A board’s job is to provide guidance and oversight of the executive management team, making sure that the company’s policies are followed and that all fiduciary duties are fulfilled. Some boards give too much power to executive leadership. Most don’t. Sadly, the media abounds with stories of corporate disasters that are the result of improper or unqualified management teams.
To avoid such disasters it is crucial to ensure that your board is comprised of a wide range of perspectives and capabilities. They should also work effectively as a team. This requires establishing certain management principles for your board which include accepting diversity when creating your board and assuming leadership roles, fostering agile structure (e.g. the formation of committees to deal with new threats) and engaging in ongoing evaluation of both the board as well as individual members.
Another principle of board management is to not get too involved in operational issues, particularly when dealing with the day-to-day operations of your company. The main role of a board is to establish the long-term vision for your company and its position in the society.
Although it might sound like a no-brainer, many companies are struggling with this idea. For instance the board members may begin having direct meetings with management without the CEO’s knowledge or decide to make a decision in the hope of being helpful. This can put the CEO in a tough situation. The ideal scenario is for how to start a board meeting the CEO to collaborate with the chair of the board and other directors in resolving this issue and build trust again.