Boards are unique leadership structures with considerable power, and they have a duty to all within and outside the organization. They operate within a spherical structure that is only limited by state-by-state guidelines and the collective decision to change their own composition and structure.
While boards have a lot of responsibilities, they should primarily focus on the oversight of management policies and decisions while delegating operational matters to the CEO and executive team. That means establishing a governance system and developing guidelines for their actions and the actions of managers. It also involves focusing on legal issues including compensation, conflicts of interest, community benefits, and the evaluation of CEOs.
A well-designed governance system is essential to the activities of the board. It should include explicit documentation of the roles and responsibilities for each committee and director. Directors should be in a position to access and use the board portal. This helps directors prepare efficiently for meetings and keeps board discussions focussed on the central concerns of the meeting. It also facilitates better communication between board members as well as the smoother transition of board members rotate.
A good governance system includes the appointment of an independent director who is accountable for the smooth running of meetings and establishing the agenda. It must also include scheduling executive sessions in accordance with requirements of the stock exchange and a time for directors to meet in private with the CEO if management is not present.
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