, it is important to ensure that your board is comprised of many perspectives and abilities. They should also work well as a team. This requires the establishment of board management principles such as accepting different perspectives and assuming leadership roles, encouraging an agile structure (e.g. setting up committees to deal with new risk areas), and engaging in continuous assessment of the board as well as individual members.
Another principle of board management is to avoid getting involved in operational issues, particularly when dealing with the day-to-day operations of your company. This is because a large part of the work of a board is to set the long-term vision for your company and how it fits into the world.
Although it may seem like a no-brainer, a lot of companies are struggling with this idea. Some board members, for instance hold meetings directly with management without the CEO’s knowledge or make quick decisions to be helpful. This can put the chief executive in a difficult position. In the ideal scenario, the CEO will work with the chair of the board and other directors to work out a solution to the issue and establish trust again.
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