A board’s job is to provide guidance and oversight to the executive management team, making sure that company policies are adhered to and that all fiduciary obligations are fulfilled. Some boards give too much power to the executive leadership. Most do not. The media is full of stories of business disasters that were caused by corrupt or incompetent management teams.
To avoid such disasters It is essential to ensure your board has many perspectives and capabilities. It must also function effectively as a group. This requires establishing specific management guidelines for your board which include welcoming diversity into your board and assuming leadership roles, fostering an agile structure (e.g. creating committees to address new risks) and engaging in ongoing review of the board as well as the individual members.
Another important principle of management for boards is to avoid getting too involved in the day-today operations of your business. 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 fits within the wider society.
It may seem like something that is easy to implement however, many companies are struggling to implement this idea. For instance the board members may begin meeting directly with management without consulting the CEO or make quick judgments in the hope of being helpful. This can put the chief executive in a precarious position. In the ideal scenario, the CEO will collaborate with the chair of the board and other directors to resolve the issue and establish trust once more.